345 S.W.3d 79
Tex. App.2011Background
- 160-acre Dawson County tract governed by Lindsey Leases and a 1995 Form 610-1982 JOA covering Section 109.
- Lindsey Well drilled 1997; proration unit designated 160 acres around the Lindsey Well, with a 1998 affidavit depicting the unit.
- Forcenergy ownership assigned to Long in 2000; Long acknowledges JOA applicability; RIM becomes Lindsey Well operator in 2004.
- Lindsey Well ceases production December 2006; January 2007 RIM files AFE for workover with estimated cost $320,686; Long does not respond.
- Workover proceeds, reveals partial casing collapse; July 2007 replacement well drilled and production reestablished.
- JOA Article XV.K. offers non-consent relief for required wells/operations to perpetuate or earn leases; non-consent relinquishment to consenting parties contemplated.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of frauds compliance of XV.K | Long contends XV.K fails SOF for future conveyance of interests. | RIM argues entire JOA and referenced documents satisfy SOF; area sufficiently described. | Overruled; SOF satisfied. |
| Whether conditions precedent to XV.K were met | Long argues lack of required consent and improper operator branding. | RIM shows operator status and that XV.K excludes standard consent provisions. | Overruled; conditions satisfied. |
| Enforceability of nonconsent penalty/forfeiture | Long asserts XV.K creates unenforceable penalty. | RIM relies on Valence balancing, noting risk-sharing and incentive to participate. | Overruled; not unenforceable. |
| Rule against perpetuities concerns | Long argues XV.K creates future executory interests violating the rule. | XV.K does not unduly restrain alienation; no restraint on sale/price. | Overruled; not violative. |
| Attorney's fees award – remand for calculation | Disputed fees and sufficiency of affidavits create questions. | Affidavits show amounts; some detail lacking but overall reasonable. | Remanded for factual determination of reasonable and necessary fees. |
Key Cases Cited
- Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005) (nonconsent penalties are permissible; not liquidated damages)
- Westland Oil Development Corp. v. Gulf Oil Corp., 637 S.W.2d 903 (Tex. 1982) (AMI/farmout provisions enforceable with sufficient contract-area description)
- Sabre Oil & Gas Corp. v. Gibson, 72 S.W.3d 812 (Tex.App.-Eastland 2002) (missing royalty owners not always necessary for declaratory relief)
- Abraxas Petroleum Corp. v. Hornburg, 20 S.W.3d 741 (Tex.App.-El Paso 2000) (waiver and standing principles in operator disputes)
- Cherokee Water Co. v. Forderhause, 641 S.W.2d 522 (Tex. 1982) (per se rule about restraints on alienation)
- Kmiec v. Reagan, 556 S.W.2d 567 (Tex. 1977) (SOF description requirements for property conveyance)
- In re Entergy Corp., 142 S.W.3d 316 (Tex. 2004) (standing and declaratory judgment principles; de novo review)