Recent Cases

Published on: June 27, 2025

Texas Supreme Court Opines on Ownership of Produced Water

The Supreme Court has handed down its opinion in Cactus Water Services, LLC v. COG Operating, LLC, a dispute over ownership of produced water. Its holding: COG, the operator, owns the produced water.

Between 2005 and 2014, the Colliers granted leases covering 37,000 acres of land in Reeves County to COG. The leases granted lease of only “oil and gas” or “oil, gas and other hydrocarbons.” COG has drilled 72 horizontal wells, and production from those wells has generated nearly 52 million barrels of produced water. Between December 2018 and March 2021 COG paid nearly $21 million in disposal fees to a third party to dispose of the produced water.

In 2019 and 2020 the Colliers signed “produced water lease agreements” with Cactus Water Services, conveying to Cactus water from oil and gas producing formations and flowback water under the lands covered by the COG leases. Cactus then notified COG of its claim to the produced water, and COG sued for a declaration that it, not Cactus, owns the produced water. The trial court agreed with COG, and the court of appeals affirmed with one dissent. 676 S.W.3d 733 (Tex.App.—El Paso 2023). Cactus obtained review in the Supreme Court.

Continue reading →

Published on: June 10, 2025

Texas Supreme Court’s Final Word on Ownership of Pore Space

By John McFarland

In Myers-Woodward v. Underground Services Markham, No. 22-0878, the Texas Supreme Court removed any doubt that pore space is owned by the owner of the surface estate, not the mineral estate.

Myers Woodward owns the surface estate of 160 acres in Matagorda County. It also owns a 1/8^th royalty on oil, gas and other minerals produced from the land.

Underground Services Markham (USM) owns the salt and salt formations under the 160 acres. USM produced some 2.7 tons of salt from the property between 2015 and 2019. The salt is mined by injecting water into the salt formation, pumping the resulting brine back to the surface and extracting the salt from the brine, creating an underground “salt cavern.”

Continue reading →

Published on: March 26, 2025

Iron Bar Holdings v. Cape – Tales of the Wild West

By John McFarland

I ran across a fascinating opinion from the 10^th Circuit Court of Appeals that provides a window into Wyoming history. Iron Bar Holdings v. Cape, No. 23-8043, decided March 18.

The facts are these: Iron Bar Holdings owns a ranch in southwest Wyoming covering 50 square miles. But within its boundaries are some 11,000 acres of federal and state public lands, some of which are completely enclosed by Iron Bar’s lands. In 2020, three hunters from Missouri decided to travel to Wyoming to hunt elk on public land within Iron Bar’s ranch. They could get to one section wholly surrounded by Iron Bar sections only by crossing over the corner touching two sections of federal land. So they stepped across the corner from Section 14 to Section 24, without setting foot on Section 13 or Section 23.

As stated by the court, “Iron Bar is not friendly to corner-crossers.” It erected no trespassing signs at the corners, and its employees harassed the hunters. But in 2020 they did hunt on Section 24. They returned in 2021 to do the same, but this time Iron Bar convinced the local prosecuting attorney to prosecute the hunters for criminal trespass. They were acquitted in a jury trial. Not satisfied, Iron Bar sued the hunters for civil trespass, seeking $9 million in damages. It is this civil case that eventually ended up in the 10^th Circuit.

Continue reading →

Published on: March 10, 2025

Basic Energy Services v. PPC Energy LLP – Another Case on Injection Wells in the Delaware Mountain Group

By John McFarland

The Delaware Mountain Group is a group of formations including the Bell Canyon, Cherry Canyon and Brushy Canyon formations, deposits in ancient canyons filled in over the ages, and are productive of oil and gas. These formations lie above parts of the Wolfcamp formation in the Permian Basin. Disposal of produced water in the Permian has become a big problem, and the Texas Railroad Commission has granted permits for disposal wells that inject produce water into depths within the Delaware Mountain Group. These disposal wells have caused water to migrate to producing wells in the Delaware Mountain Group, killing those wells. The disposed water from these wells has also migrated to long-abandoned wells causing gushers of produced waters from the abandoned wells.

In Basic Energy Services v. PPC Energy, No. 08-23-00218-CV in the El Paso Court of Appeals, PPC Energy operated several marginal wells producing from the Delaware Mountain Group. It sued several disposal well operators in the vicinity for killing nine of PPC’s producing wells, resulting in a total loss of their remaining reserves. PPC settled with all disposal well operators except Basic. (Basic’s well was 6,300 feet from PC’s nearest well.) At trial, the jury found that Basic’s disposal well was responsible for 60% of PPC’s losses, and the trial court entered a judgment for PPC of $13 million, including interest. Basic appealed.

Basic complained that the charge to the jury was erroneous. The jury was asked:

Continue reading →

Published on: January 28, 2025

Opielas Settle Suits Against Magnolia on Allocation and PSA Wells

By John McFarland

Our firm represented the Opielas in two cases involving a Magnolia horizontal well in Karnes County: a suit against Magnolia in Karnes County, and a suit against the Texas Railroad Commission in Travis County. In both cases the Opielas contended that Magnolia had no right to drill a horizontal well located partly on their land.

Because this was a significant case addressing allocation and PSA wells, this post will go into the somewhat complex facts and history in some detail.

