Alas, we might never know. Opiela v. Railroad Commission of Texas and Magnolia Oil & Gas Operating, was a challenge to the Commission’s authority to issue permits for allocation wells and wells drilled under Production Sharing Agreements. The parties have submitted a Joint Unopposed Motion For Reversal and Remand Pursuant to the Parties’ Settlement, which the Court granted.
The lawsuit, with potentially game-changing ramifications for PSA’s and allocation wells, attracted attention from the horizontal well drilling community (which includes just about everybody in the business in Texas) and we have reported it regularly: First on the trial court result, second on the Austin Court of Appeals result, and finally on the Supreme Court briefing. Those posts will tell you a lot about the dispute.
Because outsiders like you and me (or at least me) are not privy to the black box that is the parties’ settlement agreement, we don’t know what the parties truly believed about the strength of their respective cases.
What does it mean? It’s been business as usual at the Commission since the suit was filed. Time will tell if that changes. Parties in the future can be guided by the opinion of the Austin court: What they said and declined to say about, among others, the “65 percent rule”, the Commission’s authority to evaluate a permit applicant’s good faith claim to the right to drill a well, the Commission’s authority to resolve title issues, and the relationship between pooling and PSA’s.
Your musical interlude
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