Schlumberger to Buy Cameron – What does this Mean for A&D?

The world’s largest oilfield service company, Schlumberger Ltd., and one of the largest providers of oilfield equipment, Cameron International Corp., announced today in a joint press release that the parties have executed an Agreement and Plan of Merger under which Schlumberger will buy Cameron in an all-stock deal valued at $14.8 billion.

The parties held a teleconference this morning, as announced in their 8K filing. Under the Merger Agreement, Schlumberger Holdings will acquire Cameron in a transaction in which Rain Merger Sub LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Schlumberger Holdings, will merge with and into Cameron, with Cameron as the surviving entity, and with Schlumberger Holdings acquiring all of the stock of Cameron. Read More »


Texas Court: Lessee May Not Exclude Other Lessees from Constructing Surface Facilities Or Drilling Through Mineral Estate

The San Antonio Court of Appeals, in Lightning Oil Co. v. Anadarko E&P Onshore, LLC, [1] Opinion not yet published, San Antonio Court of Appeals (4th Dist.), August 19, 2014.  held that a Texas oil and gas lease does not inherently convey a right for the lessee to control the “subterranean structures” from which hydrocarbons may be produced.  As a result, the court held that the mineral lessee of a severed mineral estate did not have the right to exclude third-parties from constructing surface facilities on the surface overlying the lessee’s mineral estate and/or exclude third-parties from drilling wells through (but was not producing from) the lessee’s mineral estate.  The Lightning court identified the “central question” as being the nature of Lightning Oil Co.’s (“Lightning”) interest as a mineral lessee.  After reviewing cases from its own court and the Texas Supreme Court, among others, the Lightning court concluded that the surface estate owner, not the mineral estate owner, controls the earth beneath the surface estate. Read More »

Footnotes   [ + ]


Case Law Update: ConocoPhillips Must Release 15K Acres

Texas Case Law Update: On August 5, 2015, the San Antonio Court of Appeals released its opinion in ConocoPhillips Company v. Vaquillas Unproven Minerals, Ltd., [1] No. 04-15-00066-CV (San Antonio – August 5, 2015).  affirming the trial court’s order declaring ConocoPhillips breached two oil and gas leases in Webb County by failing to release all acreage in excess of 40 acres for each producing and shut-in natural gas well capable of producing in paying quantities. As a result, ConocoPhillips was ordered to release an additional 15,351 acres. The issue on appeal was whether the retained acreage clauses allowed ConocoPhillips to retain 40 acres per gas well or 640 acres per gas well.

This case illustrates how appellate courts can interpret acreage perpetuation and release language in a lease in conjunction with regulatory rules. As such, this case underscores the importance of lease language that references regulatory rules, which may provide for spacing or proration units of a greater or smaller size than the default acreage provided within the lease.

Read More »

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Anderson v. Dominion – JOA AMI, Pref Right, Contract Area and Term

In Anderson Energy Corp. v. Dominion Oklahoma Texas Exploration & Prod., Inc., [1] 04-14-00170-CV, 2015 WL 3956212 (Tex. App.—San Antonio June 30, 2015, no. pet. h.) the San Antonio Court of Appeals answered the following questions involving a 1977 AAPL JOA, with a printed Pref Right, and a typewritten AMI:

  1. Whether the AMI and Pref Right clauses covered interests acquired after execution of the JOA, based largely on the extent of the “Contract Area;”
  2. The Term of the JOA where the parties failed to select one of the printed options;
  3. Whether the above claims were precluded by the Statute of Frauds; and
  4. Whether the affirmative defenses of waiver or laches precluded the plaintiff’s claims described above.

Read More »

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William Sciscoe v. Enbridge Gathering

On June 1, 2015 the Amarillo Court of Appeals issued an opinion [1] William Scisco, et al v. Enbridge Gathering (North Texas), LP, et al 2015 WL 3463490 (Tex. App.—Amarillo June 1, 2015, no. pet. h.)  concerning whether a landowner may have a cause of action for nuisance or trespass against a company conducting regulated oil and gas operations in the vicinity.  In reversing the trial court’s summary judgment in favor of the defendant-companies, the Amarillo court held that a cause of action for trespass is available when particles migrate from regulated operations onto neighboring property and that liability for nuisance will not be avoided by mere regulatory compliance.

