Oil and Gas Lawyer Blog

Published on: December 13, 2016

Texas Agriculture Law Blog

Every year, the ABA Journal of the American Bar Association publishes a list of its 100 best blogs related to law topics. One of those on this year’s list is the Texas Agriculture Law Blog, published by the Texas A&M AgriLife Extension Service. The author is Tiffany Dowell Lasmet, an Assistant Professor and Extension Specialist in Agricultural Law at A&M. The ABA Journal reports that

Enviromnmental laws, animal safety, real estate and property issues, food safety and fracking are all issues that Texas farmers and ranchers have to contend with, and this blog does a great job of analyzing how recent court decisions or state legislation can affect them. Texas has long been on the cutting edge of energy law, and this blog also offers excellent examinations of how energy companies and agriculturists are dealing with their often-competing interests.

Check it out. Good information about ad valorem tax exemptions, hunting leases, solar leases, hydraulic fracturing, water law and more.

Published on: December 5, 2016

OPEC and Crude

By John McFarland

With OPEC’s announced reduction in crude production, it might be good to take the long view. Below is chart of crude prices since 1985. The period between 2005 and today has seen a revival of the US oil industry. Companies have now bet that they can make money at $50/bbl, at least in the Permian. While significant, OPEC’s announced reduction (1) has not yet been realized and (2) is a small percentage of total world oil production. If drilling rigs return to the field in the numbers present in 2008-2014, Opec’s reduction can easily be made up by increased production from US fields. (click on charts to enlarge)

Published on: November 18, 2016

Quakes and the Commission

By John McFarland

The Dallas Morning News has published an excellent, in-depth investigative report — “Seismic Denial? Why Texas Won’t Admit Fracking Wastewater is Causing Earthquakes,” by Steve Thompson and Anna Kuchment — about the Texas Railroad Commission’s failure to recognize or address the relationship between salt water disposal wells and earthquakes in North Texas, and the industry’s influence on the process. Anyone who wants to know how the Railroad Commission really works should read this article. In an accompanying editorial, the News said:

Not only has the Texas Railroad Commission consistently denied man-made earthquakes in the face of compelling science, it also worked overtime to protect the oil and gas industry from accountability for its role in an earthquake swarm that rattled Azle and Reno [in North Texas] in late 2013 and early 2014.

The editorial remarks on the substantial campaign contributions received by commissioners, all of whom are elected, from exploration companies. The Commission is under sunset review (again) this session and must be re-authorized by the Legislature next year. The editorial continues:

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Published on: November 17, 2016

The Permian Boom

By John McFarland

The news this week is full of stories about the EIA’s new figures on the amount of recoverable oil in the Permian Basin. Unlike the rest of the country, the rig count in the Permian is rising and is now equal to all other rigs in the country combined. Permian oil production exceeds that from the Eagle Ford and the Bakken. And unlike all other plays, production from the Permian continues to grow. From EIA’s Drilling Productivity Report (click to enlarge):

Published on: November 15, 2016

Harold Hamm, Donald Trump, and Earthquakes

By John McFarland

National press have reported that oil tycoon Harold Hamm, billionaire founder and CEO of Continental Resources, is being considered for Energy Secretary in the Trump administration. Last year, it was reported that Hamm pressured the University of Oklahoma to dismiss scientists who were studying links between disposal wells and earthquakes in Oklahoma. (Google Harold Hamm and earthquakes.) Since that time, the Oklahoma Corporation Commission has been forced to order severe curtailment of salt water disposal to lessen incidence of earthquakes. Most recently, a 5.0 quake hit near Cushing, OK, the site of the largest oil and gas storage facility in the U.S., forcing shutdown of some pipelines and causing significant property damage in the town of Cushing.

