Articles

Created by: Martha Mills at 12/8/2017 7:02:58 PM | 0 comments. | 41 views.

As we enter the final month of this year, let us reflect on the numerous blessings bestowed upon us. Each of us has faced adversity in one way or another, yet we have grown as individuals from these experiences. There will always be a degree of uncertainty in our industry, however there are few professions that give one the sense of accomplishment as ours.

We on the Executive Committee are honored to serve our fellow landmen. We wish to express gratitude to the past Executive Committee and its elected leaders for their hard work and for laying an excellent foundation for us to start on.

If you rarely attend events put on by LAPL, we urge you to take part in more activities. Our annual Christmas Safety Meeting takes place on December 14th and will be from 5-8:00 pm. It will be held at LaFonda, and we’d like to thank Liskow & Lewis for graciously sponsoring this much-anticipated event once again. We ask that you please reach down into your hearts and donate to Love INC of Lafayette so that they may fulfill their mission of helping those less fortunate than ourselves.

We on the Executive Committee are here to serve our fellow LAPL members. We have many great events planned for the upcoming year and encourage you to attend them.

 

Have a Wonderful Christmas and a Happy New Year!


 

 

 

 

Created by: Martha Mills at 12/8/2017 6:58:52 PM | 0 comments. | 46 views.

TDX Energy, LLC v. Chesapeake Operating, Inc., 16-30450 (5th Cir. 5/12/2017)

857 F.3d 253

 

By George C. Plauché

Bullen & Plauché

 

            In this case, the United States Court of Appeals, Fifth Circuit considered Chesapeake’s claim as operator of a unit well in DeSoto Parish to recover from TDX, as a lessee of interest unleased by Chesapeake, TDX’s share of drilling costs plus a risk fee of 200%.

A Brief History of Forced Pooling

            The court begins with a brief, but interesting, history of forced pooling in Louisiana. To summarize, the need for forced pooling began to be evident when a well struck oil in 1901 above the Spindletop salt dome, which ultimately led to 440 wells being drilled over 125 acres. The resultant drain of the reservoir was inefficient, wasteful and environmentally damaging. This was the inevitable result of the application of the common law rule of capture which states that a landowner owns oil and gas produced from wells on the owner’s land, regardless of if the oil and gas migrated from his neighbor’s land. As a result, states including Louisiana enacted “forced pooling”, forcing mineral rights owners to be part of a drilling unit in order to protect neighbors’ rights to benefit from their mineral interests and to promote Louisiana’s interest in preventing waste and promoting economic activity.

Forced Pooling in Louisiana

            The Commissioner of Conservation administers the forced pooling regime in Louisiana, designating drilling units when necessary to prevent waste or avoid needless drilling, and appointing an operator for the unit well. The operator is responsible for drilling within the unit, but pays a proportionate share of production to mineral owners within the unit. Louisiana law includes mechanisms for the mineral owners to share drilling risks and costs. As to mineral lessees who have not entered into an agreement with the operator, the operator may give notice of the well, and allow the owners to participate in the risk by paying their share of the estimated drilling costs up front. As to those mineral lessees who elect not to participate, if the well produces, the operator can recover from production each nonparticipating lessee’s share of drilling costs plus a 200% risk fee. The operator is also required to provide cost and production reports to nonparticipating lessees and unleased owners within ninety days of completing a well (“report requirements”). After an additional thirty days from receiving notice of its failure to comply with the report requirements from an owner, the operator cannot collect drilling costs from that owner. The issue in TDX was, to which owners do the risk fee and report requirements apply?

Case Background

            Chesapeake was the operator of a 640-acre unit, over which it held a number of oil and gas leases. On February 5, 2011, Chesapeake spud the unit well, and completed the well on July 19, 2011. When the well was spud, 63 acres of the unit were not leased by Chesapeake or any other party. Touchstone Energy, LLC took leases over the 63 acres with an effective date of July 15, 2011 (before drilling was completed), and recorded the leases between July 22 and September 14 (after the well was completed). Touchstone transferred the leases to TDX who notified Chesapeake in late 2011 of its interest and requested an accounting under the notice requirements discussed above. TDX sent Chesapeake notice that it failed to comply with the notice requirements. Chesapeake did not provide reports, but instead, sent TDX a letter asking TDX to make an election to participate in the well’s risk. TDX responded that the election notice was untimely, therefore, TDX was not required to make an election, and Chesapeake could not collect a risk fee. TDX then wrote Chesapeake that its failure to provide the requested cost and production data prevented Chesapeake from recovering TDX’s proportionate share of drilling costs.

Report Requirement Statutory Framework

            TDX claimed Chesapeake failed to provide the required reports, thus forfeiting its right to deduct drilling costs. The report requirement is found in Louisiana Revised Statutes Title 30, sections 103.1 and 103.2. Section 103.1 states, in relevant part, the following:

Whenever there is included within a drilling unit ... lands producing oil or gas, or both, upon which the operator or producer has no valid oil, gas, or mineral lease, said operator or producer shall issue ... reports to the owners of said interests ...

 

LA. R.S. 30:103.1(A)(emphasis added).

The deadlines and penalty for failing to timely provide the required reports is found in the following section 103.2, which states the following:

Whenever the operator or producer permits ninety calendar days to elapse from completion of the well and thirty additional calendar days to elapse from date of receipt of written notice by certified mail from the owner or owners of unleased oil and gas interests calling attention to failure to comply with the provisions of R.S. 30:103.1, such operator or producer shall forfeit his right to demand contribution from the owner or owners of the unleased oil and gas interests for the costs of the drilling operations of the well.

 

LA. R.S. 30:103.2(emphasis added).

            The issue the court considered was whether “owners of unleased oil and gas interests” in 103.2 includes lessees. Relying on a prior Louisiana Third Circuit Court of Appeals decision, XXI Oil & Gas, LLC v. Hilcorp Energy Co., 206 So.3d 885 (La. App. 3d Cir. 2016), and a broader interpretation of the language in 103.2 in the context of the statutory framework and the language in 103.1, the court held that 103.2 does include lessees.

Risk Fee Statute

            Chesapeake claimed that TDX is required to pay a risk fee because TDX did not elect to participate in the well. The election provision is found in Louisiana Revised Statutes Title 30, section 10(A), which states, in part, the following:

Any owner drilling or intending to drill a unit well, ... on any drilling unit heretofore or hereafter created by the commissioner, may ... notify all other owners in the unit of the drilling or the intent to drill and give each owner an opportunity to elect to participate in the risk and expense of such well.

 

LA. R.S. § 30:10(A)(2)(a)(i). The notice must contain estimates of the cost of the well, proposed well location and depth, and technical data such as logs and core analysis that have not been made public.

            Section 10(A) entitles the operator to recover from production the nonparticipating owner’s “share of the actual reasonable expenditures incurred in drilling, testing, completing, equipping, and operating the unit well, including a charge for supervision, together with a risk charge, which risk charge shall be two hundred percent of such tract’s allocated share of the cost of drilling, testing, and completing the unit well.” An owner not notified still bears its tract’s share of “actual reasonable expenditures,” but owes no risk charge. The risk charge also does not apply to “any unleased interest not subject to an oil, gas, and mineral lease.”

            Although TDX’s leases were dated effective before the well was completed, they were recorded after the well was completed. Under Louisiana’s public records doctrine, the leases were effective as to third parties (including Chesapeake) after the well was completed. As to Chesapeake, the interest leased by TDX was unleased according to the public records when the well was completed and Chesapeake had no reason to send notice of an election to the owner of record because there was no chance of claiming a risk fee.

            The court held that Chesapeake’s election request sent to TDX after the well was completed was untimely. In so doing, the court focused on the language of the statute requiring notice of “drilling or intent to drill”, concluding that the language was not intended to apply to completed wells. As the court pointed out, section 10(A) was amended, effective June 13, 2016, to now state that an owner “drilling, intending to drill, or who has drilled a unit well” may send notice. The court rejected Chesapeake’s argument that the amendment only clarifies the original intent of the statute. Instead, the court stated that the amendment would now lead to a different conclusion if it had been effective prior to the facts at issue in this case.

