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2012 AAPL ANNUAL MEETING SPONSORS PLATINUM GOLD SILVER SAN FRANCISCO SEMINAR GOLF A wholly owned subsidiary of ExxonMobil BRONZE
58 th Annual Meeting - San Francisco June 13-16, 2012 Litigation Update on Oil & Gas Royalty Lawsuits and Other Contract Disputes of Interest to Landmen AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court finds that proposing party invoked an inapplicable provision of the JOA, providing for a 48-hour response period, in bad faith. Chisos, Ltd. v. JKM Energy, L.L.C., 258 P.3d 1107 (N. M. App. 2011). (Page 4 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court addresses attempt by non-consenting party to avoid the non-consent penalty under special provision of JOA. Long v. RIM Operating, Inc., 2011 WL 1431476 (Tex. App. – Eastland 2011). (Page 2 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Article XV.K. of the JOA: “ As to any required well or required operation proposed by any party hereto in which any other party hereto elects not to participate, the non-participating party shall release and relinquish forever proportionately to the participating parties all of non-participating party ’ s interest in and to the lease or leases or interest... herein which would be perpetuated by such required well or required operation. ” AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court addresses disputes concerning timely commencement of operations, fiduciary duty and contractual duty of good faith under the 1989 JOA. Bays Exploration, Inc. v. PenSa, Inc., 771 F.Supp.2d 1289 (W.D. Okla. 2011). (Page 5 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court allows Operator to recoup mistaken over- payment of production proceeds. Marlin Oil Corp. v. Lurie, 417 Fed. Apex. 740 (10th Cir. 2011). (Page 7 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Ability of operator to recoup over-payments on one well from payments owed to owner on different wells. Nelson v. Linn Midcontinent Exploration, L.L.C., 2009 OK CIV APP 99, 228 P.3d 533. (Page 7 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Party who proposes a new well under the JOA is sued for failing to follow-through and timely commence the new well. Valence Operating Co. v. Anadarko Petroleum Corp., 303 S.W.3d 435 (Tex. App. – Texarkana 2010). (Page 8 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update New Operator (not a successor to prior Operator) found to be bound by terms of JOA even though he did not sign it; Court determines scope of exculpatory clause, duty to not plug well without notice to non-operators and other issues. Reeder v. Wood County Energy, L.L.C., 320 S.W.3d 433 (Tex. App. – Tyler 2010). (Page 9 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court addresses statute of limitations issues and cash balancing rights under gas balancing law principles. Sanderson v. Yale Oil Assoc., 2010 OK CIV APP 129, 246 P.3d 1109. (Page 14 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Underproduced party asserts conversion claim against Operator who is alleged to have under- stated the extent of the plaintiff’s underproduction account. Chaparral Energy, L.L.C. v. Pioneer Exploration, Ltd., 2010 OK CIV APP 126, 241 P.3d 1161. (Page 15 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Judgment on jury verdict in favor of royalty owners is reversed on appeal. Occidental Permian Ltd. v. Helen Jones Foundation, 333 S.W. 3d 392 (Tex. App. – Amarillo 2011). (Page 17 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Deduction of gas processing fees from royalty payments was allowed in order to recoup a proportionate share of the lessee's monthly operating costs and capital investment. Pursue Energy Corp. v. Abernathy, 2011 WL 5027134 (Miss. 2011). (Page 19 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Courts uphold the deduction of post-production costs from royalty payments applying Kentucky law. Poplar Creek Development Co. v. Chesapeake Appalachia, L.L.C., 636 F.3d 235 (6th Cir. 2011). (Page 20 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update North Dakota Supreme Court determines legal standards for the deduction of post- production costs from royalty payments. Bice v. Petro-Hunt, L.L.C., 2009 ND 124, 768 N.W.2d 496 (2009). (Page 23 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Landowners assert that oil and gas leases became ineffective when lessee failed to timely pay the balance of the agreed upon bonus sums. Irish Oil and Gas, Inc. v Riemer, 2011 ND 22, 794 N.W.2d 715. (Page 29 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update "Within 60 days upon receipt of the signed lease, and subject to approval of title... you will receive a check in the amount of $10,640.00. On January 15, 2009 you will receive the balance of bonus consideration in the amount of $10,640.00." AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court upholds lessee's contention that the subject well had not been completed until it was hydraulically fractured. Bledsoe Land Co. LLLP v. Forest Oil Corp., 2011 WL 2474407 (Colo. App. 