Understanding Similarities and Differences in Four Oilfield Anti-Indemnity Acts

Indemnity provisions are widely used in the energy industry as a method of contractually apportioning liability between parties. These provisions are a staple in Master Service Agreements and can be unilateral or mutual, explains Zoe Vermeulen in a post on the website of Kean Miller LLP.

The author discusses oilfield anti-indemnity acts in Texas, Louisiana, New Mexico and Wyoming,.

The article also covers construction anti-indemnity acts.

“Like the Oilfield Anti-Indemnity Acts, these construction anti-indemnity acts vary widely from state to state and have many exceptions and nuances. And awareness of and familiarity with these statutes is also critical to adequately evaluating the viability of a contractual indemnity provision,” writes Vermeulen.

Read the article.





Class Action Royalty Litigation in the Shale Plays

A recent article posted on the website of Haynes and Boone analyzes nationwide trends in the filing and certification of royalty class action cases, which result in much greater exposure to producers than individual royalty owner cases. For example, in the past five years, producers have settled class actions for amounts in excess of $80 million.

“Ninety-six putative class actions filed during the period from 2001 to the present are analyzed in this article. Since Congress enacted the Class Action Fairness Act of 2005 (CAFA), most of these cases were litigated in federal court,” write David Ammons and Mike Stewart.

“These cases deal almost exclusively with alleged underpayment of natural gas royalties (oil royalty litigation rarely arose during the period analyzed).”

Read the article.



What Will the 2018 Elections in Colorado, New Mexico, Wyoming and Alaska Mean for the Energy Industry?

Oil wellsHolland & Hart will host a panel discussion titled “Shifting Tides: What Will the 2018 Elections in Colorado, New Mexico, Wyoming, and Alaska Mean for the Energy Industry?”

The event, which includes lunch, will be Friday, Oct. 12, 2018, 11 a.m.-1 p.m. in the firm’s Denver office.

Key governors’ races in the energy-producing states of Colorado, New Mexico, Wyoming, and Alaska are in full swing, the firm says on its website. The panel will discuss how these races, along with potential shifts in the make-up of state legislatures, might affect energy policy and future development in these critical states.

Moderator: Sean Parnell
Attorney | Holland & Hart LLP
Former Alaska Governor


Eric Waeckerlin
Partner | Holland & Hart LLP

Tracee Bentley
Colorado Petroleum Council Executive Director

Ryan Flynn
New Mexico Oil & Gas Association Executive Director

Susan Aldridge
Anadarko Petroleum Corporation Director, Wyoming Regulatory and External Relations

Joe Milczewski
Anadarko Petroleum Corporation Government Relations Manager

Holland & Hart LLP
555 17th Street,
Suite 3200
Denver, CO 80202

For more information contact Lauren Israel at 303.295.8201 or lmisrael@hollandhart.com.

Register for the event.



Minimum Volume Commitments in the Midstream Industry

Oil and gas pipelineMinimum volume commitment contracts (MVCs), often referred to as throughput agreements, are agreements under which a shipper or producer—a counterparty—undertakes to transport an agreed minimum volume of a commodity such as natural gas, NGL or crude oil through a third-party operator’s assets, such as pipelines or processing plants, over a specified period, explains a post on the website of Opportune.

“In the midstream industry, these contracts are typically utilized to enable the operator to recoup the costs of constructing infrastructure, such as a processing plant or pipeline lateral, for the benefit of the counterparty. Under these agreements a counterparty pays a shortfall or deficiency fee if the MVC is not met for a specified period—monthly, quarterly or annually,” the authors write.

Read the article.



EPA Proposes Affordable Clean Energy Rule to Replace Clean Power Plan

The U.S. Environmental Protection Agency’s proposed Affordable Clean Energy (ACE) rule would establish guidelines for states to develop plans to address greenhouse gas emissions from certain existing fossil-fuel-fired power plants.

A post on the Beveridge & Diamond website says ACE would replace the Obama Administration’s 2015 Clean Power Pla, which EPA has proposed to repeal on the basis that it exceeded EPA’s authority.

“In particular, the current Administration does not believe it has authority under Section 111 of the Clean Air Act to require regulated entities to take actions “outside the fenceline,” as contemplated by the CPP.  Accordingly, the ACE plan would impose only “inside the fenceline” requirements on electric generating units,” write authors Brook J. Detterman and Grant Tolley.

Read the article.



