At the Well Weekly (v.5.9.2025)
- George A. Bibikos
- 54 minutes ago
- 9 min read
Oil + Gas Update: Texas Supremes Reject Reliance on Oral Reps that Contradict O+G Lease.
Natural gas prices averaged around $3.50/MMBtu since our last report alongside declining oil prices and a sliding rig count. In pipeline news, Mountain Valley is pursuing an expansion of its system, Williams has signaled plans for a new project in Virginia, and Trump is pushing to revive the Constitution Pipeline. In Appalachia, courts addressed surface use, pipeline permits, forced pooling, arbitration, co-tenants, royalties, and trespass. In other region, courts addressed “implied” pooling, royalties, the marketing covenant, pipelines, curtailment disputes, LNG exports, streambed oil and gas, FOIA, condemnation rights, RRC permits, and conflicts between oral representations and written terms of an oil and gas lease.
Rig Counts, Spot Prices + Oil Prices
Rigs: National (578); Marcellus (25); Utica/Point Pleasant (10)
Brent Crude: $63.91/bbl
West Texas Intermediate: $61.02/bbl
NYMEX: May 2025 @ $3.621/MMBtu; 12-Month Strip @ $4.254/MMBtu
Spot Prices: Henry Hub @ $3.17/MMBtu
Headlines & Holdings - Appalachia
Sixth Circuit Confirms Surface Rights Limited to Underlying O+G. The Sixth Circuit confirmed the longstanding principle that, at common law, an owner or lessee of severed oil and gas cannot use the overlying surface area to produce oil or gas from neighboring lands without the surface owner’s additional consent, thereby reversing an injunction that authorized the lessee to clear the surface area of trees to prepare for operations and holding that the injunction actually engenders irreparable harm to the surface owner. EOG Res., Inc. v. Lucky Land Mgmt., LLC, --- F. 4th ----, No. 24-3211, 2025 WL 1099086 (6th Cir. Apr. 14, 2025).
Sixth Circuit Rejects Challenge to TGP’s CWA Permit Approval. The Sixth Circuit upheld the Army Corps’ approval of a Section 404 permit under the Clean Water Act, denying a petition for review filed by environmental groups claiming that the approvals of TGP’s pipeline projects violated the Administrative Procedure Act. Appalachian Voices v. United States Army Corps of Eng'rs, --- F. 4th ----, No. 24-3831, 2025 WL 1009180 (6th Cir. Apr. 4, 2025).
Sixth Circ. Rejects Challenge to Section 401 Cert. Issued by Tennessee. The Sixth Circuit upheld an order of Tennessee’s environmental protection agency issuing a water quality certification to TGP under Section 401 of the Clean Water Act, denying petitions for review filed by environmental groups challenging the pipeline projects. Appalachian Voices v. TDEC, No. 23-3682, 2025 WL 1009286 (6th Cir. Apr. 4, 2025).
Ohio App. Ct. Addresses Standing to Appeal Forced Pooling Order. A court of appeals in Ohio held that a potential owner of a working interest in leases that an operator included in an application for statutory unitization under the state’s conservation law lacked standing to challenge the forced pooling order. Eric Petroleum Corp. v. Vendel, --- N.E.2d ----, No. Nos. 24AP-272, 24AP-275, 2025 WL 1041138 (Ohio Ct. App. April 8, 2025).
Ohio App Ct. Sends O+G Royalty Disputes to Arbitration. An Ohio court of appeals sent several disputes over royalties to arbitration, holding that the parties to the oil and gas leases agreed to arbitrate disputes involving the leases and orders of payment and further holding that the AAA rules apply to their dispute per the arbitration provisions. Wolfe v. Encino Energy, LLC, --- N.E.2d ----, Nos. 24 HA 0010, 24 HA 011, 24 HA 0012, 24 HA 0014, 2025 WL 1276871 (Ohio Ct. App. May 2, 2025); Denham v. Encino Energy, LLC, --- N.E.2d ----, No. 24 HA 0013, 2025 WL 1276977 (Ohio Ct. App. May 2, 2025).
MD of PA Gives Plaintiffs Pass at Filing Late Amended Complaint. Despite acknowledging plaintiffs’ delays and blown deadlines for filing an amended complaint in a dispute alleging that various companies (EXE included) shorted them on royalties, a federal court in Pennsylvania granted a motion for leave to amend a complaint filed more than 20 days after the court’s deadline, holding that the plaintiffs’ late filing is “excusable neglect” per the rules that gives them pass. A&B Campbell Family, LLC cv. Chesapeake Energy Corp., --- F. Supp. 3d ----, No. 3:15-CV-00340, 2025 WL 1265853 (M.D. Pa. May 1, 2025).
