TERMINATION OF OIL, GAS AND MINERAL LEASES: SAVINGS CLAUSES AND DEFENSIVE DOCTRINES. Written by:

Transcription

1 SAVINGS CLAUSES AND DEFENSIVE DOCTRINES Written by: JESSE R. PIERCE Jesse R. Pierce & Associates, P.C Montrose Boulevard Houston, Texas WILLIAM R. BURNS King & Spalding, L.L.P Louisiana, Suite 4000 Houston, Texas Presented by: JESSE R. PIERCE, Houston Jesse R. Pierce & Associates, P.C. State Bar of Texas 26 TH ANNUAL ADVANCED OIL, GAS & ENERGY RESOURCES LAW COURSE September 25-26, 2008 Houston CHAPTER 18

2 TABLE OF CONTENTS I. INTRODUCTION...1 II. TEMPORARY CESSATION OF PRODUCTION...1 III. PRODUCTION IN PAYING QUANTITIES...2 IV. DRILLING AND OPERATIONS CLAUSES...3 A. Commencement of Operations Clauses...3 V. SHUT-IN ROYALTY CLAUSES...8 A. Shut-in Royalties and Lack of Market...8 VI. FORCE MAJEURE CLAUSES...10 VII. MODERN PROBLEMS...13 VIII. RATIFICATION...17 IX. REVIVOR...17 X. EQUITABLE DEFENSES...19 i

3 CASES TABLE OF AUTHORITIES Amoco Prod. Co v. Braslau, 561 S.W.2d 805 (Tex. 1978)... 2 Anadarko Petroleum Corp. v. Thompson, 94 S.W.3d 550 (Tex. 2002)... 13, 16, 18 Bradley v. Avery, 746 S.W.2d 341 (Tex. App. Austin 1988, no pet.)... 2, 17 Cannon v. Sun-Key Oil Co., 117 S.W.3d 416 (Tex. App. Eastland 2003, pet. denied)... 1, 2, 19 Clark v. Holchak, 284 S.W.2d 399 (Tex. Civ. App. San Antonio 1955, writ refused)... 2 Clifton v. Koontz, 325 S.W.2d 684 (Tex. 1959)... 1, 2 Cox v. Miller, 184 S.W.2d 323 (Tex. Civ. App. Eastland 1944, writ refused) Cox v. Stowers, 786 S.W.2d 102 (Tex. App. Amarillo 1990, no writ)... 8 Decker v. Kirlicks, 216 S.W. 385 (Tex. 1919) Exploracion de la Estrella Solataria Incorporacion v. Birdwell, 858 S.W.2d 549 (Tex. App. Eastland 1993, no writ) Fike v. Riddle, 677 S.W.2d 722 (Tex. App. Tyler 1984, no writ) Fox v. Thoreson, 398 S.W.2d 88 (Tex. 1966) Freeman v. Magnolia Petroleum Co., 171 S.W.2d 339 (Tex. 1943) Fuller v. Rainbow Resources, Inc., 744 S.W.2d 232 (Tex. App. Texarkana 1987, no writ) Garcia v. King, 164 S.W.2d 509 (Tex. 1942)... 2, 8, 12 Guleke v. Humble Oil & Ref. Co., 126 S.W.2d 38 (Tex. Civ. App. Amarillo 1939, no writ) Gulf Oil Corp. v. Reid, 337 S.W.2d 267 (Tex. 1960)... 6, 8 i