Webinar Looks at Research on Landowner Coalitions in Shale Gas Development

Marcellus Shale landowner coalitions — their form, function and impact — will be the topic of a one-hour, web-based seminar offered by Penn State Extension at 1 p.m. on Thursday, Aug. 23, 2018.

Presenting the webinar will be Grace Wildermuth, a Penn State doctoral degree student in the Department of Agricultural Economics, Sociology, and Education. She will discuss research from her thesis on landowner coalitions.

Topic will include:

  • coalition models and forms
  • benefits and detriments of membership in a coalition
  • best practices identified by members of coalitions
  • specific effects of participation in a coalition for agriculturalists
  • potential future applications of the landowner coalition model.

Register for the webinar.



Department of Energy Streamlines Small-Scale LNG Export Authorizations

The Department of Energy has announced a final rule that will expedite the approval process for small-scale exports of natural gas, reports Cadwalader.

Special counsel Brett A. Snyder writes:

The DOE explained that the new rule is intended to accelerate its processing of small-scale export applications and reduce administrative burdens for the small-scale natural gas export market.

Effective August 24, 2018, the DOE will issue an export authorization, without public notice and comment, to an applicant submitting a complete application to export natural gas, including liquefied natural gas (“LNG”), to countries with which the United States has not entered into a free trade agreement (“FTA”) that requires national treatment for trade in natural gas and with which trade is not prohibited by U.S. law or policy (i.e., non-FTA countries), if the application meets two criteria.

Read the article.



Top 10 Mistakes When Drafting Non-Competes in the Oil Patch

Bruce “Chip” Morris of Kane Russell Coleman Logan has posted a new podcast in the firm’s Energy Law Today blog about the top 10 mistakes employers can make—in the oilfield, and beyond—when drafting non-compete agreements.

Morris, a director in the firm’s Houston office, is the head of the firm’s Intellectual Property Group.

The 10 mistakes involve such areas as overbroad restrictions, choice of forum clauses, agreements that aren’t appropriate for all employees, and agreements that haven’t kept up with technology.

Listen to the podcast.




5th Circuit: How to Determine Whether a Contract Is (Or Is Not) Maritime

Offshore oil wellAfter 30 years of wrestling with the cumbersome six-part test for determining whether a contract to perform services related to oil and gas exploration on navigable waters is maritime, the 5th Circuit took up a case earlier this year in an effort to streamline the test and bring clarity to an area of the law mired in uncertainty, reports The Energy Law Blog of Liskow & Lewis.

Deciding that several of the factors were either redundant or unnecessary, the court carved away at Davis & Sons until it was left with a two prong test, write John Almy and William W. Pugh.

Those two prongs are:

(1) Is the contract to provide services to facilitate drilling or production of oil and gas on navigable waters? and

(2) Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract?

Read the article.



Former Energy XXI CEO Agrees to Settle SEC Charges

Reuters reports that the former chief executive of Energy XXI Ltd agreed to settle civil charges that he failed to disclose to investors more than $10 million in personal loans obtained from company vendors and a candidate for the company’s board, the U.S. Securities and Exchange Commission said.

John D. Schiller Jr. didn’t admit or deny the charges, but he settled with the SEC by paying a $180,000 penalty and agreeing not to serve as an officer or director of a public company for five years, the SEC said.

The Reuters article explains: “The SEC alleged Schiller maintained an extravagant lifestyle using a leveraged margin account secured by his shares in the oil and gas producer. When oil prices tumbled in 2014 and he was faced with margin calls, Schiller accepted more than $7.5 million in personal loans from companies that did business with Energy XXI, the SEC claimed.”

Read the article.



Court Affirms Take-Nothing Verdict for Company Harmed by Texas Ponzi Scheme

A federal district court judge has affirmed a take-nothing defense verdict for the owner of an Oklahoma City-based company that unknowingly provided services in connection with a mineral royalties Ponzi scheme, finding that the company, Cianna Resources Inc., does not have to repay $21.7 million the scheme paid to Cianna for mineral interests and commissions.

“Our group of attorneys did an outstanding job and put together a powerful case,” said Sawyer Neely of Dallas-based Sayles Werbner, one of the attorneys who represented Cianna. “It certainly was a David-and-Goliath situation, and we appreciate that our hard work resonated with the jury.”

In a release, the firm described the case:

In 2008, Cianna Resources and owner Kyle Shutt entered into a sub-broker agreement with Oklahoma-based Ruthven Oil & Gas, LLC, for the purchase of mineral interests. Ruthven was working with Dallas-based Provident Royalties, Joseph Blimline and others, in what authorities described as a scheme involving nearly 7,800 investors and losses of more than $400 million.