Third Circuit Addresses Co-Tenants, Trespass, and Royalty Suspense Issues in Bankruptcy Row. In an adversary proceeding as part of a bankruptcy in which a royalty owner sued a debtor company (the well-site operator) for trespass and wrongfully withholding royalties under Texas law, the Third Circuit concluded that the debtor did not trespass or improperly withhold payment, holding that (a) although the royalty owner’s lessee abandoned its lease, the debtor had a lease with the royalty owner’s co-tenant such that the debtor could enter on the property and produce gas without trespassing; (b) the debtor did not trespass on the royalty owner’s interest by withholding payment to cover well costs given that the well has not yet paid out; (c) the debtor could be the ”payor” under Texas law obligated to make royalty payments; but (d) fact issues regarding related JOAs and division orders precluded summary judgment in favor of the royalty owner regarding whether the debtor had payment obligations. In re MTE Holdings LLC, --- F.4th ----, No. 23-1916, 2024 WL 5682927 (3d Cir. May 7, 2025).
Headlines & Holdings - Beyond Appalachia
Tex. Fed. Ct. Rejects “Implied Pooling” Argument. A federal court in Texas held that there is no such thing as an implied pooling covenant, rejecting the argument that, when a lease contains an express pooling clause limited to natural gas development, the court should imply a similar requirement to compel pooling of oil leases to protect the property from being surrounded and stranded by development on adjacent properties. Willliams O+G Resources, LLC v. Diamondback Energy, Inc., --- F. Supp. 3d ----, No. 24-CV-00185-DC, 2025 WL 900915 (W.D. Tex. Mar. 25, 2025).
Tex. App. Ct. Says Deed of Trust Exempts OGM from Public Auction. In a dispute over oil and gas ownership, a court of appeals in Texas interpreted a trust to conclude that the language clearly and unambiguously excepted mineral rights, leases, and easements from the sale of the property at public auction. Vaughn v. Vaughan, --- S.W.3d ----, No. 11-23-00200-CV, 2025 WL 920041 (Tex. App. Mar. 27, 2025).
NM Fed. Ct. Rejects Royalty Interest Claim. In a dispute over interest on underpaid royalties, a federal court in New Mexico found that a lessee never suspended a landowner’s royalties and maintained the landowner’s account in pay status such that the landowner lacked standing to pursue interest on underpaid royalties pursuant to the state’s royalty interest statute. Kulp Minerals LLC v. Apache Corp., --- F. Supp. 3d ----, No. 2:23-CV-00408-KG-KRS, 2025 WL 932933 (D.N.M. Mar. 27, 2025).
DC Circ. Blesses FERC’s Order Approving La. Pipeline Projects. The D.C. Circuit upheld FERC’s order authoring two new natural gas pipelines in southwestern Louisiana over the objections of environmental groups, rejecting claims that FERC failed to comply with NEPA requirements. Healthy Gulf v. FERC, --- F. 4th ----, No. 23-1226, 2025 WL 937664 (D.C. Cir. Mar. 28, 2025).
NM Fed. Ct. Certifies Class Claiming Breach of Marketing Covenant. In a class action alleging breach of implied marketing covenants in leases, a federal court in New Mexico revised the class of plaintiffs because (a) individualized lease language can negate the implied covenant when evaluating the propriety of deciding those claims on a class basis; (b) removing those plaintiffs to create a subclass of lessors who claim they are entitled to the “highest reasonable price for gas” eliminates individualized issues; and (c) whether the lessee owes interest on late gas royalty payments pursuant to the state’s royalty interests statute defeat the commonality and predominance requirements. The Anderson Living Trust v. ConocoPhillips Company, LLC, --- F. Supp. ----, No. CIV 12-0039 JB/SCY, 2025 WL 950473 (D.N.M. Mar. 28, 2025).
La. App. Ct. OK’s Plan to Install Pipelines Under Other Pipelines. A court of appeals in Louisiana held that a pipeline company could install a forty-two inch pipeline under seven pipelines owned and operated by ETP without ETP’s consent and over its objection. Louisiana Energy Gateway LLC v. Trunkline Gas Co., LLC, --- So.3d ----, CA 24-544, 2025 WL 982045 (La. App. Ct. April 2, 2025).
Tex. App. Ct. Tackles Force Majeure in Curtailment Dispute. A court of appeals in Texas reversed an order of a trial court that upheld a natural gas supplier’s decision to curtail production based on a force majeure clause with a buyer that converts natural gas to LNG, holding that the supplier failed to demonstrate the necessary causal connection between the force majeure event and its nonperformance and remanding for further proceedings. Freeport LNG Marketing, LLC v. Kinder Morgan Texas Pipeline LLC, --- S.W.3d ----, No. 14-22-00864-CV, 2025 WL 1109028 (Tex. App. Apr. 15, 2025).
