News & Analysis as of

Oil & Gas Contract Interpretation

Gray Reed

Two Words = Six Million Dollars: SCOTX Reverses Trial Court That Added Words to a Gas Transportation Agreement

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In American Midstream (Alabama Intrastate), LLC v. Rainbow Energy Marketing Corporation, the Texas Supreme Court held that the trial court improperly inserted the words “scheduled” and “physical” into a contract. By...more

Troutman Pepper Locke

Fifth Circuit Finds ANR Pipeline’s Tariff Does Not Require Simultaneous Delivery for Short-Notice Shipments

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On May 22, 2025, the U.S. Court of Appeals for the Fifth Circuit (“Fifth Circuit”) addressed a dispute between ANR Pipeline Company (“ANR”) and FERC. The case centered on the interpretation of ANR’s tariff and whether it...more

Gray Reed

Texas Supreme Court Decides Who Must Produce to Maintain an Oil and Gas Lease

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In Cromwell v. Anadarko E & P Onshore LLC the Supreme Court of Texas did what it so often does: In order to provide “legal certainty and predictability”, the Court considered the plain language of a contract in order to...more

McGinnis Lochridge

Supreme Court of Texas Washes Out the “Anadarko Washout”

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The so called “Anadarko Washout” involves a washout of oil and gas leases on undivided working interests owned by non-operating mineral cotenants. This particular species of lease washouts is based on two recent cases from...more

Houston Harbaugh, P.C.

Sixth Circuit Rules That Driller Must Establish Marketability of Each Gas Product Under Market Enhancement Clause

Houston Harbaugh, P.C. on

Let’s assume you own 105 acres in Greene County, Pennsylvania. In 2020, you signed an oil and gas lease with ABC Exploration. During the negotiations, you agreed that only those post-production costs which actually...more

McGinnis Lochridge

Texas Supreme Court Clarifies Limits of Shut-In Payment Notations in Lease Disputes

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In this case (Scout Energy Mgmt., LLC v. Taylor Properties, No. 23-1014, 2024 WL 5249490 [Tex. Dec. 31, 2024]), the Texas Supreme Court held that vague notations on shut-in royalty check receipts cannot modify an unambiguous...more

McGinnis Lochridge

Can a Production Sharing Agreement Override Surface Owner Consent? Hamilton v. ConocoPhillips Explored

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A landowner’s failure to provide consent for surface use related to oil and gas operations does not necessarily preclude the lessee from conducting activities if the lease agreements allow surface use....more

Gray Reed

Operator Excused from Texas Relinquishment Act Claims

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In Williams O & G Resources, LLC v. Diamondback Energy, Inc., a federal magistrate judge concluded that the Texas Relinquishment Act does not apply to public-school lands patented after 1931. The report and recommendation was...more

Gray Reed

Texas Pore Space Ownership – Royalty Calculation

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In Myers-Woodward, LLC v. Underground Services Markham, LLC et al, (discussed previously) the parties disagreed on how to calculate Myers’ royalty on salt produced by Underground....more

McGinnis Lochridge

Who Owns the Empty Space? Texas Supreme Court Affirms Surface Ownership of Salt Caverns in Landmark Ruling

McGinnis Lochridge on

In Myers-Woodward, LLC v. Underground Services Markham, LLC, No. 22-0878, 2025 WL 4356581 (Tex. May 16, 2025), the Texas Supreme Court resolved two significant issues affecting mineral owners and surface owners: (1) who owns...more

Baker Botts L.L.P.

