Exxon Corp. v. Emerald Oil & Gas Co., LC
348 S.W.3d 194
| Tex. | 2011Background
- royalty owners (Miesches, O’Connors, Dunns) own minerals in Refugio Field; Exxon drilled/plugged in O’Connor Lease; Emerald acquired part of lease post-termination; Emerald and royalty owners sued Exxon for waste, breach of regulatory duty, negligence-related claims, fraud, and tortious interference; Exxon completed plugging by 1991 and disclosed data via Railroad Commission filings; June 1994 Emerald report disclosed casing cuts and junk; trial court granted partial summary judgment and directed verdicts; court of appeals reversed/ remanded; this Court on rehearing affirmed some aspects and remanded others.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Limitations applicability to waste and misrepresentation claims | Emerald/Miesches tolling via concealment/delivery | Limitations run from accrual; no tolling | Claims time-barred except fraud and breach of lease (later phrasing) |
| Interpretation of 'fully develop' vs Article 4 duty | Article 3(a) requires full development; Article 4 broadens duty | Article 3(a) defines duty; Article 4 aspirational only | Article 3(a) defines duty to fully develop; Article 4 informs but does not override; Exxon liable on breach of lease claim reversal denied |
| Fraud claim timeliness and reliance | Public filings could induce reliance by Emerald | Need 'especial likelihood' of reliance; Ernst & Young standard applies | Fraud claim timely; directed verdict on intent-to-induce reliance reversed for Emerald; court remanded on fraud issues for further proceedings |
| Direction verdicts vs sufficiency on development evidence | Wells in FS75/H12 could be developed further to realize full value | Evidence shows at least one well in each zone; not required to exploit all reserves | No evidence supports failure to drill/complete requisite number; Exxon fully developed under Article 3; judgment for Exxon on breach of lease affirmed |
Key Cases Cited
- Knott, 128 S.W.3d 211 (Tex. 2003) (accrual and discovery rule considerations; know of injury starts limitations clock)
- Ernst & Young v. Pacific Mutual Life, 51 S.W.3d 573 (Tex. 2001) (intent-to-induce reliance requires more than foreseeability; reason-to-expect standard)
- -barrett v. Ferrell, 550 S.W.2d 138 (Tex.Civ.App.-Tyler 1977) (definitions of drilling/completion; contract interpretation in oil and gas leases)
- PPG Indus. v. JMB/Houston Ctrs. Partners, 146 S.W.3d 79 (Tex.2004) (accrual and discovery rule; timely filing after notice of injury)
- HecI Exploration Co. v. Neel, 982 S.W.2d 881 (Tex. 1998) (royalty owners’ duty to investigate after notice of injury)
- KPMG Peat Marwick v. Harrison Cnty. Housing Fin. Corp., 988 S.W.2d 746 (Tex. 1999) (diligence after notice; discovery rule application in mismanagement cases)
- Seagull Energy E&P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342 (Tex. 2006) (contract interpretation; no ambiguity; specific provision controls over general)