actions “crosses the line” “from lawfully promoting his own surface interest to unlawfully doing so at the expense of the non-executive interest, thereby engaging in self-dealing that unfairly diminishes the value of that interest.” “We certainly do not hold that an executive must always accept an offer to lease both the executive’s and the non-executive’s mineral interests when the non- executive wishes to accept. But we also do not hold that an executive is never required to accept such an offer.”
straightforward and is heavily dependent on the facts and circumstances.” Examining the facts and circumstances of this case, the Court found that there was sufficient evidence to affirm the judgment. Although “an executive generally does not breach his duty by declining a lease in honest anticipation of obtaining better terms for all”, the Court found sufficient evidence that Texas Outfitters had breached its duty by refusing to lease to El Paso in order to benefit its surface interest in the ranch. The Court said Texas Outfitters’ On February 14, 2019, the Corpus Christi Court of Appeals opined on a Stipulation of Interest that should give pause to oil and gas practitioners. It held that a Stipulation of Interest is of no avail if there is not a pre- existing defect in title. Suggs owned a 640 acre tract in Irion County, Texas (Section 1). A county road crosses the section near the SW corner of the tract and exits at the NE corner. As part of a 1927 land swap the owners conveyed the lands “located North and West of the public road … [containing 147 acres]” it was called the Northwest Tract. In 1930 a partition deed gave A.A. Sugg the remaining 493 acres (640 – 147 = 493). A survey in 1939 said the 1927 deed conveyed all of the land north and west of the public road, including what came to be the disputed
A Stipulation of Interest Case Marsha Ellison v. Three River Acquisition LLC et al. 13-17-00046-CV (Corpus Christi Court of Appeals, 2019
154 acres; it said the Northwest Tract contained 301 acres (147 + 154 = 301). By numerous conveyances the Northwest Tract came to be owned by the Pilon Family Trust. The Trust leased to Questa. Questa assigned to Ellison. Richey received the minerals in the Northwest Tract; Ellison continued as operator/lessee. Sugg leased the Southeast Tract to Samson. In 2006, a title examiner said that the 1930 partition deed to Sugg provided no evidence of where the 493 acres was located on the ground. Samson wanted to drill on the 154 acre tract. The landman, Reece, drafted a boundary stipulation for execution by the mineral owners; it stated that “the Parties desire to declare, stipulate, acknowledge, and establish of record the location of the 147 acre tract and the 493 acre tract in the mineral estate in the Lands.” The “Boundary Stipulation of Ownership of Mineral Interest” described the mineral tract owned by Richey as being 147 acres and the Sugg tract as being “the balance of Section 1, … less and except the Richey 147 acre tract ….” Ellison, the lessee from Richey, was not joined because the stipulation was only as to mineral ownership. There followed: This Stipulation shall be deemed to contain adequate words of grant and conveyance as are necessary and proper to transfer and vest the ownership of the minerals estate in the Lands in each of the Parties in the amounts and proportions set out above.” In 2008, Samson sent a letter to Ellison (the mineral lessee of the Northwest Tract) describing the stipulation, noting that Samson planned to spud the Sugg #3 well
Northwest Tract (147 acres)
Pilon Well #1
“New” Boundary Line
Sugg Well #4
Sugg Well #3
Public Road
Disputed 154-Acre Tract
Southeast Tract (339 acres)
Sugg Well #2
Sugg Well #1
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G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 1 9
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