Articles Posted in Energy, Oil & Gas Law

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Charles W.H. Monson, LeeAnn Tarter, and KayCee Williams ("the Monsons") appealed a district court judgment reforming a deed executed in 1980 and quieting title in favor of Steve Goodall, Robert Goodall, Anne Stout, Joanne Quale, and Darrel Quale ("the Goodalls"). This case involved the sale of mineral rights to four tracts of land executed in one deed. In 1980, George and Dorothy Hoffman executed a deed transferring an undivided 508.26/876.26 mineral interest to Francis and Alice Goodall. Subsequent to the execution of these deeds, the Hoffmans retained a total of 508.26 mineral acres out of 876.26 total acres in the subject property. This fractional interest language in the 1980 deed is at the center of this dispute. Dorothy Hoffman died in 1985. George Hoffman died intestate in 1998. The Monsons acquired by intestate succession any mineral interests the Hoffmans retained beneath the subject property. Sometime after George Hoffman's death, members of the Monson family entered into oil and gas lease agreements with Enerplus Resources and Northern Oil and Gas, Inc. In 2013, the Goodall's filed a complaint requesting the district court quiet title in their favor. The Monsons moved for summary judgment, arguing the 1980 deed was unambiguous, the Hoffmans only transferred a fractional interest to the Goodalls, and the Monsons inherited their interests from what the Hoffmans retained in the transaction. The Goodalls claimed the deed did not reflect the parties' intentions, which was to transfer all of the Hoffmans' 508.26 mineral acres to Francis and Alice Goodall. After a hearing, the district court denied the Monsons' motion for summary judgment. After review, the Supreme Court concluded the district court did not err in admitting extrinsic evidence to support the Goodalls' argument that a mutual mistake had been made, and the district court's findings supporting reformation of the deed were not clearly erroneous. View "Goodall v. Monson" on Justia Law

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Jennifer Ogren, Lisa Marie Ogren Castle and Eric Marcus Ogren appeal from a summary judgment in favor of Marlene Sandaker, Karen Walden and Marlys Rulon. In 1958 Mike and Lorene Albert conveyed a 1/8th royalty interest to each of Mike Albert's seven siblings. Mike and Lorene Albert retained the mineral interest and a 1/8th royalty interest. Each of Mike Albert's siblings owned a 1/8th royalty interest. In 2009 Sandaker, Walden and Rulon leased the property to an oil company for a 3/16th royalty interest. In 2011 an attorney prepared a drilling title opinion concluding the 1958 assignment of royalty conveyed a fractional royalty to Mike Albert's seven siblings. A second title opinion in 2012 concluded the 1958 assignment of royalty conveyed a fraction of royalty to Mike Albert's seven siblings. In 2013 the Ogrens commenced an action to quiet title to the disputed royalty interests. The parties filed cross-motions for summary judgment to resolve the interpretation of the 1958 assignment. The district court entered an order and judgment in favor of Sandaker, Walden and Rulon, determining as a matter of law the 1958 assignment conveyed a fraction of royalty. The Ogrens appealed, arguing the district court erred by granting summary judgment in favor of Sandaker, Walden and Rulon because the 1958 assignment of royalty granted a fractional royalty and not a fraction of royalty. Finding no reversible error in the district court's judgment, the Supreme Court affirmed. View "Ogren v. Sandaker" on Justia Law

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Charles Robinson, Paul Robinson, and William Robinson appealed an amended judgment granting summary judgment in favor of THR Minerals, LLC, and deciding ownership of mineral and royalty interests in certain property. The Supreme Court concluded the assignment of royalty at issue was unambiguous, and the district court did not err as a matter of law in construing the assignment to decide the ownership of the subject mineral and royalty interests between the parties. View "THR Minerals, LLC. v. Robinson" on Justia Law

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Casey Voigt appealed a judgment affirming the Public Service Commission's ("Commission") order that affirmed its conditional approval of a surface coal mining permit for Coyote Creek Mining Company, L.L.C. ("Company"). The Supreme Court concluded the Commission's order complied with applicable law requiring identification and protection of "alluvial valley floors" and sufficiently addressed Voigt's evidence. Furthermore, the Court concluded the Commission's conclusions of law regarding the lack of "alluvial valley floors" within or adjacent to the permit area was supported by the findings of fact and that reasonable minds could have determined the Commission's findings of fact were proved by the weight of the evidence from the entire record. View "Voigt v. N.D. Public Service Commission" on Justia Law

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Ronnie Nelson owned a surface estate in Burke County who sought to use the mineral lapse statutes to obtain the mineral rights associated with the surface estate. Nelson published a notice of lapse of mineral interest against McAlester Fuel Company ("McAlester") for three consecutive weeks. Nelson filed an action to quiet title on 108 mineral acres in Burke County, a notice of no personal claim, and a sheriff's return in district court. Before filing his action to quiet title, Nelson also mailed a notice of claim and attempted to personally serve McAlester. The address to which Nelson mailed notice of claim appeared on a mineral deed dated March 6, 1958. McAlester filed no statement of claim within 60 days after Nelson published the notice of lapse. Nelson's complaint alleged he had substantially complied with the statutory procedure for claiming abandoned minerals. Nelson moved for entry of default judgment, and based upon what was provided to the district court and the fact McAlester did not file a statement of claim, the district court found McAlester had failed to use the mineral interests. The district court entered a default judgment on February 3, 2009. In 2015, McAlester filed a motion to vacate the default judgment. The district court concluded the judgment against McAlester was void and entered an order vacating the judgment quieting title. In its order to vacate, the district court determined Nelson failed to comply with the notice requirements of the statutory procedure for claiming abandoned minerals. McAlester moved to dismiss Nelson's action to quiet title for failure to state a claim and judgment on the pleadings. Nelson opposed the motion. Ultimately, the district court granted McAlester's motion to dismiss Nelson's quiet title action. On appeal, Nelson argued the district court erred because it concluded the abandoned mineral statute "requires a surface owner to conduct a reasonable inquiry to find a mineral owner's current address, even when an address appears of record." The Supreme Court found that this was not the basis for the district court's decision: the district court stated Nelson's mailing was not "reasonably certain" to reach McAlester. However, the district court then stated, "[a]llowing a claimant to pick any address from the record would encourage the claimant to always mail notice to the oldest address in the record in hopes that the address is stale, and that the notice would therefore not reach the intended target." The Supreme Court agreed with the district court that Nelson failed to comply with the statutory notice procedure, and affirmed its judgment. View "Nelson v. McAlester Fuel Company" on Justia Law

