law oil and gas minerals law, litigation, contract disputes
“An oil and gas lease is a contract, and its terms are interpreted as such.” Tittizer v. Union Gas
Corp., 171 S.W.3d 857, 860 (Tex. 2005); accord Valence Operating Co. v. Dorsett, 164 S.W.3d 656,
662 (Tex. 2005) (interpreting an oil and gas lease using contract principles). “In construing an
unambiguous oil and gas lease, . . . we seek to enforce the intention of the parties as it is expressed in
the lease.” Tittizer, 171 S.W.3d at 860.
Exxon Corp. v. Miesch, No. 05-1076 (Tex. Mar. 27, 2009)(Wainwright)(plugging of oil well to prejudice future
production subsequent to dispute over royalties, false statement to Railroad Commission, fraud, statute of
limitations, oil and gas law,)
RECENT TEXAS SUPREME COURT OPINIONS - OIL AND GAS LITIGATION
Shell Oil Co. v. Ross, No. 10-0429 (Tex. Dec. 16, 2011)(Opinion by Lehrmann)
(oil, gas and natural resources law, limitations and discovery rule, fraudulent concealment, accrual of cause of action, starting
date for running of limitations)
This case involves a dispute concerning alleged underpayments of gas royalty. We must decide whether limitations barred a
royalty owner’s claims against the operator of the field. We hold that the fraudulent concealment doctrine does not apply to
extend limitations as a matter of law when the royalty underpayments could have been discovered from readily accessible and
publicly available information before the limitations period expired. When, as in this case, the information was publicly available
and readily accessible to the royalty owner during the applicable time period, a royalty owner who fails to take action does not use
reasonable diligence as a matter of law. It has long been the law that the discovery rule does not apply to defer the accrual of
royalty owners’ claims for underpayments when the injury could have been discovered through the exercise of due diligence.
Accordingly, because the parties do not dispute that the pertinent information was readily accessible and publicly available, the
royalty owner’s claims are time-barred as a matter of law.
Conclusion
We hold that evidence conclusively established that Shell’s alleged fraud could have been discovered by the Rosses through the
exercise of reasonable diligence. Accordingly, we reverse the court of appeals’ judgment and render judgment for Shell.
.
Lesley v. Veterans Land Board of Texas, No. 09-0306 (Tex. Aug. 26, 2011)(Opinion by Justice Hecht)
The right to lease minerals — the executive right — is one "stick" in the bundle of five real property rights that
comprise a mineral estate.[1] We held long ago that the executive owes other owners of the mineral interest a
duty of "utmost fair dealing",[2] but we have seldom had occasion to elaborate. In this case, a land developer,
who also owned part of the mineral estate and all of the executive right, imposed restrictive covenants on a
subdivision, limiting oil and gas development in order to protect lot owners from intrusive exploratory, drilling,
and production activities. The non-participating mineral interest owners complain that the developer, as the
executive, breached its duty to them. The court of appeals held that the developer, never having undertaken to
lease the minerals, had not exercised the executive right and therefore owed no duty to the other mineral
interest owners.[3] We disagree, and accordingly, reverse and remand the case to the trial court.
Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Texas, LLC, No. 09-0901 (Tex. Aug. 26, 2011)
(Opinion by Justice Don R. Willett)(oil and gas law, no private condemnation power)
The Texas Constitution safeguards private property by declaring that eminent domain can only be exercised for
"public use."[1] Even when the Legislature grants certain private entities "the right and power of eminent
domain,"[2] the overarching constitutional rule controls: no taking of property for private use.[3] Accordingly,
the Natural Resources Code requires so-called "common carrier" pipeline companies to transport carbon
dioxide "to or for the public for hire."[4] In other words, a C pipeline company cannot wield eminent domain to
build a private pipeline.
This property-rights dispute asks whether a landowner can challenge in court the eminent domain power of a
Co pipeline owner that has been granted a common-carrier permit from the Railroad Commission. The court of
appeals answered no, holding that (1) a pipeline owner can conclusively acquire the right to condemn private
property by checking the right boxes on a one-page form filed with the Railroad Commission, and (2) a
landowner cannot challenge in court whether the proposed pipeline will in fact be public rather than private. We
disagree. Unadorned assertions of public use are constitutionally insufficient. Merely registering as a common
carrier does not conclusively convey the extraordinary power of eminent domain or bar landowners from
contesting in court whether a planned pipeline meets statutory common-carrier requirements. Nothing in Texas
law leaves landowners so vulnerable to unconstitutional private takings. We reverse the court of appeals'
judgment and remand to the district court for further proceedings consistent with this opinion.