The scheme collapsed and the company went bankrupt after natural gas prices fell. Mr. Blimline was convicted in 2012 for his role in the scheme, and a bankruptcy trustee later attempted to recover funds from investors who had profited before the collapse, including seeking $21.7 million from Cianna Resources.

The trial before U.S. District Judge Jane Boyle in Dallas lasted more than a week when the jury returned the defense verdict on March 28. The successful defense hinged on providing evidence that Cianna had acted in good faith and provided valuable services to an entity. On June 28, Judge Boyle entered a final judgment, denying the trustee’s motion for a new trial and rejecting requests to throw out the jury verdict.

Cianna was represented by Bill Johnson, David Elder, and Matt Brockman of Oklahoma City-based Hartzog Conger Cason & Neville, in addition to Mr. Neely.

The case is Segner et al v. Ruthven Oil and Gas LLC et al, case number 3:12-cv-01318, in the U.S. District Court for the Northern District.



Webinar: Start-ups Driving Innovation in Upstream Oil & Gas

The oil and gas industry is benefiting from a surge in start-up companies focused on digital transformation and radical change proving that the oil and gas start-up ecosystem is alive and growing.

Frost & Sullivan’s Oil & Gas Innovation Council will present a complimentary webinar titled “Start-ups Driving Innovation in Upstream Oil & Gas” on Tuesday, July 31, 2018, at 10 a.m. CDT.

Dylan Ellett, a Frost & Sullivan leading oil and gas analyst, and a panel of industry experts from start-up companies will showcase their solutions, impacts on the industry and real-world scenarios of success and hardships along the journey, from founding to investment.

  • Discover start-up companies that are providing innovative solutions to industry challenges
  • Hear real success stories and pain points from start-ups
  • Interact with start-up companies

Register for the webinar.

Texas Supreme Court Redefines an Offset Well Clause

The Texas Supreme Court has held that an offset well clause in an oil and gas lease did not require the lessee to drill wells calculated to protect against drainage, reports Gray Reed & McGraw in its Energy & the Law blog.

According to authors Charles Sartain and Chance Decker: “The Court purported to limit its holding to these facts, but the opinion could have far-reaching consequences. Wells drilled in the most active plays in Texas today are by and large horizontal, tight-shale wells. The opinion indicates the historical understanding of an ‘offset well’ is antiquated in this context.”

Four dissenting justices believed the majority disregarded the well-established meaning of “offset well” used in the oilfield for decades.

Read the article.



PA Court Rejects Fracking Company’s Appeal In ‘Rule Of Capture’ Decision

Below-ground look at frackingA Pennsylvania appeals court rejected a request by a natural gas production company to rehear a case whose outcome could affect drillers across the country, reports WSKG.

Briggs v. Southwestern Energy Production Company involves the legal principle known as “rule of capture,” which means a property owner has the right to extract or “capture” an underground resource such as water, oil or gas, even if it flows from beneath another property owner’s land, explains reporter Susan Phillips. The case calls into question the longstanding practice as it applies to fracking, which requires subsurface rock to be deliberately broken in order to release trapped gas.

“In 2015, the Briggs family sued Southwestern Energy for trespass and conversion, arguing that the company’s fracking efforts were illegal and it should not be allowed to use wells on neighboring properties to tap gas beneath their land,” writes Phillips. “The family owns about 11 acres of land in Susquehanna County and did not lease its land for gas drilling.”

The trial court rejected their arguments, but an appellate court found that the Briggs’ arguments had legal merit.

Read the article.



Oil Firm, Once Called ‘Wolf of Wall Street Type’ Company, Sued By SEC for Fraud

The Dallas Morning News is reporting that Dallas-based Texas Coastal Energy Company defrauded 80 oil and gas investors out of more than $8 million, according to a lawsuit filed Tuesday by the Securities and Exchange Commission, the stock market regulator.

The SEC alleges the company, its co-founder, Jefferey Gordon, and his sales representatives misrepresented the company’s finances, exaggerated a geologist’s background and inflated the reserves and expected production of its wells in Texas and Kansas, according to reporter Jeff Mosier.

“In an offering fraud, people who seek to steal investors’ hard-earned money will often use cold calls and inflated promises to carry out their schemes,” said Shamoil T. Shipchandler, director of the SEC’s Fort Worth regional office. “Their self-serving statements are no substitute for an investor’s due diligence.”

Read the Dallas News article.



