One thing people and organizations involved in a legal dispute can usually count on is that an arbitration clause in a contract will be upheld. The public policy in the Federal Arbitration Act expresses a preference for arbitration. The procedure …
In Texas, the winter of 2021 will be remembered for the extreme winter storm that knocked out power in many parts of the state. In an attempt to avoid a repeat, Texas regulators have proposed a series of weatherization rules …
Two recent Texas court decisions have weighed in on whether oil and gas lessees must pay royalties for gas used off-lease in processing activities, particularly in the context of whether lessees can deduct post-production costs (PPCs) from a lessor’s gas …
Texas has emphasized the importance of the mineral rights of a property since the State’s founding and first constitution. Between this early emphasis and the prevalence of oil and gas production within the State (oil and gas is produced in …
With its abundance of valuable natural resources, Texas has become a legal battleground for a variety of oil and gas interests. One such interest, the ownership of highly sought after pore space, has been at the center of multiple property …
When Texas landowners work with oil and gas companies, they typically sign a standard lease specifying how royalties will be paid. Some of these standard leases were written over 100 years ago and thus may include, addendums and amendments that …
“Anti-washout” clauses prevent certain oil and gas royalties from lapsing over time. Recently, in Yowell v. Granite Operating Co., 557 S.W.3d 794 (Tex. App.—Amarillo 2018, pet. granted), the Texas Court of Appeals for the Seventh District affirmed the trial court’s determination that an “anti-washout” provision in a mineral assignment did not extend an overriding royalty interest (“ORRI”) to new leases. The Court effectively nullified the provision because it violated the Rule Against Perpetuities. The Texas Supreme Court granted Yowell’s petition for review, setting oral arguments for January 2020.
Oil and gas leases usually include royalty provisions requiring the lessor pay a percentage of revenue (a royalty) to the owner of the mineral rights. Production costs are almost always deducted before a royalty is calculated, but when the royalty vests can affect which production costs are deducted before calculation. The Texas Supreme Court recently held that post-production costs were also properly deducted from overriding royalty payments where the interest vested “into the pipeline” in Burlington Resources Oil & Gas Company, L.P. v. Texas Crude Energy, LLC (No. 17-0266).
Many Texas families and companies have been built on the back of oil and gas production. In Texas, mineral rights—the entitlement to explore and produce subsurface minerals, like oil and gas—can be separated from surface rights and sold, leased, gifted, split or otherwise conveyed relatively freely. The complexities of mineral rights leases were the focus of a recent $41 million judgment against EP Energy E&P Company, LP, a Texas oil and gas company. The case is Storey Minerals, Ltd., et al. v. EP Energy E&P Company, L.P., Case No. 001-36253, in the 81st Judicial District of La Salle, County, Texas.
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