DC Circuit Rejects Petitions Challenging LNG Exports. The D.C. Circuit rejected petitions for review filed by environmental groups challenging LNG exports based on purported environmental impacts in foreign non-free-trade countries. The court upholding DOE’s finding that market and environmental impact models advanced by the petitioners were too speculative to inform whether or not the LNG exports are in the “public interest” under the NGA and further holding that FERC’s purported failure to quantify any environmental impacts of downstream emissions in foreign countries did not amount to a violation of NEPA. Sierra Club v. United States Dep't of Energy, --- F.4th ----, No. 20-1503, 2025 WL 1107681 (D.C. Cir. Apr. 15, 2025).
Fifth Circuit Upholds Award for Standby Costs in Pipeline Construction Row. In an arbitrated dispute over liability for certain standby costs incurred by a subcontractor during pipeline construction activities, the Fifth Circuit upheld the arbitrators’ award of approximately $1.66M in favor of the sub, holding that the arbitrators did not exceed the scope of their authority but stopped short of sanctioning the appellant for filing an allegedly frivolous appeal. United States Trinity Energy Servs., L.L.C. v. Se. Directional Drilling, L.L.C., No. 24-10833, 2025 WL 1218096 (5th Cir. Apr. 28, 2025).
Eighth Circuit Says ND State Owns Streambed O+G. In a dispute between the feds and North Dakota regarding entitlement to royalties from minerals extracted from beneath Lake Sakakawea, the Eighth Circuit held that North Dakota law applied in determining the current location of the ordinary high water mark for patented lands owned by the United States that were above the historic ordinary high water mark of a river but are now under Lake Sakakawea such that the state is entitled to royalties from minerals extracted from the lake bed. Cont’l Res., Inc. v. N. Dakota Bd. of Univ. & Sch. Lands, --- F.4th ----, No. 23-2249, 2025 WL 1273320 (8th Cir. May 2, 2025).
Fifth Circuit’s FOIA Decision on GHG Emission Targets. In a dispute over a FOIA request submitted by a conservative group to find out the names of Biden Administration officials who helped set GHG emission targets, the Fifth Circuit held that the Department of State must disclose the names and email addresses of non-policy-making employees involved in developing the 2030 emissions reduction target because withholding the information under FOIA’s Exemption 6 does not constitute a clearly unwarranted invasion of personal privacy. Texas Pub. Pol'y Found. v. Dep't of State, --- F.4th ----, No. 24-50189, 2025 WL 1287890 (5th Cir. May 5, 2025).
Tenn. Fed. Ct. OK’s TGP Condemnation. A federal court in Tennessee upheld TGP’s condemnation powers under the Natural Gas Act and ordered that the company may take immediate possession of the condemned property, holding (among other things) that TGP is likely to succeed on the merits because it proved its condemnation powers under the NGA; and the company would suffer irreparable harm because additional delays and expenses would prevent it from meeting its construction schedule and contractual supply requirements. In re: TGP, --- F. Supp. 3d ----, No. 3:24-CV-00469, 2025 WL 1336322 (M.D. Tenn. May 6, 2025).
Tex. App. Ct. Says O+G Permittee Didn’t Falsify Info. In a dispute over permits issued by the Texas Railroad Commission that allegedly contained false information, a court of appeals in Texas held that the company objecting to the permits failed to provide prima facie evidence that the permittee made false statements in permits regarding ownership of mineral rights below certain depths in one of the tracts at issue such that the trial court properly dismissed the objector’s claims under the Texas Citizens Participation Act. Horizontal Dev. Partners, LLC v. Endeavor Energy Res., LP, --- S.W.3d ----, No. 11-23-00109-CV, 2025 WL 1335314 (Tex. App. May 8, 2025).
Texas Supremes Rejects Bid to Credit Oral Reps re: O+G Lease. In a dispute over the purchase of an oil and gas lease and related interests, the Texas Supreme Court concluded that the plaintiff’s reliance on certain oral representations that contradicted the express terms of a written oil and gas lease was not justifiable, holding instead that representations such as whether the lessee would “flip” the lease or develop it, give the mineral owner the best deal compared to other nearby landowners, or pay bonus before recording the lease contradicted written lease terms. Roxo Energy Co., LLC v. Baxsto, LLC, --- S.W.3d ----, No. 23-0564, 2025 WL 1349581 (Tex. May 9, 2025).
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