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.
