Texas Supreme Court Decision in Compression Cost Case Focuses on Express Contract Language
The Texas Supreme Court recently issued a decision in a compression cost case impacting the natural gas production industry in the case of Kachina Pipeline Co., Inc. v. Michael D. Lillis, reports The National Law Review.
The ruling focused closely on the contract language finding that a natural gas transporter could not deduct compression costs and was not entitled to a five-year extension based on the terms of the agreement.
“The Texas Supreme Court affirmed the court of appeals’ judgment reiterating several contract law principles, including (1) in construing a contract, the four corners rule applies and the contract must be examined as whole to ascertain the parties true intent and (2) extrinsic evidence can only be used if a contract is ambiguous.” the Law Review reported.