Given the recent historic developments of the global pandemic and the dramatic drop in oil prices, the oil and gas industry is facing new issues never before encountered at this magnitude. For instance, storage of oil and gas is expected to reach full capacity. Pipeline companies are refusing to accept production in their pipelines. Global demand has come to a dead halt. The Railroad Commission has been asked to consider implementing statewide proration. In many cases, producers are facing the dilemma of involuntarily shutting in wells at the risk of possibly losing valuable leases. How long these events will last is currently unknown but many in the industry expect the industry fallout will stretch out over the next 12-18 months, if not longer.
It is inevitable that the law governing oil and gas will once again take on new developments. Undoubtedly, over the ensuing months many in the industry will be faced with challenges which will, by necessity, invoke the reasonably prudent operator standard in the context of the lessor/lessee relationship. This article provides a reminder of those duties and the interplay of the standard in the relationship between the lessor/lessee.Read More »