 The plaintiffs, including the City of DISH and several residents of the City (collectively, “DISH”) filed suit against several companies who owned or performed operations collateral to the “Ponder Compression Station.”  The Ponder Compression Station began operations in February 2005 and the neighboring landowners began to complain about excessive noise and offensive odors emanating from the operations.  However, DISH claimed that they did not learn the true alleged danger of the airborne particles until the release of an environmental report prepared in 2009.  Shortly thereafter, the TCEQ and the Texas Department of State Health Services performed investigations into the air quality and the effects on the surrounding community, both finding that exposure levels were no higher in DISH than in the general population.

DISH filed suit seeking compensation for past injuries, primarily for the diminution in value of the respective properties.  No pecuniary relief was sought for personal injuries or medical expenses, nor did DISH seek injunctive relief.  The trial court granted summary judgment in favor of the Defendants, but the judgment was reversed in part on appeal.

The Amarillo court rejected the Defendants’ contention that migrating particles could never, as a matter of law, be the basis for a trespass claim.  However, while the Amarillo court found that the migrating particles could constitute a trespass, the court made clear that the plaintiff must still prove the remaining elements of the claim.  DISH’s nuisance claim was analyzed in conjunction with Defendants’ arguments that a nuisance claim was preempted by local, state, and federal regulations.  However, the Amarillo court concluded that regulatory compliance will not insulate a party from liability because “[r]egulatory compliance or licensure is not a license to damage the property interest of others.”  The court did find, however, that DISH’s demand for damages in an amount equal to $1,000 per day that operations continued, was more similar to a penalty than compensation for an injury.  The court concluded that such a “penalty” would amount to a psuedo-regulatory scheme which is preempted.

The Amarillo court’s opinion can be found here.

Footnotes   [ + ]


Utica Update: The Supreme Court of Ohio Weighs In On the Dormant Mineral Act

The Supreme Court of Ohio has begun to resolve the confusion surrounding Ohio’s Dormant Mineral Act (“DMA”) as it issued its first decision on the DMA in Dodd v. Croskey on June 18, 2015.  The Court held that, under the 2006 version of the DMA, a claim to preserve that was filed after the expiration of the 20-year window but within 60 days of service of the surface owner’s notice of abandonment was sufficient to preserve a severed oil and gas interest.

The confusion results from two very different versions of the statute that co-exist – one enacted in 1989 and the other enacted in 2006.  The main difference between the two versions, aside from each focusing on different 20-year windows to determine when a severed oil and gas interest should be deemed abandoned, is that the 1989 version provides that a severed oil and gas interest will automatically revert to the surface owner without any notice afforded to the owner of that severed interest whereas the 2006 version sets forth a procedural vehicle that the surface owner must initiate before a severed oil and gas interest can be deemed abandoned.

Read More »


TX Supreme Court: Chesapeake May Not Deduct Post-production Costs from Overriding Royalty

In a 5-4 decision, the Texas Supreme Court issued its opinion in Chesapeake Exploration, L.L.C. v. Hyder, 14-0302, 2015 WL 3653446 (Tex. June 12, 2015), holding that Chesapeake is prohibited from deducting postproduction costs from an “overriding royalty interest” described in a lease. The Majority noted that while overriding royalty interests are generally subject to post production costs, the language used in the lease creating the Hyder overriding royalty shifted the burden of paying these postproduction costs to Chesapeake, alone.

Read More »


Noble Energy to Acquire Rosetta Resources

Early this morning (Monday, May 11, 2015), Noble Energy announced that has entered into a definitive merger agreement under which it will acquire Rosetta Resources.

Since the onset of the oil collapse in October 2014, experts have been forecasting a massive wave of A&D activity in the oil and gas space. These forecasts have been steady since late 2014, but there has been very little consolidation activity thus far.