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Dunn County appealed a judgment declaring the Industrial Commission had exclusive jurisdiction to determine the location of oil and gas waste treating plants. The Supreme Court affirmed, concluding the County lacked the power to veto the Commission's approval of the location for an oil and gas waste treating plant. View "Environmental Driven Solutions v. Dunn County" on Justia Law

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GEM Razorback, LLC appealed a judgment dismissing its declaratory judgment action because GEM failed to exhaust administrative remedies, and dismissing its claim for specific performance because GEM could not establish that it was a third-party beneficiary of a contract. GEM and Zenergy, Inc. owned working interests in two oil and gas wells located in McKenzie County. Zenergy operated the wells, but GEM had not consented to pay its share of the drilling and operating costs. GEM did not execute a joint operating agreement for the wells and consequently was assessed a risk penalty as a nonconsenting owner. In 2013, Zenergy assigned its interest in the wells to Oasis Petroleum North America LLC. The assignment conveyed all assets, including "all files, records and data maintained by" Zenergy. After the assignment, GEM requested the same information from Oasis. Oasis provided Zenergy with the requested information. However, according to Oasis, some of the requested information for the time period before the assignment was not in its possession. Because of differences in the numbers provided by Zenergy and Oasis, GEM filed applications for hearing with the Industrial Commission requesting that the Commission determine the actual reasonable costs plus risk penalty for the two wells. After a hearing, Oasis agreed to allow GEM to conduct an audit of the wells. The Commission then dismissed the applications without prejudice. During the ensuing audit process, GEM discovered there were documents it requested that were not in Oasis' possession for the time period before the assignment when Zenergy operated the wells. GEM contacted Zenergy and requested an extensive list of 39 specific types of information regarding the wells. Zenergy refused to provide GEM with the requested information. GEM then commenced its declaratory judgment and specific performance action against Zenergy. Zenergy argued the district court lacked subject matter jurisdiction over the request for declaratory relief because GEM failed to exhaust its administrative remedies with the Commission before filing the complaint. Zenergy further argued the claim for specific performance failed to state a claim upon which relief could be granted because a provision of the assignment agreement specifically bars third-party beneficiary status. The court agreed with Zenergy's arguments and dismissed GEM's action. Finding no reversible error, the Supreme Court affirmed the district court’s ruling. View "GEM Razorback, LLC v. Zenergy, Inc." on Justia Law

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XTO Energy, Inc., appealed and Darwin and Jean Krenz cross-appealed a judgment awarding the Krenzes $800,000 for a pipeline trespass and ordering the parties to abide by certain documents for their future relationship after the district court construed a pipeline easement to authorize one pipeline on the Krenzes' land and found XTO's unauthorized construction and operation of a second pipeline on the Krenzes' land and use of their private road was a trespass. After review of this matter, the North Dakota Supreme Court concluded an April 2007 pipeline easement was ambiguous and the court erred in construing the easement as a matter of law. The Court therefore reversed the trial court's decision construing the pipeline easement and awarding the Krenzes $800,000 for the pipeline trespass and the court's decision requiring the parties to abide by their unexecuted negotiations involving their future relationship. View "Krenz v. XTO Energy, Inc." on Justia Law

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Willard Burk appealed a judgment declaring his claim that the State, through the Board of University and School Lands, and the Tax Commissioner (collectively "State"), wrongfully withheld gross production and extraction taxes from his share of oil and gas royalties was frivolous, entitling them to an award of attorney fees. After review, the North Dakota Supreme Court affirmed the district court's decision that, as a matter of law, the State's settlement agreement with Burk did not exempt him from paying gross production and extraction taxes on his royalty interest, but reversed the award of attorney fees because Burk's claim against the State was not frivolous. View "Burk v. North Dakota" on Justia Law

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Sandra Horob, Steven Poeckes, Steve Shae, Mike Shae and Paul Shae, the successors to the interests of John and Bernice Shae ("Horob plaintiffs"), appealed the grant of summary judgment deciding ownership of an oil and gas lease in favor of the successors to the interest of the William Herbert Hunt Trust Estate (collectively "defendants") and declaring the lease did not terminate and remained in effect. The Horob plaintiffs argued the Shae lease expired under the cessation of production clause because production from the well on the interest at-issue ceased, and additional drilling or reworking operations were not commenced within 60 days of the cessation. The district court concluded the lease did not expire because the cessation of production clause was not triggered. The court alternatively concluded the lease did not expire because: (1) it remained in effect under the terms of a communitization agreement with the United States; and (2) the Horob plaintiffs ratified the lease by accepting royalty payments after the lapses in production. After review, the North Dakota Supreme Court concluded the Shae lease's cessation of production clause was triggered, however, the lease remained in effect under the terms of the communitization agreement. View "Horob v. Zavanna, LLC" on Justia Law