Back to Basics (Banker’s Edition): Mortgage and Title Coverage

April 9, 2020 By Paul D. Bradford and Merrill E. Jones Because the upcoming Borrowing Base season promises to be memorable, we wanted to highlight some key concepts related to mortgage and title coverage and Borrowing Base deficiencies. Required Mortgage and Title Coverage: Typically, a Loan… Read more

Protecting Royalty Interests in Bankruptcy

By Megan R. Knell and William G. Bredthauer In March of 2020, demand for oil began to steadily decline due to stay-at-home orders and self-quarantine measures that were implemented in response to the COVID-19 pandemic.  The significant decrease in demand led to an excessive supply of oil that… Read more

Implied Covenant to Market: Additional Considerations for Producers

By Hayley S. Murray and Megan R. Knell A shut-in clause (or shut-in royalty clause) typically allows for shut-in royalty payments as a substitute for actual production.  However, payment of shut-in royalties does not necessarily relieve a producer of its duties under the implied covenant to manage… Read more

Production in Paying Quantities

By Bryan J. May and Mark C. Matula  We have previously discussed shut-in, force majeure, continuous drilling, cessation of production, and commencement of operations lease provisions, which are known as lease savings clauses.  This brief note discusses production in paying quantities, which is… Read more

Back to Basics: Shut-In

By Paul B. Westbrook and Shawna R. Rinehart A shut-in clause (or shut-in royalty clause) traditionally allows the lessee to maintain the lease by making shut-in payments on a well capable of producing oil or gas in paying quantities where the oil or gas cannot be marketed, whether due to a lack of… Read more

Back to Basics: Force Majeure

By Paul B. Westbrook and Shawna R. Rinehart Force Majeure Clause: A force majeure clause is a lease provision designed to protect a lessee against termination of the lease resulting from governmental actions, acts of God, and other circumstances beyond the lessee’s control. Force majeure clauses… Read more

Back to Basics: Continuous Drilling

By Paul B. Westbrook and Shawna R. Rinehart Continuous drilling clauses are very similar to, and often intertwined with, some of the savings clauses often included in leases (especially a commencement of operations clause and a cessation of production clause). One difference from a commencement of… Read more

Back to Basics: Cessation of Production

By Paul B. Westbrook and Shawna R. Rinehart Cessation of Production: A cessation of production savings clause is primarily intended to prevent termination of the lease immediately upon the cessation of production, whether during the primary term, secondary term, or both. Certainly, the most… Read more

Back to Basics: Savings Clauses

Savings Clauses Generally: A savings clause is any express lease provision that can be used to maintain the lease past its primary term in the absence of actual production on the lease premises. Where a dispute arises regarding the continuing validity of a lease, the plaintiff bears the burden of… Read more

EPA Declines to Amend RCRA Subtitle D Regulations

On April 23, 2019, the U.S. Environmental Protection Agency published Management of Exploration, Development and Production Wastes: Factors Informing a Decision on the Need for Regulatory Action. The document was drafted and published, in part, in response to a Consent Decree entered by the U.S.… Read more

PA Supreme Court to Review Trespass by Fracturing

On November 20, 2018, the Supreme Court of Pennsylvania agreed to hear an appeal concerning the Pennsylvania Superior Court’s decision in a lawsuit that alleged trespass by hydraulic fracturing.  Specifically, the Pennsylvania Superior Court concluded that the “rule of capture does not preclude… Read more

Trump to Nominate Wheeler to Head EPA

On November 16, 2018, President Donald Trump announced that he intends to nominate U.S. Environmental Protection Agency acting Administrator Andrew Wheeler to head the agency on a permanent basis.  If formally nominated, acting Administrator Wheeler’s nomination would be initially handled by the… Read more

Supreme Court Grants Temporary Relief to Denbury

On July 26, 2017, the Supreme Court of Texas granted Denbury Green Pipeline-Texas, LLC’s motion for temporary relief, ordering a district court to allow Denbury to complete federally-required inspections of the pipeline at issue. On July 12, 2017, Denbury had filed a petition for writ of mandamus… Read more

BLM to Rescind 2015 Hydraulic Fracturing Regulations

On July 25, 2017, the DOI Bureau of Land Management published “Oil and Gas: Hydraulic Fracturing on Federal and Indian Lands: Rescission of a 2015 Rule” in the Federal Register. If finalized, the purposed rule would rescind BLM’s 2015 rule regulating hydraulic fracturing on certain public and… Read more

Environmental Groups Challenge TCEQ Permits

On July 20, 2017, four environmental groups filed five lawsuits in the U.S. District Court for the District of Columbia, alleging that EPA failed to prevent the Texas Commission on Environmental Quality from granting improper major source permits under the Clean Air Act to several petroleum… Read more

Interior to Increase Oil and Gas Leasing

On July 6, 2017, U.S. Department of the Interior Secretary Ryan Zinke signed Order No. 3354, which is designed to ensure that DOI consistently holds quarterly oil and gas lease sales as required by the Mineral Leasing Act of 1920. Although the MLA requires quarterly lease sales “for each state… Read more

Trump to Nominate Two for FERC Openings

On June 28, 2017, the Trump Administration announced plans to nominate Richard Glick as a commissioner of the Federal Energy Regulatory Commission. Glick currently serves as Democratic general counsel on the Senate Energy and Natural Resources Committee and would replace Democratic Commissioner… Read more

Dallas Court of Appeals Reverses $535 Million Verdict

On July 18, 2017, the Dallas Court of Appeals overturned a $535 million jury verdict related to breach of joint enterprise and breach of fiduciary duty causes of action. The plaintiff and defendant are pipeline companies that jointly investigated the economic feasibility of an oil pipeline that… Read more