Slawson Exploration Co., Inc. v. Nine Point Energy, LLC, 966 F.3d 775

Slawson and Triangle Petroleum Corporation (TPC) entered an Exploration and Development Agreement (EDA) creating an Area of Mutual Interest (AMI) allocating lease interests 70% to Slawson and 30% to TPC.
The EDA required that, for any well in which TPC elected to participate, TPC would pay its participation share plus an additional 10% of its share (the "Promote Obligation") to Slawson.
TPC’s successor (TUSA) filed Chapter 11 on June 29, 2016; Slawson filed a proof of claim asserting the Promote Obligation is not dischargeable because it runs with the land.
Bankruptcy confirmation expressly preserved Slawson’s right to litigate whether the Promote Obligation runs with the land; TUSA emerged as Nine Point Energy, LLC (Nine Point).
Slawson sued for declaratory relief alleging the Promote Obligation is (1) a covenant running with the land, (2) an equitable servitude, or (3) a real property interest; the district court granted summary judgment for Nine Point.
The Eighth Circuit affirmed, holding the Promote Obligation is none of those property interests under North Dakota law.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Promote Obligation is a covenant running with the land	Slawson: the Promote Obligation directly benefits and incentivizes development of the land and thus runs with it	Nine Point: the payment is a personal covenant/consideration, not a direct benefit to the land	Court: Not a covenant running with the land—benefit is indirect/personal, so it does not run with the land
Whether the Promote Obligation is enforceable as an equitable servitude	Slawson: equitable enforcement is appropriate because the obligation affects use/development of land	Nine Point: North Dakota courts have not recognized equitable servitudes in this context; analogous doctrines are distinct	Court: Declined to apply equitable servitude—ND courts limited recognizing servitudes in narrow contexts (e.g., condominium statutes)
Whether the Promote Obligation is a real property interest (akin to an overriding royalty)	Slawson: the obligation is like an overriding royalty carved from the working interest, payable on drilling	Nine Point: drilling-cost allocation is not a profit or royalty issuing from the land	Court: Not a real property interest—drilling-cost allocation differs from royalties/profits issuing out of the land

Beeter v. Sawyer Disposal LLC, 771 N.W.2d 282 (N.D. 2009) (personal covenant that does not directly benefit land does not run with land)
Wheeler v. Southport Seven Planned Unit Dev., 821 N.W.2d 746 (N.D. 2012) (covenants to fund maintenance/improvements can run with the land when tied to property benefit)
Spring Creek Exploration & Production Co. v. Hess Bakken Inv., II, LLC, 887 F.3d 1003 (10th Cir. 2018) (AMI covenants held not to run with the land under North Dakota law as applied by that court)
Golden v. SM Energy Co., 826 N.W.2d 610 (N.D. 2013) (noting parties had stipulated AMI covenant did not run, so court did not decide the issue)
Nantt v. Puckett Energy Co., 382 N.W.2d 655 (N.D. 1986) (oil and gas leases are interests in real property)
Kittleson v. Grynberg Petroleum Co., 876 N.W.2d 443 (N.D. 2016) (working and royalty interests are real property interests)
ANR W. Coal Dev. Co. v. Basin Electric Power Coop., 276 F.3d 957 (8th Cir. 2002) (overriding royalty interests are real property interests)
Corbett v. La Bere, 68 N.W.2d 211 (N.D. 1954) (royalties are profits issuing out of the land)
Finstrom v. First State Bank of Buxton, 525 N.W.2d 675 (N.D. 1994) (royalties characterized as profits issuing from the land)
Slawson v. N.D. Indus. Comm’n, 339 N.W.2d 772 (N.D. 1983) (ownership interests in oil and gas discussed in property context)