XXI Oil & Gas, LLC v. Hilcorp Energy Co.
124 So. 3d 530
| La. Ct. App. | 2013Background
- Hilcorp recompleted a unit well on Jan 11, 2011; XXI acquired ~20% of unit leases in Feb 2011.
- On Apr 21, 2011 XXI sent certified-letter requests under La. R.S. 30:103.1 for a sworn, detailed, itemized initial cost report and ongoing quarterly reports.
- Before receiving XXI’s letter, Hilcorp sent an AFE with cost estimates and an invoice; the AFE was unsigned as a sworn statement and lacked some revenue detail.
- XXI elected to participate on May 20, 2011, but later sued when Hilcorp failed to provide a sworn, detailed statement as required; XXI sought statutory penalty under La. R.S. 30:103.2 (forfeit operator’s right to demand contribution for drilling costs).
- The trial court granted partial summary judgment for XXI, ruling Hilcorp’s AFE was not a sworn, detailed statement and therefore Hilcorp forfeited the right to deduct costs from XXI’s share.
- On appeal, Hilcorp argued (1) existence/validity of XXI’s leases raised material fact precluding summary judgment, and (2) equitable/intent-based reading should excuse technical noncompliance because the AFE achieved the statute’s purpose.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether summary judgment on statutory penalty was premature due to contested validity of XXI’s leases | XXI: lease validity is irrelevant to whether operator complied with disclosure statute | Hilcorp: lease validity is a material fact that could preclude penalty | Court: Lease-validity not before trial court; not required to decide for penalty issue; summary judgment proper on statutory noncompliance |
| Whether Hilcorp’s AFE satisfied La. R.S. 30:103.1 despite not being sworn | XXI: statute requires a sworn, detailed, itemized statement; AFE is not sworn and insufficient | Hilcorp: AFE substantially satisfied statute’s purpose; XXI’s participation waived strict formalities | Court: Statute is unambiguous; sworn and detailed requirements are mandatory; AFE not sworn or adequately detailed; penalty applies |
Key Cases Cited
- Thibodeaux v. Lafayette Gen. Surgical Hosp., 38 So.3d 544 (La. App. 3 Cir. 2010) (summary-judgment de novo review)
- State Farm Mut. Auto. Ins. Co. v. U.S. Agencies, L.L.C., 934 So.2d 745 (La. App. 1 Cir. 2006) (statutory interpretation may be decided on summary judgment)