Note: Marathon in Vogel was represented by John Morrison and Uriah Price of Crowley Fleck PLLP. This article was first published by Crowley Fleck PLLP June 1, 2016. ABOUT THE AUTHORS: John W. Morrison, Jr. is a Partner in the Bismarck office of Crowley Fleck PLLP. He practices in the area of natural resources, public utilities and commercial law, and regularly represents clients in both litigation matters in state and federal courts and before state and federal administrative agencies, including the North Dakota Industrial Commission, the North Dakota Public Service Commission, the North Dakota Tax Department and the Bureau of Land Management. He is a member of the North Dakota Petroleum Council Hall of Fame and has been listed in Best Lawyers of America since 1995, Chambers USA – Leading Lawyers in Litigation: Energy and Natural Resources since 2004, and Great Plains Super Lawyers since 2011.
Uriah Price is an attorney in the Energy, Environment and Natural Resources Department in Crowley Fleck PLLP’s Billings office. Uriah’s practice encompasses multiple areas of energy and natural resources law, including oil and gas, energy and mineral litigation, energy and mineral transactions, regulatory and administrative affairs, Indian law and title examination. Uriah is a member and Trustee at large of the Rocky Mountain Mineral Law Foundation and previously served as an original member of the Rocky Mountain Mineral Law Foundation’s Young Professionals Committee. Uriah is licensed in Montana, North Dakota and Wyoming. ___________________________ These materials are not individualized legal advice. It is understood that each case is fact-specific and that the appropriate solution in any case will vary. The presentation of these materials does not establish any form of attorney-client relationship with the authors or Crowley Fleck PLLP. While every attempt was made to insure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimed.
TEXAS || AVOIDING UNINTENDED CONSEQUENCES CAUSED BY RETAINED ACREAGE CLAUSES By: Eli Kiefaber and Zachary Oliva, Kiefaber & Oliva LLP
Retained acreage clauses permit the lessee to retain acreage around a producing well in the event of a forfeiture of a lease. Typically, retained acreage clauses become the subject of litigation when the lease contains a continuous drilling obligation and the lessee has ceased its drilling. The retained acreage clause permits a lessee in that situation to retain a specific portion of the acreage surrounding a producing well and requires that the lessee release all acreage not subject to the retained acreage clause. Frequently, retained acreage clauses in leases will specify the number of acres per well that an operator is entitled to retain after the continuous development program has ended. However, many oil and gas leases tie the acreage subject to the retained acreage clause to the “field rules” for a given oil and gas field, 1 which may result in the retained acreage clause operating in way that it is contrary
to the intent of the parties. Recently, Texas courts interpreted retained acreage clauses and reached differing outcomes that were not contemplated by the parties. First, in ConocoPhillips Co. v. Vaquillas Unproven Minerals , 04-15-0006-CV, Tex. App. LEXIS 8194 (August 5, 2015), the San Antonio Court of Appeals determined that the field rules governed a retained acreage clause in an oil and gas lease. The retained acreage clause provided that ConocoPhillips was entitled to retain “640 acres per gas well, except when field rules established by the governing authority provide otherwise.” Id. , at 3. Specifically, the retained acreage clause provided: “Lessee . . . agrees to . . . release . . . all portions of this lease which have not been drilled to a density of at least . . . 640 acres for each producing or shut- in gas well, except that in case any rule adopted by
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Na t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r An a l y s t s
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