The Noble-Rosetta deal may mark the beginning of a huge wave of A&D activity in oil and gas.

Under the definitive merger agreement, which was unanimously agreed to by the directors for both companies, Noble will be acquiring Rosetta in an all-stock transaction, at a 38% premium over Rosett’a Friday close of $19.33.

The deal aims to bring Noble into two gigantic, oil-rich, and highly economic, shale plays: the Eagle Ford and Permian Basin. Rosetta currently has an assets base including approximately 50,000 net acres in the Eagle Ford and 56,000 net acres in the Permian.

This marks the first time since the oil downturn that a major U.S. oil and gas company has acquired another oil and gas company.

If you have been to one of my recent presentations on “A&D During the Oil Downturn,” then you have heard me outline several reasons experts believe this A&D activity has been delayed, and what companies are doing to prepare for these acquisitions.  Many sellers are likely to be strapped for cash, which introduces numerous potential issues for a due diligence team to tackle.

Share your thoughts below.


Anatomy of a Joint Operating Agreement

In Introduction to Joint Operating Agreements, we reviewed several of the critical roles the Joint Operating Agreement plays within the oil and gas industry.  One of the first steps to understanding the JOA is to understand the anatomy of its several components. The AAPL Joint Operating Agreement is organized into the following sections, in order:

  1. Cover page,
  2. Table of contents,
  3. 15 sections of standard provisions labeled as “articles,”
  4. An article designed exclusively for custom provisions, and
  5. Several placeholders for exhibits which parties may identify.

Read More »


The 1989 JOA: Horizontal Modifications and Other Crucial Updates

The 1989 JOA is one of the most common O&G forms. However, updates are need in response to 25 years of case law and continually evolving custom & practice.


As we discussed in the last article pertaining to Oil and Gas Joint Operating Agreements, the JOA is one of the most commonly used instruments in the oil and gas industry today.  A JOA provides the crucial foundation upon which multiple leasehold cotenants can cooperate in the joint exploration, development, and production of oil and gas properties. For example, JOAs cover the terms and conditions under which the operator is to conduct operations, such as drilling the initial well, it provides a voting mechanism for future operations, and establishes a basis for which the costs of operations are to be paid.  In addition, the Form 610 describes how the cost and revenue sharing percentages of the parties are to be calculated, how the operators and non-operators will handle title issues, and also covers the potential future acquisition and/or disposition of interests within the contract area.

By far the most common form is the AAPL Form-610.  However, the last major revision of the Form-610 was made in 1989.  THerefore, this form simply does not take into account the last 25 years of crucial case law updates and changes to industry custom and practice.  As a result, many believe an update is sorely needed.

Recently, as will be discussed below and in future articles on this blog, the AAPL has created a new committee to update and revise the JOA to create a new major revision. Perhaps it will be referred to has the “2014 Form-610” or the “2015 JOA.” As of the date of this article, the committee has not yet finished this revision.

However, the committee has created and published a new minor revision to the 1989 JOA, designed to cover crucial aspects relating to horizontal operations.  In the next article in this series, we will cover many of the modifications introduced by  the committee in the Horizontal version of the 1989 Form 610 JOA.  Then in later articles, we will cover several important cases that have been decided in the last 25 years, many of which are routinely addressed in the Additional Provisions section of most JOAs today.
But for the topic of this article, what is this history of the AAPL Form 610 JOA? Why did AAPL publish a Horizontal version? Why has the AAPL formed a committee to produce a new major revision? Does it need a major overhaul? What are some shortcomings that have been experienced over the past 25 years?

Read More »

© Copyright 2012-2018, McGinnis Lochridge LLP. All Rights Reserved. DISCLAIMER: The information in this article is for general information purposes only. This article should not be substituted for legal advice and should not be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or reading this article does not constitute, an attorney-client relationship. You are encouraged to contact an attorney for legal advice concerning the information provided in this article.
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Note: When choosing facebook or google, alerts will be sent to the email listed in that account.
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