FPL Farming Ltd. v. Environmental Processing Systems, L.C., No. 09-1010 (Tex. Aug. 26, 2011)(Opinion
by Justice Dale Wainwright)(liability re: waste water injection well)
Dynegy Midstream Services, LP v. Versado Gas Processors, LLC, No. 07-0043 (Tex. Aug. 28, 2009)(Willett)
(oil and gas law litigation, gas lost in transit, construction of contract re: sale, delivery)(gas sale dispute,
“percentage of proceeds” contract)(New Mexico Unfair Practices Act (NMUPA) as alternative theory to breach of
contract)
Apache sought recovery for sales that never occurred, but the agreements did not require Versado to pay
Apache for gas unless it reached the tailgate and was sold to third parties. There is no provision in these
contracts for “unaccounted-for gas.” Nor did they impose liability on Versado for gas that was lost and
indisputably unavailable for sale at the tailgate, but for which Versado could not establish the precise reason
for the loss. Under these contracts, Versado was not contractually liable for lost gas whenever it could not
definitively explain a metering discrepancy between the wellhead and the tailgate.
Because the contracts unambiguously do not impose an obligation on Versado to compensate Apache for
“unaccounted-for” gas that was not sold at the plant tailgate, contract damages for gas lost between the
wellhead and the tailgate are not recoverable. Apache’s breach-of-contract claim fails as a matter of law.
Exxon Corp. v. Emerald Oil & Gas Co., L.C., No. 05-0729 (Tex. Mar. 27, 2009)(Wainright)(oil and gas law,
statutory construction, cause of action for improperly plugging well, standing of subsequent lessee)
Exxon Corp. v. Miesch, No. 05-1076 (Tex. Mar. 27, 2009)(Wainwright)(plugging of oil well to prejudice future
production subsequent to dispute over royalties, false statement to Railroad Commission, fraud, statute of
limitations, oil and gas law,)
Wagner & Brown, Ltd. v. Sheppard, No. 06-0845 (Tex. Nov. 21, 2008) Brister)(oil and gas lease)
Coastal Oil & Gas Corp. v. Garza Energy Trust, No. 05-0466 (Tex. Aug. 29, 2008)(Hecht)
(oil and gas, trespass, rule of capture)
Justice Willett delivered a concurring opinion.
Justice Johnson delivered an opinion concurring in part and dissenting in part, in which Chief Justice Jefferson
joined, and in Part I of which Justice Medina joined.
(Judge Tracy Christopher and Justice Robert Pemberton sitting by appointment pursuant to section 22.005 of
the Texas Government Code) (Justice O'Neill and Justice Wainwright not sitting)
Kerlin v. Sauceda, No. 05-0653 (Tex. Oct. 10, 2008)(subst op. by O'Neill) (oil and gas law, statute of limitations
not tolled)
Kerlin v. Sauceda, No. 05-0653 (Tex. Aug. 29, 2008)(O'Neill) (oil and gas royalties, claims time-barred)
Justice Brister delivered a concurring opinion, in which Justice Hecht, Justice Medina, and Justice Willett joined.
Bowden v. Phillips Petroleum Co., No. 03-0824 (Tex. Feb. 15, 2008)(Justice Wainwright)
(class action de-certification, royalty owners, interlocutory appeal) (Justice Brister not sitting)
COURT OF APPEALS CASES IN WHICH THE SUPREME COURT DENIED REVIEW
08-0324
DSTJ, L.L.P., SUCCESSOR TO DSTJ CORPORATION; AND MILESTONE OPERATING, INC. v. M & M RESOURCES, INC.;
ENERGY LAND RESOURCES A/K/A ENERGY LAND RESOURCES LAND SERVICES; A.M. PHELAN, III; AND DANIEL PHELAN;
from Jefferson County; 9th district (09-07-00559-CV, ___ SW3d ___, 03-13-08) (accelerated appeal of an order modifying a
temporary injunction, competing claims to ownership of mineral leases)
This is an accelerated appeal of an order modifying a temporary injunction. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(4)
(Vernon Supp. 2007). In the trial court, M & M Resources, Inc. and DSTJ, L.L.P. assert competing claims to ownership of mineral
leases on a 210.5 acre tract in the Bennett Blackman Survey in Jefferson County, Texas. (1) M & M obtained a temporary
injunction to restrain operations on the tract which includes the Quail No. 1 Well and the Quail No. 2 Well in the Frio 2 formation.
See DSTJ, L.L.P. v. M & M Resources, Inc., No. 09-06-073 CV, 2006 WL 1360509, *1 (Tex. App.--Beaumont May 18, 2006, no pet.).