Conclusion and Discussion

            The court ultimately held that Chesapeake was not entitled to deduct drilling costs from TDX’s share of production because it failed to provide the well cost information TDX requested under 103.1. The court also held that the risk fee statute did not apply under these circumstances. The opinion creates a bit of an anomaly in the law whereby a lease buyer can purchase unleased interest in a unit, and, by waiting to record the leases until after the unit well is completed, may avoid a risk fee and possibly its share of the costs of the well if the operator fails to timely provide the required reports. While the amendment to the election notice and risk fee statute in section 10(A) may remedy the issue after the amendment’s effective date of June 13, 2016, circumstances predating the amendment may be subject to the result in TDX. At the very least, this case highlights some of the problems with the imprecise language (the court referred to it as “ambiguous . . . awkward, and even ungrammatical”) in the report requirements in 103.1 and 103.2 as well as the risk fee statute in 10(A). Perhaps additional amendments to the statutory framework will resolve and clarify the issues such as to avoid the result in TDX, however, until then, it is advisable for operators to be aware of the risk that they may not be able to recover costs and risk fees from lessees’ interest in production in certain circumstances.

 

George C. Plauché is a partner of Bullen & Plauché. George practices commercial and civil litigation and commercial transactions in the petroleum onshore and offshore industries. George graduated magna cum laude from Millsaps College in 1991 with a B.S. in Physics and received his law degree in 1994 from the Paul M. Hebert School of Law at Louisiana State University. He is admitted to practice in Louisiana and Texas in both state and federal courts.

 

Created by: Martha Mills at 12/8/2017 6:54:34 PM | 0 comments. | 39 views.

 

 

The AAPL December Quarterly Board of Director meeting held was this past weekend in beautiful San Antonio Texas at the Omni La Mansion del Rio Hotel on the Riverwalk near the Alamo. With Holiday decorations and Christmas Lights everywhere it was hard not getting in the Christmas Holiday mood.

 

The AAPL Disaster Relief Fund application deadline date was December 1, 2017, with over $100,000 in matching donations made by members, companies and local associations.  The fund is AAPL’s way of giving back to the members. The majority of the applicants were from East Texas and the Texas Coast. Final numbers on applicants, disbursements and total donations will be available in January.

 

AAPL’s Mentoring Program for Landmen, has been named Advisory Landman Connection. This program will begin initial rollout in January using AAPL technological platforms Higher Logic, LandNews as well as Skype to help both Mentors and Mentee’s communicate. It will allow Mentors to assist their Mentee’s with non-legal advice and encouragement as well as helping answer land questions of every kind. All are encouraged to participate.

 

This year is the 25th Anniversary of NAPE (Feb 5-9), so expect big things from AAPL and NAPE Expo with a show ending Ford Truck giveaway. The NAPE Summit Business Conference has a great line up of speakers along with Tom Brokaw speaking at the NAPE Charities Luncheon. Also, The AAPL Annual Meeting and Conference is scheduled for June 20-23 in Denver, CO.  The conference speakers and sessions have been finalized so go to the landman.org website to see the topics and sessions available this year. This will be a great time to be in Colorado, so please make plans to attend.

 

Currently AAPL has 15,077 paid members, with approximately 23% being CPL’s.

 

Proctors are still needed for Test and re-take Test in all areas including Lafayette, LA, CPL certification is required. Please contact Joanne Stoy at AAPL if you are interested in participating.

 

Contract Center  the new subscription based  contract and form collaboration application is available to both members and non-members alike. New forms are being added such as a Participation Agreement, Purchase and Sale Agreement, Master Land Services Agreement as well as the JOA agreements for 2015, 1989 and 1982, along with various confidentiality agreements.

 

The Landman Scholarship Trust and The AAPL Educational Foundation two separate entities associated with AAPL have asked if LAPL and/or its members would consider donating annually to their corpus to keep both ongoing enterprises relevant with their missions of giving back to needed Students and landmen.

 

Several seminars and educational events are coming your way in 2018, be on the lookout for a Field Landman Seminar and Independent Contractor Workshop coming in the first half of 2018.

 

Thanks again for your support and confidence, I am here to help you should the need arise.

 

Richard Hines

AAPL Director

 

Created by: DAVID DEVILLE at 12/6/2017 3:16:37 PM | 0 comments. | 63 views.

ReliaTerre is accepting resumes for experienced landmen for title and lease acquisition projects in Louisiana. Send resume, references and dayrate to info@reliaterre.com   Must be able to work in a team setting on fast-paced projects. No phone calls please. All resumes will be kept confidential.

Created by: Martha Mills at 11/9/2017 9:12:20 AM | 1 comments. | 129 views.

FROM A PAST PRESIDENT

Keith T. Hebert, CPL

 

Obviously, things have changed positively in our industry as indicated by the  increase in the number of projects around the country, especially in areas like the Permian Basin and EOG’s large Austin Chalk play in South Louisiana, etc.  Although the lower price of oil and gas coupled with the proliferation of legacy lawsuits in Louisiana, has forced many companies to scale back, postpone or cancel some drilling prospects, the amount of work available to independent landmen is much better today than a year ago.  Yet because of the grit and character of landmen, we must hang in there as we all ride out the ups and downs of this industry. 

 

Although there are factors which we cannot control, there are actions we can take during these times of uncertainty.  Consider enhancing our education within our profession by attending LAPL and AAPL sponsored seminars; attend seminars offered by the state dealing with the SONRIS system which is being updated on a regular base; take note of and properly maintain continuing education requirements; follow issues facing the land profession in Landman and Landman 2 magazines and maybe get involved in furthering those causes which will bolster and strengthen professionalism within our industry; volunteer to help within LAPL, AAPL and other industry related organizations.  And all these things can be done while we continue networking and working in the profession we’ve all come to enjoy!

 

We’ve all seen positive and encouraging moves within the Trump Administration to help bolster our American economy, which can lead to greater prosperity and opportunities for our beloved country.  However, let us remain cognizant of what really matters as we strive to adhere to the lesson taught to us all by the greatest person who has ever walked on this earth as Jesus Christ, at the Last Supper, taught his disciples to serve and not wait to be served.

 

God bless and may the peace of God Our Father and the Lord Jesus Christ be with you and yours!

 

Keith Hebert

 

 

 

 

 

 

 

 

 

         

 

 

Created by: Martha Mills at 11/5/2017 2:19:33 PM | 0 comments. | 114 views.

LOUISIANA LEGAL

UPDATE

 

Ryan McAlister

Gordon Arata

    

Glassell Producing Company, Inc. v. Junius A. Naquin

July 5, 2017

On July 5th, the Louisiana First Circuit Court of Appeal reversed the 17th Judicial District Court of Lafourche Parish, Louisiana to hold that the contested deed conveyed the owner’s royalty interest only in a prior mineral lease and not the entire royalty interest in the land covered by the deed.

The suit arose out of a concursus action involving a dispute over royalty payments due under a mineral lease.  Three siblings, Junius Naquin, Carol Naquin Boudreaux and Dolores Naquin Durocher, had each inherited an undivided 1/3 interest in their father’s 1/16 interest in and to a 31-acre tract of land in Lafourche, Louisiana.  When they inherited the property, it was subject to a 1947 oil, gas and mineral lease with a 1/8 royalty.  Thus, each sibling had a 1/3 of 1/16 of 1/8 (or 1/3 of 0.0078125) royalty interest under the 1947 lease.

In August and October of 1993, while the 1947 lease was still in effect, Junius and Dolores conveyed to royalty interests to Carol.  Each deed contains the following language:

ALL OF SELLER'S right, title and interest consisting of an undivided one third in a .00781255 mineral royalty interest in and to the following described property

A certain tract or parcel of land containing 26.34 acres, being in the W/2 of the E/2 of Section 57, T 15 S, R 15 E; being bounded as follows: North by land of Dewey Adams now or formerly, East by Heirs of Joseph Adams now or formerly, South by Lyric Realty and Parking Company now or formerly, West by Roger heirs now or formerly

In 1998, after production had ceased, the lessees under the 1947 lease filed a release and surrender of the lease in the parish conveyance records.  Later that year, Carol entered into a new mineral lease with Alfred C. Glassell, Jr. for a portion of the property; she retained a 1/6 royalty interest.  But Glassell did not obtain a lease from the Dolores or Junius.  In 1999, a well was successfully drilled on the 1998 Lease.

