A Texas Supreme Court ruling in Texas Outfitters Limited v. Nicholson explains why there is no bright-line rule delineating the duty of the executive right holder in resolving disputes among the mineral interest family, according to Gray Reed & McGraw.

The article in the firm’s Energy & the Law blog explains that the case presented an opportunity for the court to apply the guidelines outlined in an earlier ruling to a different scenario: whether the executive breached the duty by refusing to lease.

The ruling in “Outfitters reinforces the message that surface protection is not the only goal an executive is allowed to pursue – especially if a co-owner has leased.”

Read the article.

A new article by two Gray Reed & McGraw lawyers in Houston covers the benefits and risks of hydraulic fracturing, including reduction of foreign imports, jobs, reduced prices for consumers, water quality and usage, air quality, earthquakes, and social impacts, writes John McFarland in the Oil and Gas Lawyer Blog of Graves, Dougherty, Hearon & Moody.

“A Brief Look at the Law of Hydraulic Fracturing in Texas and Beyond” gives a balanced view of the ongoing debate over whether increased use of natural gas for generation of electricity reduces greenhouse gas emissions, whether there is a connection between hydraulic fracturing and earthquakes, and adverse impacts on roads and other infrastructure, according to McFarland.

Read the article.

The 9th Circuit recently handed down an opinion that helps provide guidance to those employers trying to comply with collective bargaining agreements while simultaneously being challenged to apply potentially inconsistent definitions in California’s overtime law, writes Rebecca King for a Fisher & Phillips website post.

The case involved an offshore oil worker whose contract called for 12-hour shifts for a week and required him to be on the off platform between shifts. He wanted to be paid for the hours he was required to be on site.

Read the article.

The term “net royalty acre” is used by mineral and royalty buyers to price a mineral or royalty interest that is subject to an oil and gas lease. It is related to, but different from, a “net mineral acre,” explains John McFarland of Graves, Dougherty, Hearon & Moody in the firm’s Oil and Gas Lawyer Blog.

“Mineral buyers often make offers in terms of dollars per net royalty acre. If the recipient of the offer does not know for sure what she owns, it can be difficult to evaluate the offer,” he writes.

In the article, McFarland explains the difference between the two terms and provides formulas that can be used to calculate each one.

Read the article.

Recent court decisions are making it easier for private litigants who believe they have been underpaid royalties under an oil-and-gas lease to ratchet up the pressure on operators by styling their complaints as putative class actions, writes Thomas G. Ciarlone Jr. for Kane Russell Coleman Logan’s Energy Law Today.

“This has the obvious potential to transform nuisance-value lawsuits into headline-making disputes that can involve thousands of lessors seeking a bigger piece of the pie from the working interest,” he explains.

“There could be trouble ahead for operators if the future of royalty disputes lies increasingly within the province of states’ attorneys (with broad powers and vast resources) operating under the auspices of consumer protection laws,” Ciarlone concludes.

Read the article.

The Federal Energy Regulatory Commission is continuing to aggressively investigate and bring enforcement action against companies that engage in energy market manipulation, reports WilmerHale in its 10-in-10 Hot Topics in Energy Series.

These investigations and proceedings mirror Commodity Futures Trading Commission (CFTC) action on financial market manipulation in the energy area.

“As the recent Powhatan and Silkman decisions indicate, the body of case law defining FERC’s enforcement authority continues to develop. Regulated companies should be aware that the statute of limitations in market manipulation cases will likely be read permissively. A strong internal compliance program, coupled with self-reporting in appropriate instances, can help reduce risk,” according to the article’s authors.

Read the article.

The 5th U.S. Circuit Court of Appeals has overturned a $1.5 million award to ex-NBA All Star David West, who claimed he qualified for a payout in the BP oil spill settlement because he earned less in 2010 than in 2009.

Reuters reporter Alison Frankel explains that West “was in the fourth year of a five-year, $45 million contract with the New Orleans Hornets when the Deepwater Horizon rig exploded in 2010. West was paid every penny of the $45 million he was owed under his contract, including the full amount he was due in the year after the spill. He nevertheless argued – and the settlement administrator agreed – that under the definitions and formulas in BP settlement, he qualified for a payout for economic losses because he earned less in 2010 than in 2009. The 5th Circuit shut that right down.”

5th Circuit Judge Andrew Oldham, who wrote for the panel, didn’t see it that way: “In 2010, he earned exactly what he was entitled to receive under his contract.”

Read the Reuters article.

