Seeligson v. Devon Energy Prod. Co., L.P., Civil Action No. 3:16-CV-00082-K, 2020 U.S. Dist. LEXIS 23166 (N.D. Tex. 2020).
In this royalty class action case, the class plaintiffs alleged that DEPCO improperly passed a 17.5% “gas processing fee” on to all class members by reducing their royalty payments by 17.5% thereby breaching the duty to market. In certifying the class, the court reasoned that because the gas is bought and sold under one contract and determining the rate a reasonably prudent operator would have received (“RPO Rate”) did not require proof of other sales, determining the RPO rate was subject to generalized proof and applicable to the class as a whole. The court also noted that the entire class was comprised of proceeds leases, making it distinguishable from the Texas Supreme Court’s decision in Union Pac. Res. Grp., Inc. v. Hankins, 111 S.W.3d 69 (Tex. 2003).
Energy Transfer Partners, L.P. v. Enter. Prods. Partners, L.P., No 17-0862, Tex. Sup. Ct. J. 340, 2020 Tex. LEXIS (Tex. Jan. 31, 2020).
Energy Transfer Partners, L.P. (“ETP”) claimed that it had entered into a common law partnership with Enterprise Products Partners, LP and Enterprise Products Operating, LLC (collectively, “Enterprise”) to place into operation an oil pipeline. However, in three written agreements the parties had reiterated their intent that neither party would be bound to proceed until each company's board of directors had approved the execution of a formal contract. Thus, the Texas Supreme Court was tasked with determining whether Texas law permits parties to conclusively agree that, as between themselves, no partnership will exist unless certain conditions are satisfied. The Supreme Court affirmed the appellate court’s decision, holding that it does and that ETP and Enterprise had made such an agreement and, as a result, had not entered into a partnership.
Geary v. Two Bow Ranch Ltd., P'ship, No. 04-18-00610-CV, 2020 Tex. App. LEXIS 552 (Tex. App.—San Antonio Jan. 22, 2020, pet. filed).
In this case, grantors under a warranty deed reserved an interest in the minerals but assigned the grantee a so-called “provisional authority” with respect the executive rights. Years later, the grantors file suit against the grantee’s successors, claiming that they breached their alleged contractual or fiduciary duties as executive interest owners. The grantees’ successors responded by disclaiming any ownership interest in the executive rights. The court interpreted the Provisional Authority clause as granting a conditional permission to exercise the grantor’s executive rights. However, the court held that it did not actually convey an ownership interest in the executive rights. Further, the court held that those powers were exercisable by the original grantee alone and would not pass to grantee’s successors or assigns. Therefore, the court concluded that the grantee’s successor could not be liable for any alleged breach of contractual or fiduciary duties as an executive interest owner.
Samson Expl., LLC v. T.W. Moak & Moak Mortg. & Inv. Co., No. 09-18-00463-CV, 2020 Tex. App. LEXIS 443 (Tex. App.—Beaumont Jan. 16, 2020, no pet.).
Held that foreclosure of deeds of trust covering a lessor’s property, which were not made subordinate to the oil and gas leases, terminated the leases and the lessor’s corresponding reversionary interest. As a result, a post-foreclosure purchaser of the mineral interest was not entitled to an accounting from a pooled unit that included the original lease. The court held that, even though the pooling declaration purported to pool “the land” as opposed to the leases themselves, the foreclosures had the effect of terminating the leases and the original lessee’s pooling authority.
Verde Minerals, LLC v. Koerner, No. 2:16-CV-199, 2019 U.S. Dist. LEXIS 207737 (S.D. Tex. 2019).
The grantees under a royalty deed were permitted to maintain suit against their grantors for unpaid royalties, and were not limited to filing suit against the lessee. The royalty deed contained language obligating the grantors to “pay and deliver to [grantees]” all money received by grantors. The court held that, absent specific language to the contrary in a royalty deed, the owner of the executive interest does not effectively assign a prior contractual obligation to pay royalties by executing an oil and gas lease, nor will signing an oil and gas lease release the executive owner from obligations contained within the royalty deed.