After we affirmed the granting of the temporary injunction, the trial court modified the injunction to prohibit the appellants from
performing operations in the Frio 2 with the Quail No. 3 Well on the adjacent Gilliland tract. (2) In two issues, the appellants,
DSTJ and Milestone Operating, Inc., contend: (1) the trial court abused its discretion by modifying the existing temporary
restraining order to prohibit oil and gas exploration, operations, and production on the Gilliland Survey; and (2) that the appellees,
M & M, Energy Land Resources, A.M. Phelan, III, and Daniel Phelan, failed to establish a probable right to recovery and a
probable, imminent, and irreparable injury. We affirm the trial court's order modifying the temporary injunction.
08-0326
KEN E. MACKEY v. GREAT LAKES INVESTMENT, INC. AND GREAT LAKES INTERESTS, INC.; from Zapata County; 4th district (04-
06-00277-CV, 255 SW3d 243, 03-12-08)(competing claims to royalty payments under an oil and gas lease.)
Great Lakes Investments, Inc./Great Lakes Interests, Inc. and Ken Mackey assert competing claims to royalty payments under an
oil and gas lease. After the trial court determined Great Lakes Investments, Inc./Great Lakes Interests, Inc. owned the disputed
royalty payments, Mackey filed this appeal claiming that the trial court erred by granting summary judgment in favor of Great
Lakes Investments, Inc./Great Lakes Interests, Inc. (1) The Madrid and Laredo Trading Company, Ltd., an intervenor in the
underlying lawsuit, also appeals, claiming the trial court's judgment is not a final appealable judgment because unresolved
matters remain pending in the trial court between Madrid and Great Lakes Investments, Inc./Great Lakes Interests, Inc. We
conclude the trial court's judgment is a final appealable judgment and affirm the trial court's judgment.
08-0319
VERITAS ENERGY, LLC v. BRAYTON OPERATING CORP., ET AL.; from Jackson County; 13th district
(13-06-00061-CV, ___ SW3d ___, 02-14-08)(oil and gas law, mineral lease termination dispute)
This is a lease termination dispute over a 275 acre mineral lease in Jackson County, Texas. By seven issues, appellant, Veritas
Energy, LLC (Veritas), contends the trial court erred in granting summary judgment in favor of appellees, Sundown Energy, Inc.
(Sundown), and Brayton Operating Corporation and the Selected Non-Operating Interest Owners (Brayton). (1) We reverse and
remand in part and affirm in part.
The trial court's order is reversed and remanded in part and affirmed in part. Specifically, summary judgment was improper on
the claims against defendants, Tauber Exploration & Production Co. and Carnes Natural Gas, Ltd. Thus, we reverse the portion
of the order granting summary judgment in favor of Tauber Exploration & Production Co. and Carnes Natural Gas, Ltd. and
remand the case to the trial court for further proceedings. The remainder of the trial court's judgment is affirmed.
07-0838
PETRO PRO, LTD., A TEXAS LIMITED PARTNERSHIP, AND L & R ENERGY CORPORATION v. NANCY WILSON BRISCOE,
JUDITH BROCK SEITZ, AND CAROLYN ROGERS, UPLAND RESOURCES, INC., KCS RESOURCES, INC., GREAT LAKES
ENERGY PARTNERS, L.L.C. AND STEVE ZEMKOSKI; from Roberts County; 7th district (07-05-00327-CV, ___ SW3d ___, 06-14-
07, pet. denied June 2008) [separate opinion in 07-05-0327-CV] 2 petitions (oil and gas law, assignment of interest, declaration
of rights)
08-0196
ROMEO LONGORIA, ET AL. v. EXXONMOBIL CORPORATION, ET AL.; from Brooks County; 4th district (04-06-00474-CV, ___ S.W.
3d ___, 01-30-08, pet. denied May 2008)
(Justice O'Neill and Justice Green not sitting) (mineral estate, adverse possession)
Romeo Longoria and forty-one other appellants ("the Longorias") contend their ancestor, Jose M. Longoria, acquired an
undivided one-half interest in 9200 acres of land in Brooks County by adverse possession before the mineral estate was
severed from the surface. The Longorias have sued eleven energy companies ("the energy company defendants") and Hector
and Gloria Lopez, who allegedly hold or have held record title to the minerals in part of the 9200 acres. In this suit, the Longorias
seek to establish title to an undivided one-half of the mineral estate claimed by the defendants, a declaration removing the cloud
on the Longorias' title, an accounting of the mineral production and income from such property and damages for conversion of
their share of the net production for minerals extracted from the property since limitations title was perfected. The trial court
dismissed the Longorias' suit for failing to join "absent mineral interest owners" as parties. The Longorias appeal, arguing the
trial court abused its discretion by dismissing the case. We affirm.
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