production marketed “shall be paid on or before the first day of the calendar month next following the expiration of sixty (60) days from the execution date of the completion report or potential test for the well that is filed with the Railroad Commission[.]”’ 21 The Court also rejected Samson’s argument that it is excused from late charges because of a title dispute. Again, the Court looked to the plain language included in the lease. It determined that Samson was not excused from paying late charges in the event of a title dispute because the parties had made the “safe harbor” provision of the Suspense Statute inapplicable by specifically excluding it in the lease, replacing it with provisions that did not excuse nonpayment of late charges in the event of a title dispute. 22 The lease contained the following provision: “ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, and in lieu of the terms and provisions contained in Sections 91.401 through 91.406 of the Texas Natural Resources Code, the parties hereto specifically agree that the following provisions shall apply to this Lease and all royalty payments made hereunder or other rights as provided in the above listed sections, and that such provisions of the Texas Natural Resources Code shall not be applicable; such parties further, by their signatures below, waive any and all rights which might be claimed or asserted under such Sections 91.401 and 91.406 of the Texas Natural Resources Code…” 23 Although the court rejected Samson’s “safe harbor” argument, it reasoned that even if Samson had not waived the “safe harbor” provision by contracting around it in the lease, the circumstances surrounding the title did not rise to the level of a “bona fide title dispute” required by statute to invoke the “safe harbor” provision. 24 The Court stated that,“[t]here was no evidence that the minerals had not been conveyed to the Bordages.” 25 While Samson was willing to recognize equitable title in the Bordages in 2007 based on the Hooks’ affidavit with the Certificate of Interest attached, Samson knew as early as 2002 that the Bordages had equitable title based on information from the title attorney regarding the “very same Certificate of Interest” Samson later relied on in 2007. 26 Additionally,“[d]espite Samson disavowing knowledge
of who to pay, Samson advised the taxing authorities that the Bordages owned these interests, and the Bordages received corresponding tax statements.” 27 Therefore, the Court affirmed the trial court’s judgement, holding that there was no “bona fide title dispute” to alter when royalties became due under the lease, and that Samson was responsible for late charges on past due royalties. 28 At the end of the day, Samson Expl., LLC v. Bordages is a reminder that an oil and gas lease is a contract and will be interpreted as such by the courts. Parties are free to include, or contract around, provisions as they see fit, and all terms should be chosen and analyzed with care. CONTACT If you have any questions regarding this case law update or suggestions for topics to be covered in future issues, please call our office at 713-229-0360 or contact: _______________________________________________
Emily Sheffield Senior Attorney, Houston esheffield@oglawyers.com
www.oglawyers.com
The content of this publication and any attachments are not intended to be and should not be relied upon as legal advice or to create a lawyer-client relationship. © 2022 Oliva Gibbs LLP.All rights reserved. This publication may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Houston (principal office): 815 Walker St., Suite 1140, Houston, Texas 77002, 713-229-0360 | Columbus: One East Livingston Avenue, Suite B, Columbus, Ohio 43215, 614-349-4525. _________ 21 Id. at 17. 22 Id. at 19-20. 23 Id. at 16. 24 Id. at 19-20. 25 Id. at 20.
26 Id. 27 Id. 28 Id. at 21.
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