Seeligson v. Devon Energy: Gas Processing Fee Class Certified

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).

Crawford v. XTO Energy, Inc., No. 02-18-00217-CV, 2019 Tex. App. LEXIS 11066 (Tex. App.—Fort Worth Dec. 19, 2019, pet. filed)

The Fort Worth Court of Appeals held that the “strip and gore doctrine” applied to a 1984 conveyance of 76 acres, causing the conveyance to also include a severed mineral interest underlying an adjacent 8.25-acre strip of land.

Chalker Energy Partners III, LLC v. Le Norman Operating LLC, No. 18-0352, 2020 Tex. LEXIS 161 (Tex. Feb. 28, 2020);

Copano Energy, LLC v. Bujnoch, No. 18-0044, 63 Tex. Sup. Ct. J. 348, 2020 Tex. LEXIS 49, (Jan. 31, 2020)

In response to COVID-19, many companies and their employees have quickly shifted to a “work from home” model. Even though email has been a large part of business for decades, the new “remote” reality has only increased our reliance on electronic communications. In a pair of recent cases, the Texas Supreme Court was tasked with deciding what role email plays in contract formation. As companies continue to conduct an extensive amount of business electronically, it is important to keep in mind what effect courts will give to agreements formed through email conversations.

WTX Fund, LLC v. Brown, No. 08-17-00104-CV, 2020 Tex. App. LEXIS 94 (Tex. App.—El Paso Jan. 8, 2020, pet. filed)

In WTX Fund v. Brown, the El Paso Court of Appeals reviewed a dispute as to whether language in a 1951 mineral deed was sufficient to reserve a royalty interest in whole or in part. That issue turned largely on the meaning of the phrases “shall not affect” and “benefits.” Ultimately, the El Paso Court of Appeals held that, under the holistic four-corners approach, the proper interpretation was that the deed reserved the entirety of the grantor’s royalty interest.

Piranha Partners v. Neuhoff, No. 18-0581, 63 Tex. Sup. Ct. J. 474, 2020 Tex. LEXIS 136 (Tex. Feb. 21, 2020)

Where parties assign an interest in a lease with a single existing well, disputes can sometimes arise when the leasehold is further developed. Was the parties’ intent for the assignment to be limited to that single wellbore or did it also include production from later-drilled wells? The Texas Supreme Court reviewed a dispute as to whether an assignment of an overriding royalty interest conveyed an interest limited to an entire lease, a single well, or to the lands identified in the assignment.

Atmos Energy Corp. v. Paul, No. 02-19-00042-CV, 2020 Tex. App. LEXIS 1926 (Tex.App.-Ft. Worth, Mar. 5, 2020, no pet.)

In this case the Fort Worth Court of Appeals held that a “blanket easement” for multiple pipelines did not require the grantee to lay the additional pipelines along the same route as the initial pipeline, but rather the grantee was permitted to lay the additional pipeline anywhere upon the entire tract so long as its location does not unreasonably interfere with grantor’s property rights.

Mesa Southern CWS Acquisitions, LP v. Deep Energy Exploration Partners, LLC, No. 14-18-00708-CV, 2019 Tex. App. LEXIS 10107 (Tex. App.—Houston [14th Dist.] November 21, 2019, no pet.).

The Fourteenth Court of Appeals in Houston held that provisions within a master service agreement, stating that a subcontractor could only seek payment or damages exclusively from the contractor, were effective to preclude that subcontractor from enforcing a mineral lien against the mineral property owner. In effect, some have interpreted this case as allowing a de facto lien waiver for Chapter 56 mineral liens, despite the prohibition on lien waivers under §53.286 of the Property Code. While Chapter 56 (providing for mineral liens) does not expressly address lien waivers, §56.041 does expressly provide that “A claimant must enforce the lien within the same time and in the same manner” as a Chapter 53 lien. For this reason, the subcontractor argued that this provision in the master service agreement was a de-facto mineral lien waiver, unenforceable and void as against public policy pursuant to §53.286. The appellate court disagreed, dismissed its claims, and ordered it to release its liens.