Legislative
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Texas HB 2056
Texas
Texas HB 2056, which was left pending in committee on April 10, 2023, relates to a severance tax exemption for oil and gas produced from certain restimulation wells. This legislation provides a temporary severance tax exemption for up to 75% of
restimulation costs, or for 60 months, whichever comes first, when the restimulation treatment was performed using hydraulic fracturing pumps powered exclusively by electricity or natural gas. The exemption is based on the difference between the previous production rate of the well and any added production that results from the restimulation. The Commissioner of the Railroad Commission of Texas, Jim Wright, came out in favor of the novel approach taken by HB 2056. Legal Updates Articles are not intended to be and should not be relied upon as legal advice or to establish any kind of an attorney-client relationship with the author.
Every Lessee for Himself! – In Cromwell v. Onshore, the El Paso Court of Appeals doubles down on its support of the “Anadarko Washout”
Texas
In 2019, the Texas Eighth District Court of Appeals reached its decision in Cimarex Energy Co. v. Anadarko Petro. Corp. , 1 raising eyebrows across the oil and gas industry. The Cimarex decision sent “non-op” lessees scrambling to double-check their lease language and straining to recall whether they ever signed that operating agreement. Cimarex warned lessees that production on their lease may not extend it past its primary term if the lessee did not “directly cause” the production. In other words, if your lease does not provide otherwise and you are not party to an operating agreement, your lease may not be extended by the on-lease activities of your designated operator. Once the primary term of the lease expires, the 1 574 S.W.3d 73 (Tex. App.—El Paso 2019, pet. denied). 2 See Durrett, Brandon, Turn Around, Don’t Drown: A New Generation of Oil and Gas Lease “Washouts: in Texas and How to
leased interest would instead revert back to the lessor as an unleased cotenant. Of further concern is the possibility that another lessee may have taken a top lease that is now in effect. In the wake of Cimarex , many practitioners expected the Supreme Court to weigh in on the decision and provide further clarity. 2 However, on August 28, 2020, the Supreme Court of Texas denied a petition for review, and on March 5, 2021, it denied a motion for rehearing on petition for review, tacitly endorsing the Cimarex decision. Now, in Cromwell v. Onshore , 3 the El Paso Court of Appeals has upheld and arguably expanded Cimarex. Cromwell potentially opens the floodgate for what will be referred to in this article as an
Avoid Them, 53 Tex. L. Rev. 473, 495 (2021). 3 2023 Tex. App. LEXIS 5848 (El Paso 2023).
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G rowth T hrough E ducat i on - J uly / A ugus t / S ept ember 2023
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