Haynes and Boone’s Spring 2019 Energy Roundup highlights an evolving United States oil and gas industry responding to recent commodity price volatility, the firm said on its website.

It also examines new international investment opportunities arising from legal changes in the United Kingdom and Brazil.

And the Spring 2019 Borrowing Base Redeterminations Survey predicts a conservative, but not knee-jerk, response by banks to the late 2018 drop in oil prices.

“Investor activism is on the rise in the public E&P space – our capital markets group tracks the various players and the demands they are marking. In the midst of this changing market, our guest contributor from Opportune LLP gives an outlook on upstream trends in 2019 and we also look at the related impact in the midstream space,” the firm said in the introduction to the report.

Read the report.

The Supreme Court of Texas is considering whether to grant a petition for review to establish whether an indemnity provision covers only third-party claims, not first-party claims, unless the provision unequiv­oc­al­ly states otherwise, writes D.C. Toedt III in the On Contracts blog.

He describes the case of Claybar v. Samson Exploration LLC, in which a property owner sued Samson for alleged damage to the property during oil and gas drilling. Claybar settled with Samson’s contractor but still claimed Samson was con­tract­ually required to indemnify Claybar for the attorney’s fees and costs that Claybar had incurred in pursuing his negligence claim.

Read the article.

The Energy & the Law blog of Gray Reed & McGraw discusses a case that sums up what is required for an instrument to be a conveyance and what is required for a stipulation to be effective.

Ellison v. Three Rivers Acquisition involves land title issues that arose when a mineral development company discovered an apparent discrepancy in a land swap from almost 100 years ago. The developer asked the owner of a mineral lease on the land in question to sign a letter confirming acceptance of a boundary stipulation designed to resolve the discrepancy.

The article discusses the question of whether the boundary stipulation was a legal conveyance.

Read the article.

A federal judge in North Dakota has dismissed a $900 million defamation and racketeering suit against Greenpeace filed by Energy Transfer Partners, operator of the Dakota Access Pipeline.

Greenpeace was represented in the matter by Lance Koonce, Laura Handman, Lisa Zycherman, and Thomas R. Burke of Davis Wright Tremaine, the law firm said in a release.

District Judge Billy Roy Wilson wrote in his order dismissing the case that, “Posting articles written by people with similar beliefs does not create a RICO enterprise,” and that, “Donating to people whose cause you support does not create a RICO enterprise.”

Last month, the same Davis Wright Tremaine team won dismissal of similar RICO claims lodged against Greenpeace by Resolute Forest Products. That case was heard in the Northern District of California.

“The dismissal of these cases is of enormous importance not just to our clients but to watchdog and advocacy groups of all stripes,” said Koonce. “Because if companies criticized by such organizations were able to bring claims under the guise of RICO, with its treble damage provision, that are really designed to chill speech, it would put critical discourse on issues of public significance at great risk.”

Opportune takes a look at a few key indicators shaping the upstream oil and gas sector so far in 2019.

The first indicator is the continued climb of U.S. shale output, which is estimated to set records this year and next.

On the subject of supply and demand, the United States is expected to continue leading growth in oil supply worldwide, as global consumption of petroleum and liquid fuels show relative growth.

Liquid natural gas production reached a record high at the end of 2018, and export capacity will grow significantly.

The bad news for producers, however, is that increased production will limit price increases.

Read the article.

The 4th U.S. Circuit Court of Appeals has upheld the “take first, pay later” approach to building the Mountain Valley Pipeline, in which the company condemned private property in the project’s path before paying opposing landowners for their losses, reports The Roanoke Times.

Reporter Laurence Hammack writes that the ruling was a blow to pipeline foes, who have long decried the use of eminent domain to take parts of family farms and rural homeplaces to make way for a 303-mile natural gas pipeline through West Virginia and Virginia.

Landowners did not contest the laws that allowed the pipeline company to obtain forced easements through nearly 300 parcels in Southwest Virginia, but they objected to a lower-court ruling granting immediate possession of the disputed land before deciding how much each property owner should be compensated, Hammack explains.

Read the article.

Writing in Gray Reed’s Energy & the Law blog, Charles Sartain points out that parties to a transaction need to be mindful that if a business deal is a partnership, there will be rights and duties not present in arms-length commercial transactions.

He discusses a recent appellate court opinion and considers the main question: Was a partnership formed by a letter agreement, a participation agreement and the actions of the parties?

Stephens et al v. Three Finger Black Shale Partnership et al. is a complicated petroleum development deal that included all those elements. The jury trial ended with a multimillion dollar judgment for actual and exemplary damages in favor of two separate groups of plaintiffs and intervenors against several groups of defendants.