The Opielas’ lease covers some 640 acres; they acquired the property subject to an old existing lease that was held by production from vertical wells. Enervest and Magnolia drilled some horizontal EagleFord wells located wholly on the lease. The old lease provided for 1/8 royalty, and 3/4 of the royalty had been reserved or transferred to other owners long before Enervest acquired the lease, so the Opielas owned only 1/4 of 1/8 royalty. But the old lease prohibited pooling for oil wells. Enervest sought a lease amendment permitting pooling, but they were not able to reach agreement with the Opielas.

Continue reading →

Published on: January 13, 2025

Hahn v. ConocoPhillips: When is a Stipulation Enforceable?

By John McFarland

On the last day of 2024 the Texas Supreme Court issued its opinion in ConocoPhillips v. Hahn, No. 23-0024, putting to rest a long-running dispute between Kenneth Hahn and ConocoPhillips (COP). The opinion deals with a fixed vs. floating NPRI reservation, and a stipulation of interest addressing the reservation.

Kenneth Hahn owned the surface estate and 1/4th of the minerals in 37 acres of land in DeWitt County. In 2002 Hahn conveyed the tract to William and Lucille Gips, reserving

an undivided one-half non-participating interest in and to all of the royalty [Hahn] now owns (same being an undivided one-half of [Hahn’s] one-fourth or an undivided one-eighth royalty) ….

Continue reading →

Published on: December 12, 2024

Two Decisions by Eastland Court of Appeals on Fraction-of-Royalty Issue

By John McFarland

Another case interpreting a royalty reservation in an old conveyance has been decided by the 11th Court of Appeals in Eastland: Boren Descendants and Mabee Descendants v. Fasken Oil and Ranch, Ltd., two consolidated appeals, Nos. 11-22-00365-CV and 11-23-00001-CV. This is the first skirmish in a fight that will undoubtedly end up in the Texas Supreme Court.

In 1933, Midland Farms Company sold to J.E. Mabee 60,000 acres of land in Andrews and Martin Counties. The deed reserves “an undivided one-fourth (1/4th) of the usual one eighth (1/8th) royalty.” The Boren and Mabee descendants are the successors-in-interest of J.E. Mabee in the minerals under this 60,000 acres. Fasken Oil and Ranch, Ltd. is the successor to Midland Farms Company and owner of the reserved royalty. Fasken is also the operator of wells on the 60,000 acres.

Fasken sued the Boren and Mabee descendants in 2019, contending that the 1933 deed reserved a floating 1/4th of the royalty. The Boren and Mabee descendants raised several affirmative defenses, including waiver, division order estoppel/estoppel by contract, judicial estoppel, estoppel by deed, limitations, ratification and/or quasi-estoppel, and presumed grant. The trial court sided with Fasken on construction of the royalty reservation and entered partial summary judgment denying the Boren and Mabee affirmative defenses, leaving only the question of damages. The judge suggested, and the parties agreed, to appeal the legal issues in both cases. The Eastland Court of Appeals affirmed the trial court’s rulings and remanded the cases.

Continue reading →

Published on: October 18, 2024

Gill v. Hill — another chapter in due process law in Texas

By John McFarland

In Mitchell v. Map Resources, the Texas Supreme Court described the constitutional right of due process as follows:

The Due Process Clause of the United States Constitution prevents the government from depriving a person of his or her “property, without due process of law.” U.S. Const. amend. XIV, § 1; see also Tex. Const. art. I, § 19 (“No citizen of this State shall be deprived of … property … except by the due course of the law of the land.”).⁷ It is well settled that these words “require that deprivation of life, liberty or property by adjudication be preceded by *189 notice and opportunity for hearing appropriate to the nature of the case.” Mullane, 339 U.S. at 313, 70 S.Ct. 652. Notice must be “reasonably calculated, under the circumstances, to apprise interested parties of the pendency of the action and afford them the opportunity to present their objections.” Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 84, 108 S.Ct. 896, 99 L.Ed.2d 75 (1988) (quoting Mullane, 339 U.S. at 314, 70 S.Ct. 652).⁸

Gill v. Hill, 688 S.W.3d 863, decided by the Texas Supreme Court in January, grows out of a very similar set of facts the court reviewed in Mitchell v. Map Resources in 2022.

Continue reading →

Published on: August 22, 2024

Who can enforce a pipeline burial covenant in an oil and gas lease?

By John McFarland

Unitex WI, LLC v. CT Land and Cattle Co., decided by the Amarillo Court of Appeals, petition for review pending in Texas Supreme Court.

CT Land and Cattle owns the surface estate of 4,000 acres in Scurry and Kent Counties. The land is subject to an oil and gas lease signed in 1948 to Humble Oil & Refining Company. Unitex is the operator of some 200 wells on the property. The oil and gas lease provides: “When required by Lessor, Lessee will bury all pipelines below ordinary plow depth.” Multiple pipelines serving those wells lie on the surface of the land.

CT Land wrote Unitex, requesting that all pipelines be buried, per the burial covenant in the lease. Unitex refused; CT Land sued; and the district court in Lubbock County entered an order requiring Unitex to bury its lines. Unitex appealed.

Continue reading →

Published on: July 10, 2024

Ammonite Oil & Gas v. Railroad Commission – Supreme Court opinion on MIPA

By John McFarland

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.

Continue reading →