In 2015, the lease holder, Legacy Trust Company N.A., and the well operator,  Glassell  Producing  Company,  Inc.,   instituted a concursus proceeding to determine proper payment of the royalty under the 1998 Lease.  The question presented was whether the 1993 deeds from Junius and Dolores to Carol conveyed only their royalty interest in the 1947 Lease or instead conveyed all of their royalty interest in the property.

Carol answered the petition and argued that the reference to a .00781255 mineral royalty interest in the deed was “merely a typographical error” and that her siblings intended to transfer all of their royalty interests in the property. 

The heirs of Dolores argued that the language of her deed was clear in that the transfer concerned only the .00781225 interest and that it was never the intent to transfer any future royalty interests.  Junius failed to timely answer the petition and was thereafter precluded from filing a claim in the matter.

Carol later filed a motion for summary judgment that her siblings transferred all of their royalty interest thereby creating a new mineral royalty interest under Louisiana Revised Statute 31:80.

Noting that neither deed referenced the 1947 Lease, the trial court granted Carol’s motion.  The court explained:

Prior to the acts of the cash sale, they [Junuis and Dolores] were receiving their one-third (1/3) interests. After the sale, they ceased receiving their interests. The sales accomplished what they intended to do, which was to relieve themselves of the financial royalties, so that they could qualify for whatever governmental qualification they were trying to attain. None of that is in dispute…

I don’t think that there's any dispute that these acts of sale transferred their interests—the interest of Junius II or the interest of Dolores Naquin to Carol. They’re not—those transfers of the interests were not somehow revived just because the Beckenstein lease [the 1947 Lease] went out of existence. Those interest were already sold.  They’re not revived.  The fact that they moved on to a new provider or payor, Glassell, doesn’t bring them back into this mineral interests.

Dolores’ heirs appealed to the Louisiana First Circuit Court of Appeal.  They argued that the district court erred in holding that her deed transferred all of her royalty interest in the land.  The pivotal distinction the heirs articulated was that the deed described “a .00781255 mineral royalty” and did not contain the language “all royalties.”  Additionally, they stressed that Carol had no authority to lease Dolores’ interests to Glassell, as Dolores never conveyed anything in the property other than a mineral royalty interest.

The First Circuit established the foundation of their opinion through the interpretation of several revised statutes and previous court opinions.  First, the court explained that under Louisiana Revised Statute 31:82, a mineral royalty may be created either by a mineral servitude owner or landowner who owns minerals.  Further, the court cited the seminal Louisiana Supreme Court case of Vincent v. Bullock, 192 La. 1, 187 So. 35 (1939), for the proposition that the nature of the royalty is grounded “upon the contract in which it appears … If a party to a contract sells royalty under an existent lease, he is selling a part or the whole of his rent due from the lease upon which his royalty depends.”

The First Circuit identified the issue whether the royalty interest conveyed to Carol created a new, real right in the property or instead was an appendage to the 1947 Lease and thus would cease to burden the property upon termination of the 1947 Lease. 

The First Circuit held that Dolores’ deeds lacked any language evidencing the intent to transfer all of their royalty interest in the land.  Furthermore, the Court found that “ALL OF SELLER’S right title and interest” simply modified reference to the “undivided on third in a .00781255 royalty in a royalty interest.”  Accordingly, because the conveyance was strictly applicable to the 1947 Lease, the royalty interest at issue in the deed ceased to burden Dolores’ interest in the land when the 1947 Lease terminated.  Thus, the First Circuit reversed the district court for erring as a matter of law “in finding that the 1992 deed conveyed a general royalty interest.”

What should you take away from Glassell?

First, it’s important to be accurate and precise when drafting and interpreting agreements.  Often times, disputes will arise long after a contract is executed and the parties may “remember” their intent differently than what it actually was at the time of signing—or one or more of the original parties may no longer be accessible.  Thus, parties are often left with only the language of the document to ascertain the executing parties’ intent.  Where the intent of the parties is not clear, a seemingly insignificant word or provision may make all the difference.

Second, identify these issues lurking in land and mineral title early on in the exploration and development of mineral resources.  Failure to do so often results in costly litigation to determine ownership of claims for unpaid royalties.  If the language in a deed seems ambiguous, or if you are charged with drafting specific provisions related to transfers of mineral or royalty interest, call Gordon Arata.

Ryan is an associate in the firm’s Lafayette office where he focuses his practice on oil and gas matters and complex litigation.  After graduating from Lafayette High School, Ryan attended the United States Military Academy at West Point where he earned his Bachelor of Science.  He then served as an Infantry Officer in the United States Army for over six years, including a year deployment to Iraq. During law school, Ryan interned with the Louisiana Department of Natural Resources.  He graduated Cum Laude from the Paul M. Hebert Law Center at Louisiana State University in 2017, receiving his Juris Doctor, Graduate Diploma in Comparative Law, and the Energy Law and Policy Certificate. He is admitted to practice law in Louisiana.

 

 

      

 

Created by: Martha Mills at 10/6/2017 9:45:39 AM | 0 comments. | 309 views.

Job:  Title Landman - Louisiana (contract)

Job Description:  See below

Availability:  Immediate

Project Duration:  2 months to 1 year

Please apply online:   https://www.ziprecruiter.com/job/d119848a?source=share-email

GOAL: As a Title Landman, you will be responsible for independently running full mineral and surface title, conducting online and / or courthouse research and preparing detailed lease packets. You will be responsible for the deliverables from start to finish, with as-needed support from the team leaders and written documents detailing project requirements.

As a Lease Acquisition Landman, you will be responsible for preparing the Oil, Gas and Mineral Lease, negotiations with the mineral owners and properly obtaining and witnessing the Oil, Gas and Mineral Leases.

ESSENTIAL FUNCTIONS: Must be able to:

-       Run title from the source deed to present on oil & gas properties located in Louisiana.

-       Understand and have knowledge of Louisiana Mineral Law and Mineral Servitudes.

-       Prepare lease packets for all properties researched. Include copies of all appropriate documents, completed runsheets, mineral and surface ownership reports, and interest flow charts if needed.

-       Research production information using public data websites and report on such information

-       Deliver accurate mineral and surface title reports and prepare lease packets based on detailed specifications

-       Follow written and verbal instructions

-       Complete tasks independently, accurately and timely

REQUIREMENTS:

· Minimum of  4 years of Louisiana experience running mineral and surface title, preparing title abstracts and preparation of title run sheets.

· Proficient in the use of Microsoft Excel, Word, and online collaboration and file sharing sites.

· Excellent research skills and attention to detail

· Self-motivated, strong ethics and ability to work with minimal supervision

· Active AAPL membership

Created by: Martha Mills at 10/4/2017 3:06:44 PM | 0 comments. | 271 views.

The Student Association of Professional Landmen had their first meeting on September 18th to discuss this semester’s upcoming events. We will be touring the property in Iberia Parish donated by Chevron on September 24th. Students will get a first – hand look at the wellheads, the gathering systems for those wells, and see the daily operations of a sugar cane farm.

We are also planning on a Volunteer Day at St. Josephs Diner before Thanksgiving to help prepare and serve meals to individuals and families experiencing poverty and homelessness in Acadiana. 

Our next meeting is on October 23rd and our Guest Speaker will be Mark Miller, from Merlin Oil and Gas. We are working on getting a continuing education point approved by AAPL and encourage LAPL members to attend.

 SAPL Officers 2017-18

From left to right: Cooper Aitken (Treasurer), Chloe Clifton (President), Ethan Istre (Vice President), and Bradley Harp (Secretary).

Created by: Martha Mills at 10/4/2017 11:51:24 AM | 0 comments. | 281 views.

Click on link below for the September 2017 Louisiana Legal Update

 

BIOGRAPHIES OF AUTHORS

 

Thomas G. Smart received his Bachelor’s of Science from Louisiana State University in 1979. He went on to Louisiana State University Law Center where he earned his Doctor of Jurisprudence in 1982. Tommy is licensed to practice in Louisiana and Texas. He is Vice President of the Mineral Law Section of the Louisiana State Bar Association, and a member of the Oil, Gas and Energy Resources Law Section of the Texas Bar Association. He is a frequent speaker at various legal, land and industry seminars, including the Louisiana Mineral Law Institute, and is a guest lecturer for the University of Louisiana at Lafayette PLRM Program.