Texas Court Holds Drop in Oil Prices is Not Force Majeure

A divided panel of the Texas Court of Appeals in Houston has held that the 2014-2015 drop in oil prices is not a force majeure for purposes of general force majeure contractual protection, reports Liskow & Lewis in its Energy Law Blog.

Jackie E. Hickman explains that the court addressed a dispute between ConocoPhillips Company and TEC Olmos over a farmout agreement that required Olmos to commence drilling by a specified date.

“During the interval between execution of the agreement and commencement of drilling, however, changes in the global supply and demand of oil caused the price of oil to drop significantly. As a result, Olmos was unable to secure financing for drilling and informed ConocoPhillips that it would be unable to meet its drilling obligations. ConocoPhillips filed suit against Olmos and the guarantor of the contract, Terrace Energy Company, for breach of the farmout agreement. The lawsuit sought $500,000 in liquidated damages,” Hickman writes.

Olmos invoked the force majeure clause of the farmout agreement to excuse its inability to perform, but the court agreed with ConocoPhillips.

Read the article.



AZA’s Tim Shelby Appointed to Texas State Bar’s Oil & Gas Jury Charges Committee

Tim Shelby, a partner in Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C., or AZA, was appointed to a three-year term on the State Bar of Texas’ Oil & Gas Pattern Jury Charges Committee.

The committee updates and revises the way the law is typically presented to juries in Texas trials and members must be up-to-date on their knowledge of oil and gas law. The issues the committee researches and explains include trespass, adverse possession, lessor-lessee matters, contracts between working interest owners, defenses, and damages. The panel’s guidance is published in a book also used by energy lawyers in non-jury cases.

“This is a great opportunity. This committee works hard to ensure that participants in the oil and gas industry get proper jury questions, including updated questions necessitated by new law from Texas courts and the Texas Legislature,” Shelby said.

In a release, the firm said Shelby’s practice focuses on complex commercial litigation, oil and gas litigation, trade secret litigation, and professional liability matters. He has been recognized by The Best Lawyers in America for commercial litigation in Texas from 2015-2018. He has appeared on the Texas Super Lawyers list each year since 2014 after being selected for the companion Texas Rising Stars list starting in 2008.



Ask and You Shall (Not?) Receive: Retained Acreage Clauses and the Texas Supreme Court

Two Texas Supreme Court decisions published on the same day confirm that retained acreage clauses that vary in language from one instrument to another will likely vary in effect, according to Gray Reed & McGraw’s Energy & the Law blog.

Authors Charles Sartain and Brittany Blakey explain that, depending on the language, the lessee might not be able to maintain all the acreage it planned on holding.

They discuss two cases on point: Endeavor Energy Resources, L.P. v. Discovery Operating, Inc. and XOG Operating, LLC v. Chesapeake Exploration.

Read the article.



Subcontractors Sue Valero Over Explosion at Texas City Refinery

A group of 28 subcontractors at a Valero refinery in Texas City are suing the company and their employer, alleging that they suffered injuries and post-traumatic stress from an explosion at the plant less than two months ago, reports the San Antonio Business Journal.

The employees of  Beaumont-based Richard Industrial Group Inc. filed the lawsuit against their employer and Valero Refining Texas LP, a subsidiary of San Antonio-based refining company Valero Energy Corp.. Richard Industrial Group provides subcontracting work at Valero’s Texas City refinery, according to reporter Sergio Chapa.

“The workers are seeking damages based on claims that they suffered orthopedic injuries and hearing loss from the accident and are dealing with post-traumatic stress disorder,” writes Chapa.

Read the Business Journal article.



5th Circuit Sets New Test to Determine If Certain Contracts on Navigable Waters Are Maritime

In an important new en banc opinion, the Fifth Circuit has abandoned its historic criteria for determining whether a contract relating to servicing oil or gas drilling on navigable waters is controlled by maritime law in favor of a “simpler, more straightforward test,” reports Duane Morris LLP.

Jospeh J. Pangaro writes that courts in the Fifth Circuit historically applied a six-factor test to determine whether a contract is governed by maritime law, as articulated in Davis & Sons, Inc. v. Gulf Oil Corp..

“Taking the lead from the Supreme Court’s ruling in Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14 (2004), the Fifth Circuit departed from the six-factor test used in cases like Davis & Sons in favor of a new, stream-lined two-pronged test to determine whether a contract like the one at issue was maritime in nature,” Pangaro writes.

In his article, the author discusses the new test.

Read the article.