The appellate court determined that there was no evidence of a partnership, which meant that no fiduciary duty was owed by the defendants.

Read the article.

San Antonio oil and gas entrepreneur Brian Alfaro avoided getting hauled off to jail Friday, a day after a bankruptcy judge issued a warrant for his arrest, reports the San Antonio Express-News.

Alfaro had failed to provide various records to a court-appointed receiver, prompting the judge to issue an arrest warrant. But in a hearing in which Alfaro, attending via phone from his lawyer’s office as four federal marshals stood ready to take him to jail, the judge granted him an additional 10 days to comply.

The judge “presided over a trial in 2017 on 28 investors’ claims that they had been defrauded by Alfaro. The judge awarded nine of them $8 million. Alfaro is appealing. Rose’s duties include ensuring that investors collect on the judgment,” writes Patrick Danner of the Express-News.

Read the article.

The Environmental Defense Fund has signed contracts with two aerospace companies that will compete for the opportunity to construct the organization’s planned satellite project to quantify and map heat-trapping methane emissions from oil and gas facilities and other man-made sources around the globe.

A post on the Mitchell, Williams, Selig, Gates & Woodyard website quotes Mark Brownstein, Senior Vice President of the EDF energy program:

“Significant reductions in oil and gas methane emissions now can materially lower the rate of global temperature rise in our lifetime. MethaneSAT will give us the data we need to seize this moment.”

Walter G. Wright of Mitchell, Williams describes MethaneSAT “as using the latest scientific and technological innovations in sensor design, spectroscopy, data retrieval algorithms and flux inversions, a state-of-the-art modeling technique to distinguish emissions from ambient methane and trace them back to their source.”

Read the article.

The Texas Supreme Court recently heard oral argument in Barrow-Shaver Res. Co v. Carrizo Oil & Gas, Inc., on the interpretation of a farmout agreement providing that an assignment could not be made “without the express written consent,” according to a post on the website of Porter Hedges.

“The issue—whether the provision means consent can be withheld arbitrarily or only reasonably,” the post states. “Regardless how the Texas Supreme Court rules, there are three lessons in Barrow-Shaver for contract drafters: (1) be precise in contractual language; (2) address the use of non-final drafts in interpretation disputes; and (3) consider other provisions that may be impacted by the implied reasonableness issue.”

The post offers some pointers on each of those three points.

Read the article.

Charles Sartain of Gray Reed & McGraw has posted a list of what he calls “2018’s parade of reprobates, rapscallions and others generally lacking in moral hygiene” in the world of energy law.

He reports on a “mendacious filing” in an SEC civil enforcement action against Chris Faulkner; seven defendants, nine co-conspirators and three unnamed “government officials” allegedly involved in the embezzlement of funds from Venezuela’s government-owned oil company; a former Chevron employee charged with conspiracy to commit many felonies; a former Texas state senator; the culprit in a garden variety wire fraud and money laundering case; and more.

Read the article.

Trial lawyers with Jordan, Lynch & Cancienne PLLC scored big defense wins recently for two separate clients, securing a quick summary judgment for The Dow Chemical Company in Texas and prevailing in a jury trial for Union Carbide Corporation in New Orleans.

In the Texas case, MMR Constructors Inc. tried to claim an additional $17 million from Dow after it had already paid MMR for work on its plant in Freeport, Texas. That case ended with a summary judgment for the defense.

And in the New Orleans case, jurors heard three weeks of testimony related to the death of an oil field worker who died of mesothelioma. The jury found Union Carbide and Montello were not responsible.

Read details of the cases.

The Texas Supreme Court issued four opinions addressing the taxation of compressors used to deliver natural gas into pipelines, according to a post on Gray Reed & McGraw’s Energy & the Law blog.

Charles Sartain and Isreal Miller introduce a discussion of the rulings:

“Local taxing authorities frequently look to out-of-towners to bear what the locals consider the outsiders’ fair share of the burdens of increased oil and gas activity. The counties are often small and rural. (See the Dimmit County road tax).You can’t blame them, but  Reeves County (county seat: Pecos, 2010 pop. 13,783), Loving (county seat: Mentone, 2010 pop. 1,340), and Ward (county seat: Monahans, 2010 pop. 10,658) have been reminded by the big guys and gals in Austin that these efforts are not likely to succeed. It didn’t work for Huey Long and it isn’t working well now.”

Read the article.