4 Hall v. McClesky, 228 S.W (Tex. Civ. App. Fort Worth 1921, no writ) Hastings v. Pichinson, 370 S.W.2d 1 (Tex. Civ. App. San Antonio 1963, no writ) Henshaw v. Tex. Nat. Resources Found., 216 S.W.2d 566 (Tex. 1949) Holmes v. McKnight, 373 S.W.2d 541 (Tex. Civ. App. Corpus Christi 1963, no writ) Humble Oil & Refining Co. v. Clark, 87 S.W.2d 471 (1935) Humphrey v. Seale, 716 S.W.2d 620 (Tex. App. Corpus Christi 1986, no writ)... 13, 16 Hunt Oil Co. v. Dishman, 352 S.W.2d 760 (Tex. Civ. App. Beaumont 1961, writ ref d n.r.e.) Hydrocarbon Mgmt, Inc. v. Tracker Exploration, Inc., 861 S.W.2d 427 (Tex. App. Amarillo 1993, no writ)...passim Jones v.killingsworth, 403 S.W.2d 325 (Tex.1966) Judice v. Mewborne Oil Co., 890 S.W.2d 180 (Tex. App. Amarillo 1994) rev d on other grounds, 939 S.W.2d 133 (Tex. 1996)... 14, 17 Kidd v. Hoggett, 331 S.W.2d 515 (Tex. Civ. App. San Antonio 1959, writ ref d n.r.e.) Ladd Petroleum Corp. v. Eagle Oil and Gas Co., 695 S.W.2d 99 (Tex. App. Fort Worth 1985, writ ref d n.r.e.) Link v. Texas Pharmacal Co., 276 S.W.2d 903 (Tex. Civ. App. San Antonio 1955, no writ) Loeffler v. King, 236 S.W.2d 772 (Tex. 1951) Midwest Oil Corp. v. Winsauer, 323 S.W.2d 944 (Tex. 1959)... 2 Miller v. St. Joseph s 55 Oil Ass n, 278 S.W. 457 (Tex. Civ. App. San Antonio 1926, no writ) Morrison v. Swaim, 220 S.W.2d 493 (Tex. Civ. App. Eastland 1949, writ ref d n.r.e.) Nafco Oil & Gas, Inc. v. Tartan Resources Corp., 522 S.W.2d 703 (Tex. Civ. App. Corpus Christi 1975, writ ref d n.r.e.) ii

5 Natural Gas Pipe Line Company of America v. Law, 65 S.W.3d 121 (Tex. App. Amarillo 2001, pet. denied) Natural Gas Pipeline Co. of America v. Pool, 124 S.W.3d 188 (Tex. 2003)... 1, 19 Phillips Petroleum v. Rudd, 226 S.W.2d 464 (Tex. Civ. App. Texarkana 1949, no writ)... 8 Ridge Oil Co. v. Guinn, 148 S.W.3d 143 (Tex. 2004)... 2 Rogers v. Osborn, 261 S.W.2d 311 (Tex.1953)...Passim Rogers v. Ricane Enterprises, Inc., 772 S.W.2d 76 (Tex. 1989) Rogers v. Ricane Enterprises, Inc., 884 S.W.2d 763 (Tex. 1994) Samano v. Sun Oil Co., 621 S.W.2d 580 (Tex. 1981)... 1 Samano v. Sun Oil Company, 621 S.W.2d 550 (Tex. 1981)... 7 Saunder v. Frye, 613 S.W.2d 63 (Tex. Civ. App. Fort Worth 1981, no writ) Scarborough v. New Domain Oil & Gas Co., 276 S.W. 331 (Tex. Civ. App. El Paso 1925, writ dism d)... 2 Sellers v. Breidenbach, 300 S.W.2d 178 (Tex. Civ. App. San Antonio 1957, writ refused)... 2 Skelly Oil Co. v. Harris, 352 S.W.2d 950 (Tex. 1962) Stanolind Oil & Gas Co. v. Barnhill, 107 S.W.2d 746 (Tex. Civ. App. Amarillo 1937, writ refused) Stanolind Oil & Gas Co. v. Newman Brothers Drilling Co., 305 S.W.2d 169 (Tex. 1957) Stephens v. Mid-Kansas Oil & Gas Co., 254 S.W. 290 (Tex. 1923)... 1, 13 Sun Operating Ltd. Partnership v. Holt, 984 S.W.2d 277 (Tex. App. Amarillo 1999, writ denied)...passim Sun-Key Oil Co. Inc. v. Whealy, No CV, 2006 WL Tittizer v. Union Gas Corp., 171 S.W.3d 857 (Tex. 2005) iii

6 Union Oil Company of California v. Ogden, 278 S.W.2d 246 (Tex. Civ. App. El Paso 1955, writ ref d n.r.e.)...8, Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005) Wagner & Brown, Ltd. v. Sheppard, 198 S.W.3d 369 (Tex. App. Texarkana 2006, pet. filed) Watson v. Rochmill, 155 S.W.2d 783 (Tex. 1941)... 1, 11 Westbrook v. Atlantic Richfield Co., 502 S.W.2d 551 (Tex. 1973) Yelderman v. McCarthy, 474 S.W.2d 781 (Tex. Civ. App. Houston [1st Dist.] 1971, writ ref d n.r.e.) STATUTES, RULES & REGULATIONS 16 Tex. Admin. Code Tex. Admin. Code iv