 

Tommy is a shareholder at the Onebane Law Firm, where he has practiced in its oil and gas section since 1982. He has a general oil and gas transactional practice serving producers and others engaged in onshore and offshore operations, including title examination, the structuring, drafting and negotiation of complex agreements, the acquisition, sale and/or financing of oil and gas properties, due diligence for property acquisition, serving as local counsel for purchase and financing transactions, 3-D seismic permit and license agreement advice, and general advice.

 

Christopher J. Peyton received his Bachelor’s of Science in Business Administration studying Economics at the University of Louisiana at Lafayette in 2012.  He went on to the Paul M. Hebert Law Center at Louisiana State University, where he earned his Juris Doctor Degree and graduate degree in comparative law in 2016.

Christopher joined the Onebane Law Firm in 2016 as a part of the Oil and Gas Division.  He plans to develop a balanced practice including Oil and Gas transactional work as well as litigation.

Christopher grew up in Lafayette, Louisiana and graduated from St. Thomas More Catholic High School.  After high school, he played a season of soccer for Millsaps College before returning to Lafayette to finish his degree.  Christopher loves hunting, fishing, cooking and playing music with his band.  Additionally, he is a leader for the Confirmation Program at St. Alphonsus Catholic Church in Maurice.  He currently lives in Lafayette with his wife, Mary-Ellen.

 

 

 

Links:

LAPL Judicial Update
Created by: Martha Mills at 9/25/2017 12:43:16 PM | 0 comments. | 259 views.

Richard Hines

AAPL Director

 

Thanks all for the honor to represent LAPL on the AAPL Board as Director, I am humbled and appreciate the opportunity. I am your voice to the National Association, from concerns and issues to Thank you and congratulations; please let me know if you need anything. I will report quarterly on our meetings and things that affect your AAPL membership.

 

The September Quarterly meeting was held at Nemocolin Resort in Farmington, Pennsylvania, which is about 1 ½ hour south of Pittsburgh. Beautiful setting in the rolling hills near the West Virginia border, if you ever get up that way check out Nemocolin, lots for all members of family to do.

 

The AAPL Board voted to establish a disaster relief fund to aid AAPL members in a time-of-need.   AAPL seeded the fund with $500,000 and has committed an additional $500,000 in matching funds, so they will match your donations dollar-for-dollar up to that amount.  In addition to the AAPL matching funds, the AAPL Educational Foundation has agreed to match donations to the disaster relief fund dollar-for-dollar up to $250,000.00 dollars.  The Educational Foundation will administer this fund under their umbrella since it is a 501(C3) organization and all donations to the fund will be tax deductible.  You will receive a letter your tax records. 

 

If you would like to make a donation or have been affected by a natural disaster, please send your donation or information to:

 

          AAPL Educational Foundation Inc. – Disaster Relief

          800 Fournier St.

          Fort Worth, Texas 76102

 

The Disaster Relief Fund will only be available to AAPL members.  The fund is AAPL’s way of giving back to the members.

 

AAPL is establishing a Mentoring Program for Landmen, both Mentors and Mentee’s are needed. If you want to establish yourself in new areas or focus areas this is a great relationship tool. For those students and new landmen the mentoring program will allow you to ask questions and advice to seasoned landmen about land and employment related issues.

 

Proctors are needed for Test and re-take Test in all areas including Lafayette, LA; CPL certification is required.

 

Currently AAPL has 16,346 members, 23% are CPL’s. The Annual Meeting in Seattle was a great success with approximately 500 members attending. Summer NAPE was also a success, larger this year than last year with more sponsors, more booths and more attendees.

 

Copas has now been added to Contract Room along with the JOA agreements for 2015, 1989 and 1982, and confidentiality agreements. Contract room is the new Forms and Contract technology made available from AAPL.

 

Please stay tuned for an Independent Contractor Workshop coming up in late October or November to assist all independent landmen with IRS and Dept of Labor rules and regulations.

 

Thanks again for your support and confidence, I am here to help you should the need arise.

 

 

Created by: Martha Mills at 9/25/2017 9:40:54 AM | 0 comments. | 287 views.

Liability of Mortgagee-Bank for Faults

of its Mortgagor-Borrower

 

Patrick S. Ottinger

Ottinger Hebert, LLC

Adjunct Professor of Law, Paul M. Hebert Law Center,

Louisiana State University, Baton Rouge, Louisiana

 

                    The case we review this month is admittedly a bit different (certainly not “run of the mill”), but it is unquestionably one of the most significant and controversial decisions rendered by a Louisiana appellate court in many decades.  The case is “a bit different” in the sense that one working in the land business might only find a bit or snippet of relevant information in a few places in the case.  It is significant and controversial because it has the potential of resulting in a retreat in capital markets that loan money to E&P companies, and, consequen­tially, a further reduction in the number of wells drilled.  The case is not final, but is worthy of understanding at this stage of the proceeding.

 

                    In Gloria’s Ranch v. Tauren Exploration, Inc.,[1] the Second Circuit, Court of Appeal, affirmed a trial court’s decision that held a mortgagee liable, on a solidary basis,[2] with its lessee who had been cast for “over $23,000,000 in monetary awards and close to $1,000,000 in attorney fees.”[3]  The mineral lessee, Cubic Energy, Inc., was held liable for damages because it failed to timely release a mineral lease,[4] that the court held to have expired for failure to produce “in paying quantities.”[5]

 

                    Under article 207 of the Louisiana Mineral Code, if the “former owner of the . . . expired mineral [lease] fails to furnish the required act [evidencing the termination of the mineral lease] within thirty days of receipt of the demand . . ., he is liable to the person in whose favor the . . . lease has been . . . expired for all damages resulting therefrom and for a reasonable attorney’s fee incurred in bringing suit.”[6]

 

                    In this case, the mineral lease having been determined to have lapsed, the damages were based upon $18,000 per acre—the “going rate” in the Haynesville Shale in Northwest Louisiana at the time of lease termination—for “lost leasing opportunities.”[7]

 

                    Whatever can be said about the propriety of the court’s determina­tion as to lease termination, and the basis of damages “resulting from” the failure to timely release the expired lease, the most radical aspect of the decision is that the mortgagee-lender of the lessee was held liable along with the defaulting lessee.

 

                    The trial court based its decision principally on the fact that the mortgagee, under its mortgage, had been “assigned” the mineral lease, seem­ingly making the mortgagee a working interest owner for purposes of having a statutory duty to release an expired mineral lease that constituted its collateral.[8]  The mortgage clause on which the trial court relied was an assignment of proceeds, commonly found in mortgages encumbering the working interest in the leases.[9]

 

                    The good news is that the appellate court reversed that particular finding as a basis of liability.  The bad news is that the appellate court found that the various covenants in the recorded mortgage and unrecorded credit agree­ment—typical in “reserve based lending” transactions of this type—evidenced elements of “control” sufficient to impose liability on the mortgagee. 

 

                    Most important to the court seemed to be a mortgage provision that required the bank’s consent to the release by the lessee of an item of collateral, in this case, a mineral lease.  As to this common clause, the court noted, as follows:

 

Wells Fargo exercised control over Cubic’s oil and gas operations on the lease, and controlled Cubic’s ability to release the lease for failure to produce in paying quantities.  As such, Wells Fargo shared coex­tensive liability with Cubic to provide a recordable act evidencing the release of its interest in the lease, and we discern no manifest error in the trial court finding Wells Fargo solidarily liable with the remaining defendants.[10]

 

                    The court’s analysis, if it can be said to exist at all, is thin, to say the very least.  The decision does not articulate a rational basis on which the bank’s liability for monetary damages was imposed for the actions or inactions of its borrower.  No prior case has turned a lending party into essentially a surety or guarantor of its borrower.  The various covenants on which the court relied to find the elements of “control” are typical in virtually every credit facility in the E&P lending space, and are in fact encouraged by Federal regulations and lending guidelines.

