Here is a list of bankruptcy cases filed in Texas federal bankruptcy courts this year, from the Houston Business Journal, compiled by Haynes & Boone:
Energy bankruptcies filed in Texas courts in 2016 by month
Company (Texas court filed); debt
Trans-Pecos Pipeline is pursuing condemnation proceedings to acquire right-of-way for its pipeline, a project of Energy Transfer Partners to build a 143-mile, 42-inch pipeline from Fort Stockton into Mexico. Presidio County landowner John Boerschig is challenging the company’s right to use eminent domain to acquire an easement across his ranch. Last week he sued the company in U.S. District Court in Pecos, contending that Texas laws on eminent domain deny him due process of law in the condemnation process. He argues that pipeline companies asserting the right to use eminent domain should have to prove their right to condemn before they can obtain a judgment awarding an easement. Boerschig’s attorney Renae Hicks said “It’s a no-strings-attached, standard-less delegation of government power to a private entity. There’s no accountability, they do not have to report to anyone.” He argues that a pipeline’s status as a public utility, which under Texas law entitles it to use eminent domain, can be legally challenged only after the condemnation award of the special commissioners appointed to determine the amount owed for the condemned easement. After the commissioners’ award, the pipeline’s right to condemn can be challenged in court, but in the meantime the pipeline has the right to tender the amount awarded by the commissioners into court and begin laying the pipeline on the easement awarded. So the pipeline can be constructed even while the landowner is challenging the company’s condemnation authority.
That is what happened in the latest condemnation case decided by the Texas Supreme Court, Texas Rice Land Partners v. Denbury, , 363 S.W.3d 192 (Tex. 2012). In that case, Denbury sought to condemn an easement for a pipeline that would carry carbon dioxide across Texas Rice Land’s property. Texas Rice Land challenged Denbury’s right to condemn an easement; the trial court sustained Denbury’s authority, and it built its easement. But the Supreme Court held that Texas Rice Land had the right to challenge Denbury’s use of eminent domain, whether it was a common carrier. It remanded the case to the trial court for trial on that issue. On remand, the trial court again agreed that Denbury had eminent domain powers, but the Beaumont Court of Appeals reversed and remanded again, 457 S.W.3d 115 (Tex.App.-Beaumont 2015). Denbury has appealed to the Texas Supreme Court, which granted Denbury’s petition for review on April 1. In the meantime, Denbury has constructed its pipeline across Texas Rice Land’s property and is using it to transport carbon dioxide.
The Gardiners claimed that a compressor station across the road from their property created a nuisance that damaged the value of their property. A trial resulted in a $2 million judgment for the Gardiners. After an eight-year battle, the Texas Supreme Court decided the Gardiners would have to try their case again. The case is another in a recent spate of cases alleging nuisance damages for operations in the oil field. Continue reading →
Here are two good websites providing information about shale plays all across the world, from the worldwide law firm Norton Rose Fulbright:
Its Hydraulic Fracking Blog gives commentary on legislation across the country affecting drilling and operations in shale plays.
Its Shale Gas Handbook explains how the technology works, and prospects for shale oil and gas development in countries from Europe to China.
Great graphic from the Energy Information Administration:
It’s amazing how production has held up and even increased despite low gas prices. Production declines have shown up only at the beginning of this year, even though prices have been below $3.00 since January 2015.
One of the speakers at our firm’s recent oil and gas seminar for land and mineral owners was Chris Atherton, President of EnergyNet, Inc. EnergyNet is an online auction site for oil and gas assets- mineral and leasehold interests. It now controls 75% of the online auction business for oil and gas assets in the U.S.; so far in 2016, it has sold 354 asset packages for $155 million. It makes its money by taking a commission on each sale. Properties are sold both in online auctions and in sealed-bid sales.
Recently, the Texas General Land Office began using EnergyNet for its auctions of oil and gas leases on state lands. It also auctions leases for Colorado, North Dakota, Utah and Wyoming, and it has recently signed up the Bureau of Land Management to conduct lease sales. An example of an EnergyNet offer for lease of a state tract in Loving County, Texas can be viewed here.
One of EnergyNet’s first big deals was sale of a package of 220,000 net mineral acres owned by Chevron in 2003, in dozens of counties in multiple estates. Chevron wanted at least $80 million. By breaking the assets down into smaller parcels, EnergyNet sold them for $120 million.
The Fourth Court of Appeals in San Antonio handed down an opinion this week in Adams v. Murphy Exploration & Production Co.-USA, deciding the meaning of “offset well” as used in an oil and gas lease.
The plaintiffs in the case signed an oil and gas lease to Murphy containing the following provision:
It is hereby specifically agreed and stipulated that in the event a well is completed as a producer of oil and/or gas on land adjacent and contiguous to the leased premises, and within 467 feet of the premises covered by this lease, that Lessee herein is hereby obligated to, within 120 days after the completion date of the well or wells on the adjacent acreage, as follows:
(1) to commence drilling operations on the leased acreage and thereafter continue the drilling of such offf-set well or wells with due diligence3 to a depth adequate to test the same formation from which the well or wells are producing from on the adjacent acreage; or
(2) pay the Lessor royalties as provided for in this lease as if an equivalent amount of production of oil and/or gas were being obtained from the off-set location on these leased premises as that which is being produced from the adjacent well or wells; or
(3) release an amount of acreage sufficient to constitute a spacing unit equivalent in size to the spacing unit that would be allocated under the lease to such well or wells on the adjacent lands, as to the zones or strata producing in such adjacent well.
The Supreme Court last week denied the petition for review of the Corpus Christi Court of Appeals’ decision in Forest Oil v. El Rucio Land and Cattle Company. Forest was acquired by Sabine Oil & Gas during the course of the case, which started in 2004. Jimmy McAllen and his company obtained a $20 million arbitration award against Forest, and the Corpus Christi Court affirmed the award. The Texas Supreme Court has now declined to hear the case. I have written about this interesting case here and here.
Ryan Sitton is interviewed by Evan Smith of The Texas Tribune. And endorses Donald Trump. And questions the human causes of climate change. Watch the interview here.
The Texas Supreme Court last week handed down its opinion in Coyote Lake Ranch v. City of Lubbock, holding, in a case of first impression, that the accommodation doctrine applies to govern the City’s right to use the surface of the Ranch to develop its groundwater.
Coyote Lake Ranch covers 40 square miles in Bailey County, on the Texas-New Mexico border northwest of Lubbock. In 1953, the then owners of the Ranch sold the groundwater under the Ranch to the City of Lubbock. The Ranch reserved the right to use groundwater for domestic use, ranching operations, oil and gas production, and agricultural irrigation, but the conveyance limits the Ranch to one or two wells in each of 16 specified locations. The Deed contains lengthy, detailed provisions on the City’s right to use the land. It grants to the City the right “at any time and location [to] drill water wells and test wells” on the Ranch, and to build roads, power lines and other improvements and otherwise make use of the Ranch lands “necessary and incidental” to the production of groundwater.
The groundwater underlying the Ranch is the Ogallala Aquifer, a huge aquifer that underlies much of north Texas as well as parts Oklahoma, New Mexico, Kansas, Colorado, and Nebraska. Water from the aquifer has made the arid high plains one of the most prolific agricultural regions of the United States. It is also a depleting resource and has been depleted in substantial areas of the Texas Panhandle. Continue reading →
