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.

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.

The Texas Supreme Court has held that the discovery rule delayed the running of the statute of limitations on behalf of the holder of a recorded right of first refusal to purchase mineral interests, reports the Energy & the Law blog of Gray Reed & McGraw.

Gray Reed partner Charles Sartain explains: “The trustees sued the Tregellases for buying the minerals without allowing the Trust to exercise its ROFR, contending that a contract was formed when they sued more than four years after the Tregellases’ purchase; the suit was their acceptance of the right to purchase the minerals, they said.”

The appellate court held that the trust suffered an injury when the minerals were sold, but the discovery rule delayed limitations.

Read the article.

Just because voters in two states rejected measures that energy companies opposed, but that doesn’t mean the fight is over for oil and gas companies, warns Buchanan Ingersoll & Rooney in a website post.

Colorado voters turned down an initiative that would have dramatically limited the use of hydraulic fracturing. And Washington voters rejected a proposed carbon fee on fossil-fuel emissions.

“Though it’s early, East Coast lawmakers in states like Connecticut, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island and Vermont may introduce their own carbon-pricing legislation in the near future. And of course, Washington isn’t quite ready to give up yet either,” according to the post.

Read the article.

A Louisiana appellate court has added to the relatively sparse body of appellate rulings in pipeline expropriation matters with an unpublished opinion affirming that landowners whose property is expropriated must prove their entitlement to severance damages to a “legal certainty.”

Writing in the Liskow & Lewis Energy Law Blog, Laura Springer Brown discusses the case of  Enterprise Products Operating, LLC, v. Southwood Terminal, L.L.C.

In its ruling, the court affirmed a two-part test for severance damages: The landowner must prove a diminution in value, “and only then could the jury continue on to the issue of the amount of damages.”

Read the article.

The Dallas Morning News reports that Texas businessman Christopher Faulkner, better known by his now infamous moniker “Frack Master,” has admitted to securities fraud, tax evasion and money laundering and faces up to 12 years in prison, federal officials said Tuesday.

Reporter Jess Mosier writes that Faulkner, the former CEO of Dallas-based Breitling Energy, became a star in business circles for his high-profile media appearances defending hydraulic fracturing or fracking. He used fake college degrees and skimpy business experience to convince Dallas business elite and Texas political elite that he was an oil and gas expert.

“The SEC effectively shut down Breitling Energy and related businesses after suing Faulkner and 11 others in 2016 for misusing $23.8 million of the $80 million they raised for oil and gas investments,” according to Mosier. “Besides the prison time, Faulkner must pay back the nearly $24 million made from his schemes, under the terms of his settlement.”

Read the Dallas News article.

The National Transportation Safety Board is well known for its sleuthing on plane crashes. However, oil and gas executives often need better education about how the agency tackles one of its other responsibilities—investigating pipeline accidents, advise attorneys with the national law firm LeClairRyan.

The catastrophic gas explosions that destroyed dozens of homes in Massachusetts this month have called attention to the NTSB’s role in investigating such incidents, noted Mark A. Dombroff, an Alexandria-based member of LeClairRyan and co-leader of its Transportation Industry practice. “Most, but not all, in the pipeline business are aware that something like this will immediately trigger a federally mandated and led investigation,” he said. “But their counterparts in aviation tend to be far better prepared to contend with the highly specific—and high-stakes—investigative process relied upon by NTSB.”

Read the article.

Holland & 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

Speakers:

COLORADO
Eric Waeckerlin
Partner | Holland & Hart LLP

Tracee Bentley
Colorado Petroleum Council Executive Director

NEW MEXICO
Ryan Flynn
New Mexico Oil & Gas Association Executive Director

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

Joe Milczewski
Anadarko Petroleum Corporation Government Relations Manager

Location:
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.

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.

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.

After 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.

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.

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.

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.

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.

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.

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.