Write it Down or Forever Hold Your Peace: Texas Supreme Court Rejects Fraud Claims Based on Oral Representations in Mineral Deals

Baker Botts L.L.P. on

On Friday, May 9th, the Supreme Court of Texas addressed important issues regarding the enforcement of written contractual representations in its per curiam opinion styled Roxo Energy Co., LLC et al. v. Baxsto, LLC, ---...more

McGinnis Lochridge

All Depths or Just One Formation? Court Clarifies Royalty Conveyance in Rock River v. Pioneer

McGinnis Lochridge on

This recent case (Rock River Minerals, LP v. Pioneer Nat. Res. USA Inc., No. 08-23-00216-CV, 2024 WL 4528917 [Tex. App.—El Paso Oct. 18, 2024, no pet. h.]) explored whether an assignment of an overriding royalty interest,...more

Gray Reed

Uri Force Majeure Cases Still Percolating

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Thought you’d heard the last of force majuere cases arising from Winter Storm Uri? Think again. In Marathon Oil Company v. Koch Services LLC. the question was how to measure damages suffered by Koch for Marathon’s...more

McGinnis Lochridge

Affirmative Defenses Are Insufficient to Rebut the Van Dyke Presumption

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Under Van Dyke, deeds with double-fraction royalty reservations referencing “1/8” are presumed to reserve a floating royalty interest unless clearly contradicted. Defenses like waiver, ratification, and limitations cannot...more

McGinnis Lochridge

Can "Free of Cost" Term Achieve Point-of-Sale Royalty Base?

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A lessee who halts production for less than 40 days and resumes without drilling or reworking does not terminate the lease. The continuous development clause keeps the lease active, and the cessation clause allows resumed...more

McGinnis Lochridge

Texas Supreme Court Rules on Modification of NPRIs

McGinnis Lochridge on

In this recent case, the Texas Supreme Court resolved whether ratification of a lease or signing of a stipulation agreement could transform a fixed non-participating royalty interest (NPRI) into a floating NPRI....more

Gray Reed

Geophysicist’s Claims Turn on Definitions

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Sewak v. Sutherland Energy Co. Ltd. is of interest for how the court defined terms commonly used in consulting contracts in the oil and gas industry, and how difficult it is to foresee all contingencies when negotiating a...more

Oliva Gibbs

Reservation or Limitation on Warranty? Navigating the Fine Line — Lessons from Valence Operating Co. v. Davidson

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In Valence Operating Co. v. Davidson1, the Court of Appeals for the Sixth Appellate District of Texas at Texarkana addressed whether the provision, “all Oil, Gas and other Minerals have been excepted and reserved by former...more

McGinnis Lochridge

Tackling Free-Use and At-The-Well Royalties

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This lease royalty case involved a dispute over whether the lessee was permitted to deduct volumes of gas used off the premises to power post-production activities on other gas produced from the same well. Carl v. Hilcorp...more

Oliva Gibbs

If the Lease Requires Notice, Then Provide Notice: Simple Enough?

Oliva Gibbs on

I. Background In the case of Kirkbride v. Antero Res. Corp., the Sixth Circuit Court of Appeals is faced with a novel argument on the interpretation of a condition precedent within an oil and gas lease. The case comes to the...more

Bradley Arant Boult Cummings LLP

Where Old Meets New: Energy Transition Projects Collide with Oil, Gas Law

Over the course of a century of oil and gas development in the U.S., a robust body of law developed, covering virtually every aspect of E&P and interpreting every provision in oil and gas leases, joint operating agreements...more

Gray Reed

“Harmony” in a Texas Mineral Reservation

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In Smart v. 3039 RNC Holdings LLC, the court reminds us that it will harmonize all parts of a contract, even one that “is not a model of clarity”, to reach the correct result. ...more

Bradley Arant Boult Cummings LLP

Contextual “Construction” of Force Majeure Clauses

The Texas Supreme Court recently provided new guidance in interpreting force majeure language in an oil and gas drilling dispute. In Point Energy Partners Permian, LLC v. MRC Permian Company, the court held that the oil and...more

Bradley Arant Boult Cummings LLP

You Can Stand Under My Umbrella (by Clearly Manifesting It)

In Texas, many master service agreements (MSAs) related to the oil and gas industry typically contain provisions related to mandatory minimum insurance coverage and indemnity obligations. The Texas Supreme Court recently held...more

Gray Reed

Texas Supreme Court Rules on “Bespoke” Add-Back Royalty Clause

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In Devon Energy Production Company, LP et al v. Sheppard et al, the Supreme Court of Texas construed what it referred to as a “bespoke” and “highly unique” royalty clause in several oil and gas leases to prohibit the...more

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