Ellis Rudy Memorial Scholarship
In 2021 there were 8 recipients of scholarship assistance to attend the NADOA Institute in Fort Lauderdale, FL.
The Ellis Rudy Memorial Scholarship will be available next year for individuals looking for assistance to attend the 2022 Annual Institute in San Antonio, TX at the Marriott Rivercenter.
Details to follow in the first quarter NADOA magazine of 2022.
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.
Texas
Vermillion FC, LLC v. 1776 Energy Partners
In Vermillion FC, LLC v. 1776 Energy Partners, the Court of Appeals of San Antonio determined the extent to which a retained acreage clause in an oil and gas lease was modified by a “notwithstanding the above” reference to “governmental authority.” Specifically, under the terms of the lease the parties agreed to abide by the applicable field rules for designating how much acreage would be retained. The Eagleville (Eagle Ford-1) Field Rules in turn incorporated by reference portions of Statewide Rule 86, which allows for additional “tolerance” acreage to be retained. In essence, the dispute in this case was whether 1776 Energy Partners (“1776”) was entitled to retain 40 acres around the horizontal Byrd Ranch No 1H Well, as argued by Vermillion FC, LLC (“Vermillion”), or 320 acres around said Well, as argued by 1776. For the reasons discussed below, the Court found that both parties were wrong and remanded the case to the trial court for an award of damages consistent with this finding. Vermillion originally entered into an oil and gas lease with 1776 in 2010, leasing 1,100 acres in Zavala County. 1776 commenced operations on a horizontal well in 2011 which began producing in paying quantities by August of that year. The lease established a three-year primary term and that it would continue in effect after continuous development only as to acreage designated as
part of a particular “well tract,” as defined in the lease. Under the first retained acreage provision set forth in the lease, 1776 would arguably only have been able to retain 40 acres surrounding the Byrd Ranch No 1H Well. However, a subsequent clause stated that “notwithstanding the above, in the event any governmental authority having jurisdiction should hereafter establish a density or spacing pattern of a different number of acres around oil and/or gas wells for full allowable purposes than the number of acres specified above, then lessee may only retain around each oil well and each gas well such number of acres as necessary to allow maximum production.” 1776 invoked this “notwithstanding the above” clause to designate 320 acres. As a result of the foregoing, the parties spent several years disputing whether 1776 breached the contract by retaining excess acreage and by untimely filing a partial release of non-released acreage. Vermillion filed suit in 2016 and moved for summary judgement, arguing that 1776 was only entitled to retain said 40 acres. The trail court ultimately ruled in favor of 1776 on all issues, and Vermillion appealed. In resolving the portions of this case of most interest to oil and gas practitioners, the court of appeals first gave effect to the “notwithstanding the above” portion of the retained acreage clause. It noted that such
G r o w t h T h r o u g h E d u c a t i o n - O c t o b e r / N o v e m b e r / D e c e m b e r 2 0 2 1 13
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