 

                    The foreseeable adverse implications of this decision were correctly noted by Judge Bleich, sitting pro tempore, and joined by Chief Judge Brown, who “strongly agreed” with the dissenting reasons of Judge Bleich on rehearing denial.  As cogently recognized by Judge Bleich:

 

Devastating economic repercussions might possibly develop throughout the lending industry if the original opinion of this court is maintained.  Serious and harmful impact on the oil and gas industry is foreseeable.  At a minimum, confusion will develop inside the legal community, as well as to other advisors to the respective companies within those industries if the original pronouncement of this court is maintained.  Notwithstanding a generally well written and analyzed original opinion and the instructive language therein that this is a somewhat isolated fact setting, cautious managers and decision makers within those industries will incur a most chilling effect on their businesses.  All of these developments can be potentially harmful in a broader sense; e.g. the potential impact on the financial condition of this state resulting from lost revenue.[11]

 

                    If this radical decision is correct (and this author does not believe it to be), banks should be concerned that the same result might attach if the borrower-mineral lessee is found liable for a “legacy lawsuit,” damages for personal injury or death, failure of the operator to pay bills to contractors, or other fault or liability of the borrower-lessee. 

 

                    To be sure, even beyond the energy lending space, a commercial lender in a sophisticated transaction typically enjoys an array of covenants that might be characterized as elements of “control,” potentially leading to unantici­pated responsibility for a fault of its borrower.

 

                    Beyond the important topic of the liability of a bank for the faults of its borrower, other issues presented in the case include the issue of whether a court is authorized to award “treble” or only “double” the amount of royalties due as damages for nonpayment of royalties, finding a lessee solidarily liable for damages related to an interest which it did not own, and the amount of attorney’s fees awarded ($1,061,803).

 

                    Wells Fargo filed an application for rehearing that was denied on August 7, 2017, with two blistering dissents, as partially noted above.  The defendants (Wells Fargo, Cubic and Tauren) filed applications with the Louisiana Supreme Court on September 6, 2017, seeking review by that court.  The case is not final, and bears watching as it proceeds.[12] 

 

 



[1]         2017 WL 2391927 (La. App. Ct. 2d 2017).

[2]         Parties cast as being “solidarily liable” means that each party can be held liable for the whole of the monetary obligation, and the creditor is not required to pursue each party separately for its actual share.

[3]         Id. at *1.

[4]         Article 206 of the Louisiana Mineral Code.

[5]         Article 124 of the Louisiana Mineral Code.

[6]         Article 207 of the Louisiana Mineral Code.

[7]         See Patrick S. Ottinger, Louisiana Mineral Leases:  A Treatise, § 1-25(e) (Claitor’s Law Books & Publishing Division, Inc., 2016), for a discussion of volatility in bonus prices in the Haynesville Shale in Northwest Louisiana in the year 2008, documenting per acre bonus payments ranging from $150 (February 2008) to $25,000 (July and August 2008).

[8]         The absurdity of this finding would be that the mortgage would have been extinguished by “confusion” (Louisiana’s version of the doctrine of “merger”).

[9]         This typical mortgage provision read, thusly: 

          2.03 Assignment.  To further secure the full and punctual payment and performance of all present and future Indebtedness, up to the maximum amount outstanding at any time. . . . Mortgagor does hereby absolutely, irrevocably and unconditionally pledge, pawn, assign, transfer and assign to Mortgagee all monies which accrue after 7:00 a.m. Central Time . . . to Mortgagor’s interest in the Mineral Properties and all present and future rents therefrom . . . and all proceeds of the Hydrocarbons . . . and of the products obtained, produced or processed from or attributable to the Mineral Properties now or hereafter (which monies, rents and proceeds are referred herein as the “Proceeds of Runs”). Mortgagor hereby authorizes and directs all obligors of any Proceeds of Runs to pay and deliver to Mortgagee, upon request therefor by Mortgagee, all of the Proceeds of Runs . . . accruing to Mortgagor’s interest[.]

[10]        2017 WL 2391927 at *33.

[11]        Dissent in the Denial of Rehearing, p. 1.

[12]        In the interest of full disclosure, this author submitted an amicus curiae (“friend of the court”) brief with the Louisiana Supreme Court on behalf of the American Bankers Association and the Texas Bankers Association, in support of the writ application filed by Wells Fargo.

 

Pat Ottinger is a partner in Ottinger Hebert, L.L.C., where he has practiced oil and gas law since 1974.  He is a graduate of the Paul M. Hebert Law Center at Louisiana State University.  He is licensed to practice in Louisiana and Texas.  Since 1996, he has taught the course in Mineral Rights at the Paul M. Hebert Law Center.  He is the author of A Course Book on Louisiana Mineral Rights, utilized at three law schools in the state.  He published a comprehensive work on mineral leases, entitled Louisiana Mineral Leases:  A Treatise, available through claitors.com and amazon.com.  He is an experienced mediator and arbitrator, rendering such services through The Patterson Resolution Group.  He currently serves as Chair of the Advisory Council of the Mineral Law Institute at LSU.  He is a member of the Mineral Code Committee, Prescription Committee, Counter-letter Committee, Unsolicited Offers Committee, and Tax Sales Committee, and is Reporter for the Risk Fee Act Committee of the Louisiana State Law Institute.  He is a Past President of the Louisiana State Bar Association, and served as Chair of the Mineral Law Section of that association.  He served as City-Parish Attorney of Lafayette Consolidated Government from January 2004 to February 2011.

 

 

Created by: Martha Mills at 9/4/2017 8:02:24 PM | 0 comments. | 294 views.

American Association of Professional Landmen - Director News

Damon R. Weger, CPL

This year’s Annual Meeting in Seattle was well attended and by all accounts a success!  Planning for the Seattle meeting was a challenge in the wake of the low attendance numbers that came out of the 2016 Orlando meeting, but key members of AAPL felt that it could still be viable even with the challenges.  They worked with the host hotel and others to lower our costs allowing us to move forward with lower budgeted attendance numbers.  The Seattle meeting exceeded the budgeted attendance of 300 members with actual attendance at around 485 members and 118 spouses and other guests.  If you haven’t attended an AAPL Annual Meeting yet, I assure you it is worth your time and expense.  Many members bring their families along and use their time around the seminar and Expo as a vacation and to see the sights, since it is usually held in a great location.

AAPL management expected about a 10% decrease in membership over the past year, but it did not lose members and actually came out gaining a few.  AAPL is now sitting at about 16,700 members and is, along with the rest of us, anticipating a good year.

Summer NAPE:  We are looking good for a successful Summer NAPE - August 16-17.  If you have not made plans yet, now would be a good time to do so.  A new idea was tried out in Seattle for those looking for some social interaction and will also be tried out at NAPE in Houston this summer.  The idea is termed “Hot Play Happy Hour Socials” and will be held at local hot spots within walking distance of the George R. Brown Convention Center.  The socials are organized by active plays (e.g. Bakken, Permian, Scoop/Stack, Eagle Ford, Marcellus/Utica and Haynesville/Bossier) and are a fun and easy way to network with others working in your region of business.

If you are an AAPL member and eligible for the Certified Professional Landman (CPL) designation, but have not taken the CPL exam, please consider taking the short course and becoming certified.  It is our only land industry special designation and can only serve to help you along in your careers.  There are an increasing number of companies that request CPLs.

Also, for all of you who are working steadily and can afford it, please consider making a donation to the AAPL Educational Foundation to help further its mission of advancing the land community.  A planned, charitable donation to the AAPL Educational Foundation, Inc. is a gift that creates a lasting legacy within the oil and gas industry.  In addition, your gift will make a tremendous difference in the lives of landmen in furthering their continuing education and ultimately advancing their careers.

Finally, I would like to thank all LAPL members for your continued support and encouragement over the past four years.  I have considered it an honor and blessing to have served you as your AAPL Director and am now confidently passing the torch to the next Director.

As always, thank you all and may God Bless each of you.

Damon Weger, AAPL Director

Created by: Webmaster at 8/8/2017 7:57:59 AM | 0 comments. | 543 views.
Synergy Land Group, LLC is seeking experienced Title, Abstracting, Due Diligence, Leasing & Mineral Acquisition agents for contract positions locally and out of State. The ability to travel is a plus. Please submit a detail of your work experience, resume, references, and day rate requirements to info@synergylandgroup.net.
Created by: Webmaster at 7/7/2017 8:16:42 AM | 1 comments. | 530 views.

