The Monthly Boost
August 2020
Welcome to the second edition of the Monthly Boost. Lear & Lear's links to news, updates and notes in the oil and gas industry.
Times are still uncertain. It's true. But we're seeing signs of certainty, or at least less uncertainty. We hope you find the notes and links below useful, and let us know if you'd like us to walk you through anything you come across.
News
Bold Endeavors
Billionaire Wildcatter Autry Stephens' company Endeavor Energy Resources is looking to drill eleven new wells in Midland County, Texas. It's the first batch of permits the company has applied for since late June. Privately held Rio Grande Exploration and Production also just filed for two permits in Webb County. Maybe a possible sign of things to come? We'll be watching.
Tax Relief Coming to Cheyenne?
The Wyoming legislature advanced a bill that would lower the state’s mineral tax rate by half, for six consecutive months, when oil and gas prices land above certain prices. Its goal is to help operators keep oil and gas pumping and the taxes they produce flowing into the state's school, infrastructure and general coffers. It's a development worth following for anybody thinking of investing in Wyoming.
To Leak or Not to Leak?
The Trump administration reversed a rule requiring oil and gas companies to monitor and limit methane leaks. Some big energy industry figures don't mind leaving the valve closed, citing their own corporate pledges to curb methane leaks. But the change could save smaller operators a lot of money in oversight and compliance costs.
Law & Policy
Gas In, Not Out
Southern California Gas Co, the largest utility company in the United States, is pushing back against California's efforts to phase out natural gas, asking a California court to force the state to revise a document discussing a transition from natural gas to cleaner energy. California law, says Southern California Gas Co, requires a state commission to analyze how to maximize the benefits of natural gas, not phase it out. As the most populous state in the country, this litigation could influence where millions of dollars of drilling and shipping investment are directed. Let us know if you want more background on it.
Wells, Lands or Interests? "Holistic and harmonizing approach" Says Texas Supremes
"In the wells;" "insofar and insofar as it relates to the wells in the lands described;" "all interest in the properties as described" What interest do these phrases convey? Current wells? Future wells? What if the land description is unclear? The Texas Supreme Court recently cut through a knotty mess of an assignment with a “holistic and harmonizing approach” that "consider[s] all of [an] [a]ssignment's provisions and prohibits us from giving greater weight to the granting clause or to any other particular types of clauses."Piranha Partners v. Neuhoff , 596 S.W. 3d. 740 (Tex. 2020). Such an approach may give an answer, but often only after a lot of time and money have been spent. If you're putting together a deal and want to be certain you're conveying only what you want to convey, let us know if we can help.
McGirt v. Oklahoma: Who's the Lessor Now?
In McGirt v. Oklahoma the Supreme Court ruled that much of eastern Oklahoma is now tribal land for many criminal law matters, and potentially for regulatory matters like wind and solar development. This means the federal government, which retains authority over tribal land, with tribes serving as beneficiaries, likely now has the power to lease mineral interests and to set relevant rules. Needless to say, this decision raises some complex problems and may affect interests even outside Oklahoma. You can read the decision here. And here's a couple of press reports touching on key issues moving forward. This is a big one. Let us know if you want us to walk you through anything.
Notes
New Definitions in Utah
The Utah Board of Oil, Gas & Mining recently added and redefined several important oil and gas terms, including “preparation for drilling,” “Operatorship" (i.e. who qualifies as a operator), and “notice of opportunity to participate,” which lays out the requirements for a non-operating owner to be deemed a “consenting owner” in a well. Although these new definitions are Utah specific, many of the twenty states in which we're licensed regularly redefine similar terms. Fred McDonald has been counseling some clients on ways these new definitions will affect them moving forward. Let us know if you'd like any guidance in states you're invested in. Fixing a Title Hole in Salt Lake County, Utah Salt Lake County, Utah, while not a big mineral county, launched a new service to combat title fraud that could serve as a model for Duchesene and Uintah counties where Utah's waxy crude, gas and gilsonite come from. "Property Watch" allows property owners to receive free updates containing record changes affecting their property, including deeds, liens, and reconveyances. Let us know if you want to learn more about it. Feedback? Topics you want to hear more about? Let us know: ben.lear@learlaw.com Until the next Boost!