Tag: oil and gas lawyer

28Jun
The Texas Supreme Court Decides Whether “Subject To” Clause Alters Who Must Bear NPRI Burden

The Texas Supreme Court Decides Whether “Subject To” Clause Alters Who Must Bear NPRI Burden

In a decision that focuses on the parties’ intent as expressed within the four corners of the document, the Texas Supreme Court in Wenske v. Ealy [1]13-15-00012-CV, ___ S.W.3d ___ (Tex. 2017) decided whether the language of a deed puts the entire burden of an outstanding non-participating royalty interest (“NPRI”) on the grantees or whether the NPRI proportionately burdens both the grantor’s reserved interest and the interest conveyed to the grantees.  The grantors argued that their reserved interest is not burdened by the NPRI, while the grantees argued that the NPRI proportionately burdens both their interest and the grantors’ interest.  The Court ruled that, based on the language in the deed, the NPRI proportionately burdens both the conveyed and reserved interest.

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Footnotes   [ + ]

17Apr
Railroad Deed Controversy: 100+ Year Old Instrument Ruled an Easement, Not a Fee Simple Conveyance

Railroad Deed Controversy: 100+ Year Old Instrument Ruled an Easement, Not a Fee Simple Conveyance

 

BNSF Railway Co. v. Chevron Midcontinent, LP

This dispute arises from a deed executed in 1903 from W.H.C. Goode to BNSF’s predecessor covering land in Upton County, Texas.  When Chevron began producing from underneath BNSF’s railway tracks, BNSF sued for trespass of title, arguing that the 1903 deed conveyed fee simple title.  Chevron argues that BNSF acquired only an easement.  Thus, the issue before the Court was whether the parties to the 1903 deed intended to convey fee simple title or only an easement.  Although the deed contained the term “fee simple” in the habendum clause, the court ultimately decided the deed conveyed an easement because it contained terms throughout the deed that suggested the parties intended to convey only an easement.  Read More »

5Aug

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.

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Footnotes   [ + ]

17Sep

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.

Introduction

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?

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© 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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