Oil and Gas Lawyer Blog
Last week the Texas Supreme Court handed down its decision in Ammonite v. Railroad Commission, upholding the Commission’s denial of Ammonite’s MIPA application. Justice Young filed a dissenting opinion, joined by Justice Busby. The case has little implication for most mineral owners in Texas but is an important loss for the State of Texas and an important decision for future MIPA applications.
The State of Texas owns the lands within the beds of navigable rivers and waterways, some 80,000 miles of rivers and streams. Where oil and gas development occurs adjacent to rivers, operators often lease those riverbeds and include them in pooled units. Revenues from leasing of State lands goes to the State’s permanent school fund, which funds primary education. But EOG Resources, developing horizontal wells in the Eagle Ford Shale along both sides of the Frio River, decided not to lease the State’s riverbed, and left it out of the units.
Ammonite Oil & Gas, owned by William Osborn (my first cousin) leases riverbeds and stranded State tracts from the General Land Office and works to get them included in adjacent pooled units. If it is unable to reach agreement Ammonite files an action under the MIPA.