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Earlier this year, the Corpus Christi Court of Appeals was called on to interpret the rights provided by a production sharing agreement. A production sharing agreement is an agreement between an oil company-lessee and the lessor mineral owners setting out how a horizontal well’s production will be allocated to the various mineral owners. In Hamilton v. Conoco Phillips, the Plaintiff and Defendant had signed a production sharing agreement.

The production sharing agreement contained the following language:

5. Surface Use, To the extent Owner may own any interest in the surface estate within the Lease, Owner giants Burlington easements (including subsurface easements) and rights-of-way (including all reasonable ingress and egress rights) on, in, and under the Leases associated with any Sharing Well, including easements and rights-of-way for:

The American Society of Farm Managers and Rural Appraisers recently published its “Texas Rural Land Value Trends” for 2021. According to its website “Chapter members from all the regions of Texas provide data to develop the annual market study.” The study is a good source for current land values, leasing rates and even hunting lease rates. You can download a copy of the study without charge at the ASFMRA website.

The Texas Supreme Court recently decided a case involving a covenant to protect against drainage. In Rosetta Resources Operating, LP v. Martin, the Court considered several issues, one of which was whether the covenant had been triggered by language in the addendum to the oil and gas lease.

Rosetta and two other companies drilled a well on property that was near but not adjacent to the pooled unit that contained a portion of the Martin’s property. The Martins sued, based on language in the addendum, claiming Rosetta and another oil company failed to protect them from drainage by the nearby well. The Court held that the covenant in the addendum was subject to competing reasonable interpretations as to when the covenant was triggered and reinstated the trial court’s ruling denying relief to the Martins for violation of the covenant.

All of this underscores how important clear and unequivocal language in the oil and gas lease is.

There are no doubt a number of honest and reputable companies installing residential solar systems in Texas. However, based on the number of folks who call me each month about problems with the company they dealt with, there are a certain number of dishonest and disreputable companies as well.

Residential solar systems are incredibly expensive, often costing between $25,000 and $35,000. Before you spend or finance this kind of money, there are a number of things you can do to make sure you’re dealing with one of the good guys:

• Check out the company’s rating and complaint history at the Better Business Bureau website. In each case where I’ve handled a complaint for a client against a solar system company, that company had numerous complaints listed on the BBB website.

The Fifth Circuit recently denied a landowner damages in their suit against a pipeline company. In Mary v. QEP Energy Co., No. 21-30195 (5th Cir. 2022) the Louisiana landowner had given the pipeline company an easement on their property. The easement had a right angle turn in it. Hard to imagine why the pipeline company agreed to this since pipelines really can’t be installed at right angles. At any rate, when the pipeline was laid, it “cut the corner” at the right angle and was laid partially outside the easement. 31 feet of one pipeline and 15 feet of the other were outside the easement.

The landowner sued for removal of the encroaching pipelines and disgorgement of all profits the pipeline company made from the gas that flowed through the pipeline. The Fifth Circuit held that the landowner could request removal of the pipelines or claim ownership of the portion of the pipelines outside the easement, subject to the pipeline company’s right to receive reimbursement for the current value of the materials and labor or the enhanced value of the land. However, regarding disgorgement of profits, the Court held that “Disgorgement in this circumstance is limited to the additional profits QEP earned, if any, as a direct result of installing the … (p)ipelines partly outside the servitude boundary, as compared to the profits QEP would have earned if it had installed the pipelines entirely within the servitude. ” The Court refused to hold that the landowner was entitled to all profits from gas flowing through the pipelines. Since the landowner did not offer any evidence of additional, incremental, profit due to the misplaced pipelines, the landowner’s claim for disgorgement was denied.

easement

The Texas Supreme Court has recently agreed to hear an appeal in a case involving the Texas Central Railroad. Oral argument is scheduled for January 11, 2022.

The case is Miles v. Tex. Central R.R. & Infrastructure, Inc., 2020 WL 2213962 (Tex. App.—Corpus Christi–Edinburg 2020), pet. granted, (Oct. 15, 2021) [20-0393]. As you may recall, Texas Central wants to build high speed passenger rail service between Dallas and Houston. To do that, while some land may be purchased voluntarily, it will probably need to use eminent domain to obtain most of the land needed for the railroad.

