Forum Selection Clauses and Trespass to Try Title v. Declaratory Judgment

In SM Energy v Union Pac. R.R. Co., the Texas Court of Appeals for Eastland held that SM Energy’s cause of action constituted a claim for declaratory judgment rather than trespass-to-try-title. Additionally, the court held that Texas courts did not have exclusive jurisdiction over the claims and allowed enforcement of the lease’s forum selection clause.

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Texas Will Interpretation Guidelines

Prather v. Callon Petroleum Operating Co., Inc., 648 S.W.2d 618 (Tex. App.—Eastland 2022, no pet.). Will Construction.

In Prather v. Callon Petroleum Co., the Eleventh Court of Appeals held that the phrase “survivor(s) thereof,” in the context of a testator’s will, constituted words of survivorship. This dispute centered on whether the testator intended the phrase to create a requirement that the listed beneficiaries survive the testator or whether the testator intended the phrase to prevent a lapse, thus allowing the heirs of the designated beneficiaries to take in their place. The court relied on principles of will construction handed down by the Supreme Court of Texas in prior cases and concluded that the phrase created a requirement that the beneficiaries survive the testator in order to take from the will.

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Texas Fourth Court Addresses Post-Production Costs

EnerVest Operating, LLC v. Mayfield, No. 04-21-00337, WL 4492785 (Tex. App.—San Antonio, Sep. 28, 2022).

Deduction of Fuel Gas from Total Royalties Owed to Lessor.

In EnerVest Operating, LLC v. Mayfield, the Fourth Court of Appeals held that per the subject oil and gas leases, deductions from royalties were proper when attributed to post-production costs, reversing the lower court’s decision. Accordingly, the Court analyzed whether fuel gas was a properly deducted post-production cost from the lessors’ total royalties under the specific language of the leases at issue. The appellate court concluded royalty deductions for fuel gas use in this instance were proper.

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Image highlighting HELG's analysis of the EP Energy vs Storey Minerals case, a key part of our 2022 oil & gas law guide.

Construction of Most-Favored-Nations clause in Oil and Gas Lease.

EP Energy E&P Co., L.P. v. Storey Minerals, LTD, No. 04-19-00534-CV, 2022 WL 223253 (Tex. App.—San Antonio Jan. 26, 2022, pet. filed). Construction of Most-Favored-Nations clause in Oil and Gas Lease.

At issue in this case is the construction of most-favored-nations (MFN) clauses contained in identical oil and gas leases. Specifically, the number of additional bonuses due to lessors upon the triggering of said clause, and whether the lower court failed to consider surrounding circumstances while construing the clause.

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Double-Fraction Texas Deed Case

Davis v. COG Operating, LLC, No. 08-20-00205-CV, 2022 WL 17477948 (Tex. App. –Eastland 2022, no pet. h.). Double Fractions.

In Davis v. COG Operating, the Eighth Court of Appeals interpreted a 1926 deed in which the granting clause purported to convey a 1/32 mineral interest and the rest of the document purported to convey 1/4. In holding that the deed unambiguously conveyed a 1/4 mineral interest, the court noted that 1/32 is the product of 1/4 and 1/8 and that 1/8 was the standard royalty reserved under an oil and gas lease at the time the deed was executed. Additionally, the court held that a subsequent 1939 deed that purported to except the same 1/32 mineral interest effectively put the parties on notice of the 1926 conveyance of 1/4 of the mineral estate.

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