9 Most Favored Nations Clause Leads to $41 million Judgment

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.

In 2018, Storey Minerals Ltd., Maltsberger Storey Ranch LLC, and Rene R. Barrientos Ltd., sued EP Energy for breaching the most favored nations clauses of their mineral leases. A most favored nations clause requires a mineral lessor pay the mineral interest owner as well as it pays any other mineral interest owners within a specified area. These provisions are commonly used to assure all mineral interest owners within a unitized field are paid equal royalties and bonuses. In this case, the mineral interest owners—whose leases provided $500 per acre bonuses—alleged EP Energy breached by not matching the $5,200 per acre bonuses paid in leases it had recently acquired. The Court agreed and, in July, signed a combined $41 million judgment in the mineral owners’ favor.

Houston Oil and Gas Attorneys

The Houston oil and gas lawyers at Burford Perry LLP have extensive experience handling a wide variety of oil and gas issues for companies large and small. We have successfully represented both mineral owners and oil and gas producers in mineral right and lease disputes. In 2018, the firm successfully reached a confidential settlement in favor of its mineral interest-owning clients in a most favored nations clause-based dispute against two major oil and gas companies. Contact us today to schedule a consultation to discuss your oil and gas litigation needs.