HPS Oil & Gas Properties, Inc. has immediate needs for experienced abstractors and title runners for North Louisiana projects.  Please email resume’ to gary@hps-og.com or jbivins@hps-og.com.

Created by: Martha Mills at 5/30/2017 8:52:36 AM | 0 comments. | 691 views.

LOUISIANA LEGAL UPDATE

By Andrea Tettleton

Mayhall Fondren Blaize

 

Smith vs Andrews, 2017 WL 603992

(La. App. 2 Cir. 2/15/17)

 

In the Smith case, the mineral servitude owners brought an action against the surface owners alleging that the surface owners were attempting to usurp their rights under the mineral servitude. The case discusses many legal issues, but we will focus on the arguments and decisions of the court regarding mineral servitude maintenance.

 

The defendants, Billy and Betty Ruth Andrews, owned several tracts of land located in Sections 23 and 33, Township 13 North, Range 14 West in DeSoto Parish. Ameritas Life Insurance Corporation owned a mineral servitude burdening part of the land, and the plaintiffs, the Smiths, owned a mineral servitude burdening some of the same property. Ameritas and the Smiths executed oil, gas and mineral leases in 1966 on the servitudes. Four wells were drilled, but only one well continued to produce, the Rogers No. 1 Well. This case concerns operations on and production from the Rogers No. 1 Well.

 

David Ogwyn, dba Quest Energies, LLC, acquired the 1966 Leases and was designated as operator of the Rogers Well. In 1994, the Smiths and Ameritas executed oil, gas and mineral leases in favor of Ogwyn. In 2001, Terry Dale Jordan was named operator of the wells, and Quest assigned the leases to Mr. Jordan. Sometime in 1990, Quest and Mr. Andrews entered into a verbal agreement whereby Mr. Andrews would serve as pumper on the Rogers Well, and would share in the net profits from the well. In May of 1997, Mr. Andrews reported that the Rogers Well was having difficulties and stopped pumping; however, evidence was presented that the well continued to use electricity through September of 1998. Further, on May 21, 1999, oil was sold from the storage tanks, and the Smiths and Ameritas received royalty payments as a result of said production and sale.

 

In 2007, the Smiths and Ameritas executed oil, gas and mineral leases in favor of Beusa. In 2008, Mr. Andrews presented evidence to the Louisiana Office of Conservation that production on the Rogers Well had stopped producing in 1997, that the servitude owners were aware of the lack of production, and the Office of Conversation amended the records to show that the well did not produce after 1997. Mr. Andrews then contacted Beusa and informed Beusa that all mineral rights will be united in the Andrews and to hold off on drilling any additional wells. Mr. Andrews then contacted the Smiths   and  Ameritas  demanding  acknowledgment that the mineral  servitudes had since terminated. The Smiths filed a lawsuit against the defendants, Quest, Mr.  Jordan  and  Mr.  Ogwyn  alleging that the defendants were attempting to usurp their mineral servitude. Mr. Andrew filed a reconventional demand asserting that the Rogers Well ceased producing in 1997; therefore, the mineral servitudes have terminated. After several summary judgments and writ applications, a bench trial was    held whereby the court determined that Mr. Andrews was not credible, had presented false evidence to the court regarding the lack of production from the Rogers Well and ruled in favor of the mineral servitude owners. Mr. Andrews appealed claiming numerous assignments of error, but we will focus on the arguments relating to prescription of the mineral servitude.

 

Termination Due to Nonuse

 

Mr. Andrews argued that even if his testimony is disregarded, there is sufficient evidence to prove that the mineral servitude terminated through nonuse. To contradict the defendants assertion, the plaintiffs presented evidence that that the well used electricity through September of 1998 to power the pump. Further in October of 1997, 69 barrels of oil were sold from the storage tank attached to the well, and testimony was presented that no oil was brought from any other place and stored in the tank. Also, an engineer testified that the only way to get the oil levels measured in the tank in May of 1999 was through production from the Rogers Well. The court agreed with the evidence presented by the plaintiffs that there was production from 1997 through 1999.

 

Intent to Act for Servitude Owner

 

Mr. Andrews also argued that the actions of Mr. Jordan, the operator of the well, were not carried out on behalf of the mineral servitude owners, because there was no legal relationship between them. Citing La. R.S. 31:42 and 31:43, the court found that argument to be meritless. La. R.S. 31:42 states that “except as provided in Articles 44 through 52, use of a mineral servitude must be by the owner of the servitude, his representative or employee, or some other person acting on his behalf.” La. R.S. 31:43 provides that “a person is acting on behalf of a servitude owner only when there is a legal relationship between him and the servitude owner…or when there is clear and convincing evidence that he intended to act for the servitude owners. Silence or inaction by the servitude owner will not suffice to establish that a person is acting on behalf of the servitude owner.” Mr. Andrews argued there was no legal relationship, because when the Smith lease was assigned to Mr. Jordan, it had terminated under the 90 day continuous operations clause due to lack of operations. While the court found this to be true, it held that the plaintiff provided clear and convincing evidence that Mr. Jordan intended to act of the servitude owners.

 

Mr. Jordan testified that he had made a deal with Ogwyn and Quest to take over the Rogers Well to get it pumping again.  He testified that he knew the wells were subject to a lease and that any production obtained  as a result of his efforts would benefit the royalty owners. He testified that he believed the assignment of the leases from Ogwyn gave him the right to produce the Rogers Well and that he was acting for his own benefit and for anyone else who had an interest in the lease. Further, the assignment clearly referenced that the leases were executed by mineral servitude owners. The court held that this evidence was sufficient to show that Mr. Jordan was aware that the Smiths, as mineral servitude owners, had rights to any production and that he was acting to make money for himself and the mineral owners.

 

Production Under R.S. 31:38

 

Mr. Andrew’s third argument was that production obtained by Mr. Jordan was insufficient to interrupt the running of prescription, as only a small amount was obtained, and it was never proven to be oil. The court rejected the argument by citing La. R.S. 31:29, 31:36 and 31:38. Prescription of nonuse running against a mineral servitude is interrupted by good faith operations for the discovery and production of minerals. To interrupt prescription, it is not necessary that minerals be produced in paying quantities. It is only necessary that minerals be produced in good faith with the intent of saving or otherwise using them for some beneficial purpose. Mr. Jordan utilized a bumping process to get the well producing oil again. He went to the well every other day, and each time the well was operational and was pumping oil. Mr. Jordan stated that the well produced between five to nine barrels of oil, but it was never enough to flow into the storage tank. The evidence showed that Mr. Jordan obtained production from the well from late 2001 through January 14, 2002. The court held that the defendants were incorrect in arguing that the amount of oil obtained was insufficient to satisfy the requirements of La. R.S. 31:38. The statute only requires that minerals actually be produced in good faith with the intent of saving them for a beneficial purpose. Mr. Jordan testified that he intended to achieve enough production to make money for himself and the mineral owners, and the court held that was sufficient to meet the requirements of La. R.S. 31:38.

 

Operations Under R.S. 31:39

 

Mr. Jordan testified that the pump was hung down, and he jarred it loose by causing the rods to strike the pump. The process is called “bumping” and took several days. The defendants argued that “bumping” the well to restore production was not a sufficient operation under La. R.S. 31:39 to interrupt prescription. The comment to La. R.S. 31:39 states that operations should be construed to include any good faith reworking operations or operations for recompletion of the well in another sand that involve use of equipment in the well bore. Gathering of geological information does not suffice. The defendant argued that “operations” require the use of equipment in the well bore to be classified as a “good faith” operation and that bumping the well was not enough. In its decision, the court utilized the Jardell v Hillin Oil Co., 485 So.2d 919 (La. 1986) which discussed reworking operations. The court in Jardell held that reworking is any process or procedure you may undertake to either regain, increase or create new production in a well or activity to restore or increase production from a well that has been drilled. For reworking to occur, it is necessary first that production has ceased or slowed down or has never been achieved. Reworking need not involved additional drilling. The court in Jardell made it clear that reworking operations encompass essential preparatory steps. The court in Jardell ultimately held that timely essential preparatory steps directly related to resolving the issue were part of reworking operations. The court held that Mr. Jordan’s actions in jarring the well in order to cause the pump to function constituted a sufficient good faith reworking operation to interrupt prescription under La. R.S. 31:39. The court affirmed the decision of the trial court and held that the mineral servitudes were still in effect.