Published on: November 14, 2016

Pennsylvania Appellate Court Dismisses Landowner’s Claim Against Range Resources of Water Well Contamination

By John McFarland

The Commonwealth Court of Pennsylvania last month issued its decision in Kiskadden v. Pennsylvania Department of Environmental Protection, copy of opinion here: Kiskadden. Kiskadden claims that chemicals from Range Resources’ Yeager wells, located about a half-mile from Kiskadden’s water well, contaminated his well. One judge dissented. The Commonwealth Court is an intermediate court of appeals in Pennsylvania, so Kiskadden can appeal to the Pennsylvania Supreme Court.

The case began with Kiskadden’s complaint to the Pennsylvania Department of Environmental Protection. The DEP conducted an investigation and held a hearing and concluded that Kiskadden’s well was not contaminated by Range’s operations. Kiskadden appealed to the Board of the DEP. The parties conducted extensive discovery. Kiskadden refused to produce a list of all products and the composition of products used at the Yeager drillsite, but Range refused to produce that information. The Board then ruled that it would grant a “rebuttable presumption” that the chemicals found in Kiskadden’s water well were presumed to be present at the Yeager drillsite. In effect, this shifted the burden of proof to Range to show that it had not contaminated the well. After a hearing before the Board, it issued extensive findings and conclusions and affirmed the conclusion of the Department that chemicals spilled at Range’s site were not the source of the contamination of Kiskadden’s well. Continue reading →

Published on: November 7, 2016

Texas Sunset Advisory Commission to Vote on Final Recommendations for Railroad Commission Sunset Legislation

By John McFarland

The Sunset Advisory Commission will meet November 10 to vote on its recommendations to the Texas legislature for legislation to continue the Railroad Commission for another 12 years. Committee members have proposed modifications to several of the staff report, and also add several additional recommendations. The staff recommendations and proposed modifications submitted by Commission members can be viewed here. Decision Meeting Material_November Proposed changes/additions of interest to land and mineral owners include:

Chairman Gonzales and Representative Flynn propose to eliminate recommendation that the Commission’s name be changed to a name that reflects the agency’s functions.
From Representative Raymond:

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Published on: November 4, 2016

Will Rogers and Politics

By John McFarland

“Liberty doesn’t work as well in practice as it does in speeches.”

“Democrats never agree on anything, that’s why they’re Democrats. If they agreed with each other, they would be Republicans.”

“If you ever injected truth into politics you would have no politics.”

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Published on: October 31, 2016

Two Sanchez Oil & Gas Deals in the Eagle Ford

By John McFarland

The Wall Street Journal reported that Sanchez Energy Corp is in talks to buy Anadarko’s leases and production in the Eagle Ford, partnering with Blackstone Group LP, for $3 billion to $3.5 billion. Separately, Sanchez Energy is selling $181 million of “non-core” Eagle Ford leases, about 15,000 acres, to Carrizo Oil & Gas Inc. Carrizo will fund the purchase with sale of 6 million shares of common stock.

The Sanchez-Anadarko deal would be a big bite for Sanchez, which has a market cap of $472 million and $1.7 billion in long-term debt. Sanchez entered the Eagle Ford play by buying Hess’s leases, and in 2014 it bought Shell’s lease position for $639 million. Anadarko’s Eagle Ford leases are principally in Dimmit and Webb Counties, including the Briscoe Ranch, in all more than 1600 producing wells.

Published on: October 25, 2016

Two New Cases: Fractional Royalty, Fraction of Royalty, or Mineral Interest?

By John McFarland

Two new opinions, one from the San Antonio Court of Appeals and one from the El Paso Court of Appeals, again tackle the task of construing mineral and royalty conveyances and reservations. A spate of these cases has arisen as a result of the recent shale plays, where lands never before productive have suddenly become valuable. As a result, muddy language in old deeds has to be clarified by the courts.

In Laborde Properties, L.P. v. U.S. Shale Energy II, LLC, the San Antonio Court of Appeals was required to construe the following mineral reservation in a 1951 deed:

There is reserved and excepted from this conveyance … an undivided one-half (1/2) interest in and to the Oil Royalty, Gas Royalty and Royalty in other Minerals in and under or that may be produced or mined from the above described premises, the same being equal to one-sixteenth (1/16) of the production.

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