2011). (Page 30 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court holds that the lessee's attempts to restore an old, plugged well did not satisfy the requirements of the lease that the lessee "commence operations for drilling a well." Bedore v. Ranch Oil Co., 805 N.W.2d 68 (Neb. 2011). (Page 31 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court rejects attempts to invoke forfeiture provision in oil and gas leases based upon inadequate prior notice and demand by the mineral owner. Vinson Minerals, Ltd. v. XTO Energy, Inc., 335 S.W.3d 344 (Tex. App. – Ft. Worth 2010). (Page 32 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Oil and gas producers assert that New York's de facto moratorium on exploration of the Marcellus Shale formation utilizing horizontal high- volume fracking constituted an event of force majeure excusing performance under leases. Wiser v. Enervest Operating, L.L.C., 2011 WL 3586014 (N.D.N.Y. 2011). (Page 34 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court found that well drilled anywhere in the unit fulfilled contractual obligation to drill a well on a particular tract within the unit. Holland v. EOG Resources, Inc., 2010 WL 1078480 (Tex. App. – Waco 2010). (Page 35 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court reviews claims that oil and gas leases terminated due to 17 - year absence of gas sales and for other causes. Concorde Resources Corp. v. Kepco Energy, Inc., 2011 OK CIV APP 39, 254 P.3d 734. (Page 37 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court determines the consequence of a forged contract. Raven Resources, LLC v. Legacy Reserves Operating, LP, 2012 WL 112237 (Tex. App.- Eastland 2012). (Page 40 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court rejected contention that a series of emails between lease broker and mineral owners resulted in a binding contract for the purchase of oil and gas leases Ballard v. XTO Energy, Inc., 784 F.Supp.2d 635 (W.D. La. 2011). (Page 43 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court reviews principles of agency law to determine if gas trading company had the authority to bind gas buyer to agreements with gas producer. Reliant Energy Services, Inc. v. Cotton Valley Compression, L.L.C., 336 S.W.3d 764 (Tex. App. – Hous. 2011). (Page 46 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court addresses oil and gas title disputes arising from termination of the JOA and its impact on mineral owner who was subject to “deemed oil and gas lease” under the terms of the JOA. Prize Energy Resources, L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537 (Tex. App. – San Antonio 2011). (Page 48 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Mineral Deed is cancelled based on the omission of the buyer/grantee to disclose certain facts to the seller/grantor in the negotiation process. Harbour Mineral Properties v. Pence, 82 O.B.J. 585 (Okla. App. 2011 - #108,822) (Not for Publication). (Page 50 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Owner whose predecessor's name was incorrectly spelled in notice of forced-pooling application challenges validity of the pooling order. Tucker v. New Dominion, L.L.C., 2010 OK 14, 230 P.3d 882. (Page 51 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Correct Name: Olinka Hrdy Regulatory Notice incorrectly spelled the name as: Olinka Hardy AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court rejects assertion that the negotiations and communications between the parties had formed a binding agreement to sell and buy oil and gas assets. WGT Gas Processing, L.P. v. ConocoPhillips Co., 2010 WL 695801 (Tex. App. – Houston 2010). (Page 52 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court addresses dispute over whether the assignment of oil and gas lease was a well bore only assignment or whether it covered the full oil and gas lease. Plano Petroleum, LLC v. GHK Exploration, L.P., 2011 OK 18, 250 P.3d 328. (Page 55 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court holds that oil and gas lessee could still bring inverse condemnation suit against the City of Houston even where city employee acted without authorization in shutting down the oil company’s operations. City of Houston v. Maguire Oil Co., 342 S.W.3d 726 (Tex. App. – Hous. 2011). (Page 57 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court finds that exploration and production company did not show that it was a “pipeline company” entitled to use condemnation rights under Oklahoma law for purposes of constructing a pipeline. D-Mil Production, Inc. v. DKMT, Co., 2011 OK 55, 260 P.3d 1262. (Page 59 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
Oil & Gas Litigation Update Court reverses finding in condemnation action that the plaintiff and landowner had reached an enforceable "oral" agreement as to the amount of damages to be paid. Enbridge Pipelines (East Texas) L.P. v. Camp Cooley, Ltd., 2010 WL 216368 (Tex. App. – Waco 2010). (Page 62 of Paper) AAPL - Copyright © 2012. All Rights Reserved.
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