 

Andrea K. Tettleton is a partner of Mayhall Fondren Blaize. Andrea represents major and independent oil companies in title examination, division order work and contract negotiation. She graduated magna cum laude from Texas Christian University with a Bachelor of Science in Psychology. She earned her Juris Doctorate cum laude from the Paul M. Hebert Law Center at Louisiana State University in 2009.

 

 

 

 

 

 

     

 

 

 

      

 

Created by: Martha Mills at 5/30/2017 8:48:09 AM | 0 comments. | 657 views.

FROM THE EXECUTIVE COMMITTEE

Annie Caillouet

 

We often hear people say, “May is such a busy month!”  With Mothers’ Day, high school & college graduations, the close of the school year and Memorial Day to wrap things up, we are often in a space of celebration and honor – looking to what’s next on life’s journey.  As we gleefully prepare for a relaxing summer vacation get-a-way, we also get to reflect on how well we have played the game for the first half of 2017.  Have we achieved the goals that we set for ourselves at the beginning of the year?  If so, how can we best use that momentum to continue propelling us forward and through the remainder of the year?  If we’ve fallen short of our goals, we get to assess the “how” and “why” so that we may re-direct our words and habits towards successful goal attainment.  We may also choose to forfeit those goals no longer conducive to our desires, while committing ourselves to new ones more fully aligned with our course trajectory.

 

Like so many who celebrate and eagerly await the next chapter, we revel during the month of May, knowing how we have persevered through many cold and rainy days to get to where we are right now.  So, with every blooming rosebush and those lingering scents of magnolia, jasmine and honeysuckle, we find ourselves thankful and satisfied in our achievement and success.  Our senses now awaken us to the possibilities of tomorrow, and we become re-energized and excited for what we will achieve before the year’s end.  Will we seek to learn a new skill or obtain a certification?  How will we be better leaders: in our homes; in our workplace; in our community?  What will motivate us to stay committed to our goals and dreams?  From whom will we learn something new and innovative in our careers?  How will we positively influence our peers and encourage them towards greatness?  Does “the next step” involve becoming a member of the LAPL Executive Committee??

 

If that last possibility perhaps piques your interest, we hope that you’ll consider becoming a part of the slate of candidates seeking to lead our LAPL organization in the upcoming cycle.  The following positions are up for election: 1st Vice President, 2nd Vice President, Treasurer, LAPL Director (2) and AAPL Director.  Ballots will be going out soon, so if you’re eager to be a part of the executive team, please contact Pete Van Der Veldt (337-281-6259) to submit your nomination.

 

And as we look to what’s next on our journey, “May” we always be kind, always be learning, and always be striving for greatness! in our careers?  How will we positively influence our peers and encourage them towards greatness?  Does “the next step” involve becoming a member of the LAPL Executive Committee??

 

If that last possibility perhaps piques your interest, we hope that you’ll consider becoming a part of the slate of candidates seeking to lead our LAPL organization in the upcoming cycle.  The following positions are up for election: 1st Vice President, 2nd Vice President, Treasurer, LAPL Director (2) and AAPL Director.  Ballots will be going out soon, so if you’re eager to be a part of the executive team, please contact Pete Van Der Veldt (337-988-9256) to submit your nomination.

 

And as we look to what’s next on our journey, “May” we always be kind, always be learning, and always be striving for greatness!

 

 

 

 

 

Created by: Martha Mills at 5/1/2017 1:46:21 PM | 0 comments. | 711 views.

Seeking Experienced Landmen

Penterra Services, LLC is seeking experienced Title, Abstracting, Leasing & Mineral Acquisition agents for contract positions for ongoing projects in Oklahoma, Texas, Louisiana, West Virginia, Ohio, Pennsylvania, North Dakota, Colorado and Kansas.  Please submit a detail of your work experience, resume, references, and day rate requirements to info@penterraservices.com.  Website: www.penterraservices.com

 

Created by: Martha Mills at 4/27/2017 10:02:45 AM | 0 comments. | 635 views.

April 2017 Legal Update

by

Gabriel R. Ackal, Jr.

Randazzo Giglio & Bailey LLC

 

Kennedy v. Saheid, 51,044 (La.App. 2nd Cir. 11/16/2016); 209 So.3d 985

 

               Roy Gish agreed to sell his 1,096–acre tract of land, complete with about 500 oil and gas wells, to Mohamed Saheid.  Saheid faxed Gish an offer (“the Offer”) to buy the property for $4 million “for 100% ownership,” with $200,000 down and the remainder to be owner-financed over five years.  On October 9, 2004, Saheid and Gish signed a one-page agreement (“the Agreement”) with respect to “Real Estate transaction involving 1,096 acres, including all oil and gas leases ….”  The Agreement included the following provision:

 

Other:  SELLER to give a best effort to deliver to BUYER the remaining 12.5% GISH family oil and gas lease holding.

 

               On November 2, 2004, the parties executed an Act of Credit Sale and Assignment of Oil, Gas and Mineral Leases, Rights to Pipelines, Wells and Gathering Systems, and Equipment Leases (“the Act of Credit Sale”).  The Act of Credit Sale recited that Gish and a certain trust conveyed “ALL THAT CERTAIN LOT OR PARCEL OF GROUND,” with all rights, ways, servitudes and component parts to Saheid. The instrument also included a special provision (“Paragraph K”) that stated:

 

K. The Trust and Purchaser acknowledge and agree that the Trust has represented to the Purchaser that the Trust is the sole and only owner of an undivided 87.5% interest in and to the leases assigned herein. Should that representation be incorrect, and should any claim be successfully asserted against the interest conveyed by the Trust to the Purchaser, then, and in that event, the purchase price attributable to said leases shall be reduced by the sum of [$400,000], without the necessity of the modification of this agreement and/or the execution of any other documents, provided, however, that any such claim be asserted on or before November 30, 2009.

 

Gish contended that he was the sole owner of the land and minerals, and that he had established the trust for tax purposes; he stated that the existence of the trust did not affect the 12.5% retention.  He went on to argue that the parties intended for Gish to retain a 12.5% mineral interest in the property.  At the trial court level, the parties stipulated that Saheid paid the 12.5% mineral royalty associated with this interest to Gish for almost four years.  

 

               When certain points of dispute arose, the parties executed an instrument entitled “Contract” on April 24, 2008, in which Saheid agreed to delete Paragraph K in its entirety from the Act of Credit Sale.  The Contract also included the following provision (“Paragraph 2(d)”):

 

2. Buyer shall: * * *

d) Waive and relinquish all rights to reduce the purchase price based on any claim that the percentage interest in any land owners['] royalty interest or leases assigned to buyer were less than what has been represented by seller * * *. Buyer consents to and acknowledges that seller has and shall continue to withhold a 6.25% royalty for the Kennedy family and a 6.25% royalty to Ruth Sheppard et al, on the 1,096 acres.

 

Additionally, in February 2009, Gish and Saheid executed an Act of Correction which corrected property descriptions, but made no mention of the 12.5% reservation. 

 

               At trial, Saheid argued that because there was no express reservation in the instruments executed in connection with the sale, Gish was not entitled to the 12.5% interest.  Gish, on the other hand, argued that the instruments reflected the intent to sell only an 87.5% interest.  Allegedly, Saheid could not get financing for the purchase, so the parties settled on owner-financing with retention of a 12.5% mineral interest.  However, Saheid claimed his original intention was to purchase all mineral rights with no reservation by Gish.  Saheid argued that because the Correction was silent as to the 12.5% reservation, his original intent was clear.  

 

               In its ruling, the trial court cited the language in the Agreement (which referred to a 12.5% mineral interest “remaining”), the Act of Credit Sale (“an undivided 87.5% interest in and to the leases assigned herein”), and the Contract (“seller has and shall continue to withhold” two 6.25% shares).  The court noted that the parties conceded that the Contract was “inartfully drafted” and that the “mineral interests were not reserved as they should have been.”  Because of the ambiguity, the court accepted parol evidence.  The court found that the parol evidence, along with the repeated mention of “12.5%” and “87.5%” in the instruments, and Saheid’s compliance with the 12.5% retention for several years, supported Gish’s argument that the intent of the parties was to convey only an 87.5% interest.

