Almost a year ago, a district court in Travis County ruled that the Texas Railroad Commission had violated Texas’ Administrative Procedure Act by issuing a well permit to Magnolia Oil & Gas after informally adopting rules for issuance of permits for allocation wells and “PSA” wells (production-sharing-agreement wells) without complying…
HB 3794 This bill, signed by the Governor, fixes a problem with the provisions of the Texas Business and Commerce Code that grant a security interest in oil and gas production and proceeds to secure the payor’s obligation to pay royalty owners. I have written about this problem before. Previous…
Today a district court in Travis County held that the Texas Railroad Commission violated the Administrative Procedure Act by informally adopting rules for issuance of allocation and production sharing well permits without following the rule-making procedures of the Act. The Court ruled in an appeal by a mineral owner of…
We’ve recently seen several requests for royalty owners to sign a production sharing agreement for a unit-line or lease-line allocation well. Such a well would be drilled along the boundary of two existing leases or pooled units. So, unlike most allocation wells, production can’t be allocated based on the portion…
Here is a permit plat for a new MD America Well in Madison County. All wells shown, including the new well, are in the MadisonVille, W. (Woodbine -A-) Field. Every well but two on the plat is an allocation well. Click on image to enlarge.
Our firm filed suit last week to challenge Devon Energy Production Company’s permit for an “allocation well” in Ward County. Monroe Properties, Inc., et al. v. Railroad Commission of Texas, Cause No. D-1-GN-18-001111, 53rd District Court, Travis County. A copy of the petition may be viewed here. Monroe v. RRC…
A client recently asked me whether he should sign a production sharing agreement. I replied that this is not an easy question to answer. First, the nomenclature. These terms are not defined anywhere and their usage is not always consistent, but here’s what I mean when I use these terms:…
Three recent articles have intensified the debate over whether allocation wells are authorized by a typical oil and gas lease. Two of the articles appear in the most recent edition of the Section Report of the Oil, Gas & Energy Resources Law Section of the State Bar. The first, written…
So you have received a division order, and it says that ABC Oil Company will pay you for a .015625 royalty interest in the Barn Burner Unit #1 Well. How do you know whether the .015625 interest is correct? I’ve written previously about the purpose and legal effect of division…