The Plaintiff, Miles, claims that Texas Central has not shown a reasonable probability of project completion, as required by Texas Rice Land Partners, LTD. v. Denbury Green Pipeline-Texas, LLC, 363 S.W.3d 192, 198, 202 (Tex. 2012). Miles asserts that the Denbury decision requires entities show a reasonable probability that a project will be completed before obtaining eminent domain power.Miles contends that Texas Central has not met this standard, and so it does not have eminent domain authority. For example, Miles points out that Texas Central has not yet laid any track or done anything else that could be called operating a railroad. In fact, the Texas Central website admits they have not even bought any land yet, but instead “have control over” about 600 acres of land” (probably through options to purchase).

The U.S. District Court for the Southern District of Texas recently approved a settlement in the case of Regmund v. Talisman Energy U.S., Inc. You can review pleadings in the case here. Three royalty owners filed the class action lawsuit in 2016 alleging that Talisman Energy was under-reporting royalties and was improperly calculating royalties from 2013 to 2016. Talisman was acquired by Repsol S.A. in 2015. The suit claimed that the oil company paid royalties based on estimated sales of oil and gas rather than the actual volume of oil and gas produced and sold.

Talisman and later Repsol had become active in the last few years in the Eagle Ford Shale play area.

In the settlement documents, Repsol denies any wrongdoing. However, it certainly says a lot that they have agreed to repay all $24 million in royalties that the Plaintiffs claim are due.in addition, if Talisman or Repsol were under-reporting royalties to the Texas Railroad Commission, they certainly are going to be in hot water with that agency.

From what I read, it appears that there are many people, including politicians in our federal government, who believe that  electricity produced by solar panels should be a substitute for oil and gas production. However, there are a number of aspects of energy produced from solar panels that don’t appear to be considered:

• studies have indicated that solar panels may actually increase global warming. The reason is that solar panels only convert around 15% of the sunlight that hits them into electricity. The rest is given off into the environment as heat. For small installations of solar panels, that may not be a big deal. But large-scale installations, the kind that would be needed to produce large amounts of electricity, would emit a large quantity of heat, thus potentially raising global temperature. You can read about one study published in 2018 in the journal Science here. Another study that reaches the same conclusion was published in 2016 in the journal Nature and can be reviewed here.
• many of the parts used to build solar panels and the batteries in which the electricity produced by solar panels is stored come from China exclusively. To the extent energy production in the future relies on solar energy, we are going to be at the mercy of China unless we can come up with domestically produced alternatives.

The Texas Supreme Court recently heard a petition for mandamus requesting relief from some of Governor Abbott‘s executive orders that suspended the right of “nonessential” business owners to make a living. The petition was denied for lack of jurisdiction. However, the concurring opinion by Justice John Phillip Devine (that you can read here) sets out a remarkable and eloquent defense of constitutional principals in the context of crises. In his opinion, Justice Devine writes that, while he concurs with the dismissal for lack of jurisdiction, he felt compelled to address the constitutional issues presented by executive orders. To quote Justice Devine:

“…Texans have experienced a suspension of their rights. Suspension of law is serious business. It involves a decision that, at the very least, itself needs a constitutional blessing. In fact, the Texas Constitution speaks to this very issue. In the first article, it states: “No power of suspending laws in this State shall be exercised except by the Legislature.” This provision means what it says. The judiciary may not suspend laws. Nor may the executive. Only the Legislature. … As Relators point out, in Brown Cracker & Candy Co. v. City of Dallas, this Court long ago held that article I, section 28 (of the Texas Constitution) does not permit the Legislature to “delegate to a municipal corporation or to anyone else, authority to suspend a statute law of the State.

Despite this clear constitutional exhortation, we review orders from the Governor that purport to be made under the Texas Disaster Act of 1975, which says that the “governor may suspend provisions of any regulatory statute prescribing the procedures for conduct of state business . . . .” I find it difficult to square this statute, and the orders made under it, with the Texas Constitution.