 

               On appeal, Saheid argued that the trial court erred in allowing parol evidence because both the Act of Credit Sale and the Contract were clear and explicit, and lacked any language reserving a mineral interest.  He went on to state that the four years of royalty payments were made in error.  While the appellate court noted that the instruments lacked the standard phraseology of “grant, bargain, sell, convey,” it also noted that in the Contract, Saheid consented to and acknowledged the fact that Gish would withhold a 12.5% interest.  Also, although it agreed with Saheid's position that the documents do not make an express reservation of mineral rights, the court held that the recurrent reference to a 12.5% interest—be it “remaining,” “withheld,” or inferred, along with Saheid paying Gish the mineral royalty for nearly four years, strongly suggested that the parties intended to make the reservation; therefore, Gish was entitled to the 12.5% mineral interest.

 

Guy v. Empress, L.L.C., 50,404 (La.App. 2nd Cir. 4/8/2016); 193 So.3d 177

 

               On March 23, 2004, plaintiffs and Long Petroleum, L.L.C. (“Long”) entered into an oil, gas and mineral lease which contained a habendum clause, a continuous drilling operations clause, a traditional Pugh clause, a “horizontal” Pugh clause, and an assignment clause.  The continuous drilling operations clause provided:

 

If within ninety (90) days prior to the end of the primary term, Lessee should complete or abandon a well on the lands described above or on land pooled therewith, or if production previously secured should cease from any cause, this lease shall continue in force and effect to ninety (90) days from such completion or abandonment or cessation of production.  If at the expiration of the primary term or at the expiration of the ninety (90) day period for in the preceding sentence, oil, gas, sulphur of other mineral is not being produced on said land or on land pooled therewith, but Lessee is then engaged in operations for drilling, completion or reworking thereof, or operations to achieve or restore production, or if production previously secured should cease from any cause after the expiration of the primary term, this lease shall remain in force so long thereafter as Lessee either (a) is engaged in operations for drilling, completion or reworking, or operations to achieve or restore production, with no cessation between operations or between such cessation of production and additional operations of more than ninety (90) consecutive day, or (b) is producing oil, gas, sulphur or other mineral from the said land hereunder or from land pooled therewith (emphasis added).

 

               The horizontal Pugh clause provided:

 

It is understood and agreed that this lease shall terminate at the expiration of the primary term as to all depths 100 feet below the deepest depth in any well drilled on the leased premises or on lands pooled therewith, subject however to the continuous drilling provisions contained in this lease.

 

               The lease contained a primary term of three (3) years with an option to extend for an additional two (2) years.  The option to extend was exercised and the primary term was extended to March 23, 2009.  On August 1, 2008, Long assigned its rights, title and interest in the lease to Empress, L.L.C. (“Empress”) except Long reserved “all rights, title and interest in strata and depths from the surface to the base of the Cotton Valley formation.”

 

               On January 16, 2009, a well (the “Edwards Well”) was spudded on lands unitized with the leased premises.  This well was completed in June 2009 at 8,200 feet in the Hosston formation, and the well produced through December 31, 2011.  Thereafter, within ninety (90) days of completion of the Edwards Well, Chesapeake spud a well (the “Yarbrough Well”) on September 21, 2009 on lands unitized with the leased premises with the purpose of producing from the Haynesville Zone.  The Yarbrough Well was completed on June 30, 2010 and it was producing as of the date of this decision (April 8, 2016). 

 

               The plaintiffs believed that the lease had expired as to depths below to base of the Hosston formation on March 23, 2009 and, on March 5, 2012, requested that Long, Empress, Chesapeake and any other working interest owners execute a partial release as to “all depths 100 feet below the deepest depth in the Edwards No. 1 Well in accordance with [the provisions of the] Lease.”  On March 15, 2012, defendants released the lease as to “all strata 100 [feet] below the stratigraphic equivalent of the Haynesville Shale formation” pursuant to the horizontal Pugh clause contained in the lease. 

 

               On August 14, 2012, plaintiffs filed suit, alleging that the lease had terminated as to all depths below the base of the Cotton Valley formation. The plaintiffs argued that the lease was horizontally divided as a result of the assignment of the lease as to depths below the base of the Cotton Valley formation and that as of March 23, 2009 (the expiration of the primary term) operations had not been conducted on depths below the base of the Cotton Valley formation sufficient to maintain the lease as to those deeper depths.  On March 25, 2014, plaintiffs filed a motion for summary judgment; the defendants filed an opposition and a cross-motion.  The district court granted the defendants’ motion for summary judgment, ruling that “although the Edwards Well ceased producing, the production from the Yarbrough Well continues to hold the entire lease.”

 

               The Second Circuit affirmed the district court’s ruling, holding that the assignment of the lease as to depths below the base of the Cotton Valley formation from Long to Empress did not constitute a division of the lease; thus, operations and/or production from depths either above or below the Cotton Valley formation was sufficient to maintain the lea, at least until 90 days after completion of the Yarbrough Well.  The court further held that because there was no evidence of record to indicate that there was a lapse in activity for any 90-day period, and because the Yarbrough Well was completed on June 30, 2010 without a gap of ninety (90) days since drilling operations commenced, the lease was maintained beyond the extended primary term by the “continuous drilling operation.”  Specifically, the court stated that the “defendants were engaged in operations for drilling, completion or reworking, or [in] operations to achieve or restore production, with no cessation between operations or between such cessation of production and additional operations of more than ninety (90) consecutive days.”

 

 

Gabriel R. Ackal, Jr. is an associate with the law firm of Randazzo Giglio & Bailey LLC.  Before practicing law, Gabe worked as an Independent Petroleum Landman in Louisiana and Texas.  As a landman, Gabe has experience abstracting title and managing lease acquisition plays.  His legal practice is primarily focused on Louisiana and Texas mineral and energy law, including rendering drill site and division order title opinions, as well as counseling on transactional matters, and providing nuts and bolts operational advice.  Gabe is licensed to practice law in Louisiana (2010) and Texas (2013).

 

 

Created by: Martha Mills at 4/27/2017 9:58:19 AM | 0 comments. | 490 views.

FROM THE PRESIDENT

Pete Van Der Veldt

 

Water’s Boiling & Balls Will Be Soaring!

 

Well it’s here, and we could not have made it possible without the generosity of our Sponsors.  I wish to first thank and recognize the following for stepping up:

 

Beta Land Services, LLC

Schoeffler Energy Group, Inc.

Mack Energy Co.

Scorpion Land Services, LLC

Petroquest Energy, LLC

Liskow & Lewis

Penterra Services, LLC

Onebane Law Firm

Bullen & Plauche, LLC

Orbit Energy, Inc.

Planet Operating, LLC

C.H. Fenstermaker & Associates

SAPL

Sterling Automotive

iLandman

Synergy Land Group, LLC

MKM & Associates, Inc.

Oil Land Services, Inc.

Mark A. O’Neal & Associates, Inc.

Trinity Energy, LLC

Gateway Land Services, LLC

Milling Benson Woodward, LLP

Audubon Energy, LLC

Hyland Abstracting, LLC

Stone Energy Corporation

 

Thank you for your support and making these events possible! 

 

I also want to thank everyone on the Executive Committee for their assistance and hard work in moving these events forward.  Most are not aware, but due to the decline in membership and the industry, the LAPL was unable to make scholarships available for the ULL Petroleum Land & Resource Management students this Spring.  On my watch, and the first time I’m aware of.  Therefore, any “meat left on the bone” from the events this week will ensure scholarships will be available next time around no matter what the future holds. So, get online, buy your tickets and attend the boil! Let’s make these events a success!

 

There have been flurries of activity in recent months and I hope everyone is overwhelmed with work. Hopefully, this is a sign of more things to come. That said, we continue to have openings this year for Safety Meetings and I thank S. Paul Provenza for filling the void this past March meeting at the Tap Room.  I know everyone who attended had a great time.  Also, we will soon be moving forward with elections and this is your opportunity to serve and better our organization.  Be looking for the announcements and throw your hat in the ring.  I extend my sincerest thanks for those who have served, and continue to serve and support the LAPL.