Wagenschein v. Ehlinger, 2019 Tex. App. LEXIS 5949 (Tex. App—Corpus Chisti July 11, 2019, pet. filed)

In this case, the Corpus Christi Court of Appeals held that, when grantors of a 1989 warranty deed signed division orders and accepted royalty payments consistent with treatment of the reservation as creating a joint tenancy with right of survivorship, that established an affirmative defense of quasi-estoppel, subsequently estopping those grantors’ heirs from claiming the reservation created a tenancy in common.

In re Estate of Ethridge, No. 11-17-00291-CV, 2019 Tex. App. LEXIS 9564 (Tex. App.—Eastland Oct. 31, 2019, no pet.)

In this case, the Eastland Court of Appeals held that a devise of “personal effects” in a will did not include special mineral interests.

Town of Flower Mound v. EagleRidge Operating, LLC, 2019 Tex. App. LEXIS 7561 (Tex. App.—Fort Worth Aug. 22, 2019, no pet.)

In this case, the Fort Worth Court of Appeals held that the trial court lacked authority to grant a temporary injunction against the Town of Flower Mound enjoining the enforcement of a local ordinance that limited truck traffic to and from well sites.

Enerlex, Inc. v. Hegar, No. 03-18-00238-CV, 2019 Tex. App. LEXIS 6771 (Tex. App.—Austin Aug. 7, 2019, pet. filed)

In Enerlex, the Austin Court of Appeals held that a mineral buyer could not demand payment from the Texas Comptroller of Public Accounts for prior unclaimed royalty payments relating to the purchased royalty interest, because those royalty payments were turned over to the Comptroller under the prior owner/grantor’s name.

HJSA No. 3, Ltd. P’ship v. Sundown Energy Ltd. P’ship, No. 08-18-00113-CV, 2019 Tex. App. LEXIS 7254 (Tex. App.—El Paso Aug. 16, 2019, no pet. h.)

This oil and gas lease termination dispute centered on a disagreement as to what type of “drilling operations” constituted “continuous drilling operations” under a continuous development clause. The court held that the lessee’s reworking of existing wells did not satisfy the continuous development clause, resulting in a partial termination of the lease. The court held that, while the lease contained a definition of “drilling operations” that expressly included “reworking,” that was a general definition that did not control over the more specific terms in the continuous development clause. In reaching its conclusion, the court analyzed the role of several lease provisions, including the continuous development clause, retained acreage provision, temporary cessation clause, and an agreed definition of “drilling operations.”

Three recent Texas cases have focused on the interpretation of express offset provisions in oil and gas leases.  Over the last year, the Texas oil and gas industry has experienced what some commentators have called “Shale Boom 2.0,” with increased drilling activity in South Texas and the Permian Basin, leading to some marketing bottlenecks and spikes in the number of drilled but uncompleted wells.

Whatever the cause, at least three reported appellate cases in the last 18 months have focused on the construction of express offset clauses in oil and gas leases.  Oil and gas landmen and lawyers alike should take note of these decisions, as they each underscore that Texas courts do not interpret oil and gas leases merely by reference to the industry’s general rules, but instead on a careful analysis of the actual language used by the parties in the lease.  And as one recent case illustrates, the “surrounding circumstances” of the shale boom might lead to results some would not expect.