Clovelly Oil Co., LLC v. Midstates Petroleum Co., LLC
95 So. 3d 1168
La. Ct. App.2012Background
- Joinder of Clovelly Oil Co. LLC as operator and Midstates as non-operator under a 1972 JOA affecting Pine Prairie Field.
- Midstates acquired a 43.75% non-operating working interest; Clovelly retained 56.25% as operator; JOA terms govern development.
- Midstates obtained a July 1, 2008 oil-and-gas lease from Crowell Land & Mineral; in April 2009 Midstates re-entered and prepared abandoned Crowell wells.
- Clovelly claimed post-assignment leases within Unit Area (Exhibit A) are subject to the JOA; Midstates argued JOA not recorded and inapplicable to New Leases.
- Wells Fargo held mortgages in leases including Pine Prairie Field; Clovelly claimed Wells Fargo has an interest affected by JOA.
- Trial court granted partial summary judgments: (a) JOA does not apply to New Leases; (b) Wells Fargo’s mortgage not subject to JOA; appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the JOA apply to New Leases acquired after the Opex assignment? | Clovelly: Unit Area Exhibit A controls; JOA includes New Leases. | Midstates: JOA applies only to pre-existing or renewed leases; geographic Unit Area governs. | Exhibit A governs; New Leases within Exhibit A are subject to JOA if Midstates assumed rights. |
| Are Wells Fargo’s mortgages in the New Leases subject to the JOA? | Clovelly: Wells Fargo’s security interests should be affected by JOA. | Wells Fargo was a non-party and unrecorded JOA; public records doctrine protects third parties. | Wells Fargo’s mortgage on the New Leases is not subject to the JOA. |
Key Cases Cited
- Amoco Production Co. v. Charles B. Wilson, Jr., Inc., 976 P.2d 941 (Kan. 1999) (geographically defined Unit Area governs intent; typewritten provisions prevail)
- Martin Exploration Co. v. Amoco Production Co., 637 So.2d 1202 (La.App. 1st Cir. 1994) (typewritten Exhibit A controls despite conflicting printed provisions)
- Kuhn v. Stan A. Planche Real Estate Co., Inc., 185 So.2d 210 (La. 1966) (typewritten provisions prevail over printed portions when in conflict)
- Cimarex Energy Co. v. Mauboules, 40 So.3d 931 (La. 2010) (public records doctrine; recording required for effectiveness against third parties)
- Wede v. Niche Marketing USA, LLC, 52 So.3d 60 (La. 2010) (recordation race; unrecorded contract has no effect on third persons)