Allegiance Hillview, L.P. v. Range Texas Production, LLC

347 S.W.3d 855, 177 Oil & Gas Rep. 186, 2011 Tex. App. LEXIS 5911, 2011 WL 3211222
CourtCourt of Appeals of Texas
DecidedJuly 28, 2011
Docket02-10-00062-CV
StatusPublished
Cited by29 cases

This text of 347 S.W.3d 855 (Allegiance Hillview, L.P. v. Range Texas Production, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allegiance Hillview, L.P. v. Range Texas Production, LLC, 347 S.W.3d 855, 177 Oil & Gas Rep. 186, 2011 Tex. App. LEXIS 5911, 2011 WL 3211222 (Tex. Ct. App. 2011).

Opinion

OPINION

ANNE GARDNER, Justice.

I. Introduction

Appellant Allegiance Hillview, L.P. (Allegiance) appeals the trial court’s declaratory judgment in favor of Appellees Range Texas Production, LLC and Range Production Company (collectively, Range) concerning the force majeure provision in the Surface Use Agreement (SUA) between Allegiance and non-party Rayzor Investments, Ltd. (Rayzor). After a bench trial, the trial court found that events of force majeure had occurred, and it extended the deadline under the SUA by which Range was required to drill a well. Challenging the legal and factual sufficiency of the evidence, Allegiance contends in its first three issues that the trial court erred by finding (1) that Range provided timely and sufficient written notice of an event of force majeure, (2) that an event of force majeure beyond Range’s reasonable control occurred, and (3) that Range timely submitted its permit applications. In its remaining issues, Allegiance challenges the award of attorney’s fees to Range, the trial court’s entry of a permanent injunction, and the trial court’s failure to make additional findings of fact and conclusions of law requested by Allegiance. We affirm.

II. Background

Allegiance is the surface owner of two contiguous tracts of land in Denton, Texas (the Property); Rayzor is the mineral interest owner of the Property; and Range *858 is Rayzor’s oil and gas lessee. The SUA provided that it would terminate if Range did not commence drilling by July 11, 2009 (the Development Deadline). However, the SUA also provided that the Development Deadline could be extended if Range were prevented from drilling by an event of force majeure, which the SUA defined to include the City of Denton’s (the City) failure to issue necessary permits. Range did not acquire the necessary permits before the Development Deadline and initiated this litigation when Allegiance threatened to terminate the SUA.

A. Original Development Deadline

When Allegiance purchased the Property’s surface estate in 2005, all minerals had previously been reserved by Rayzor.

Allegiance and Rayzor entered into the SUA in April 2006. 1 Under the SUA, the parties designated four drill sites (the Reserved Drill Sites) on the Property so that Rayzor could drill and produce minerals, but Rayzor’s right to access and use the Reserved Drill Sites originally terminated if it did not commence actual drilling of a well by October 7, 2008. The purpose of the drilling deadline was to allow for drilling activity before Allegiance developed the surface. Before drilling could commence, however, Rayzor or its lessee was required to obtain a Specific Use Permit (SUP) from the City.

In February 2008, Rayzor and Range entered into a mineral lease (the Rayzor lease), under which Range would attempt to drill for and develop the minerals on the Property. Before the parties signed the lease, Range Landman Jody Watkins had advised Rayzor President Doug Elliott that Range would “commence the permitting process with the City” within sixty days of signing the lease, that Range had “been through all of the issues with the City of Denton before, and [that] by default [Range had] become very well versed in their ordinances and policies.” Range was also aware before signing the Rayzor lease that Rayzor’s prior lessee, Dark Horse, did not timely obtain permits or begin drilling and that the lease with Dark Horse had therefore terminated, and Elliott had emphasized to Range the need for the permit in light of the issues surrounding the Dark Horse lease. In fact, Range had concerns before signing the Rayzor lease about whether it could meet the original October 2008 drilling deadline. Even so, Watkins informed Elliott on February 12, 2008, that Range would “diligently pursue the permitting process, together with the SUP and all other necessary permits and requirements as may be required by the City.” At the same time, however, Watkins expressly stated to Elliott that Range had “no control over” the permitting process.

In April 2008, Range personnel met with City representatives and discussed the need for and the process of obtaining a SUP. As a result of the meeting, Mary Patton, 'a regulatory manager for Range, understood and expected that it would take three months from the date of filing the application through the date of the city council meeting to obtain approval of a SUP. Near this same time, Allegiance indicated to Elliott that it would agree to extend the Development Deadline for approximately one year.

B. Amended Development Deadline

On July 11, 2008, Allegiance and Rayzor executed the First Amendment to Surface Use Agreement. The SUA amendment reduced the number of Reserved Drill *859 Sites from four to one, expanded the force majeure provision to include the City’s failure to issue a permit provided the permit application had been timely submitted and thoroughly prosecuted to attempted completion, and extended the Development Deadline to July 11, 2009. Because of its experience with Dark Horse’s inability to obtain a gas well permit from the City in 2007, Rayzor wanted to expand the force majeure clause to specifically ensure that it applied to time spent by the City in approving permit applications. Watkins testified that, as of July 2008, he felt that the one-year extension provided Range with enough time to get the permits approved by the City so that drilling could commence before the July 11, 2009 Development Deadline.

C. Pre-Permit Process

1. Leases and Waivers

Watkins testified that, from his perspective as a landman, the permitting process “really begins the day that we start evaluating a prospect” and that it includes evaluating possible drill sites, determining applicable zoning and waiver requirements, coordinating with surveyors to begin preparing surveys and plats, researching to identify and contact any potentially affected adjacent mineral owners, and obtaining necessary mineral leases and set-back waivers from those mineral owners. In this case, the title research revealed outstanding mineral interests affecting a portion of the Property and adjacent tracts. And because the number of Reserved Drill Sites had been reduced from four to one by the SUA amendment, Range had to determine how to drill on the southern portion of the Property while sufficiently accessing the northern portion of the Property. This required a lease from the State of Texas so the wellbores could cross beneath Highway 380 into the northern portion of the Property. Range acquired the State of Texas lease in August 2008.

The Reserved Drill Site reduction also required Range to acquire leases from mineral owners adjacent to the Property because, without leases from the adjacent mineral owners, Range would need a spacing exception from the Texas Railroad Commission for a wellbore to be within specified distances of the outlying tracts. Allegiance owned the mineral interest for a tract on the northwestern side of the Property, Albertson’s owned the mineral interest for a tract on the eastern side of the Property, and another entity owned the mineral interest to the north of the Property.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

V. Robert Fisher Jr. v. David Carnahan
Court of Appeals of Texas, 2023
Rob Hughitt v. Steven Bramlett
Court of Appeals of Texas, 2022
in the Interest of T.H., a Child
Court of Appeals of Texas, 2020
Henry Thiessen v. Fidelity Bank
Court of Appeals of Texas, 2018
Maria Castro v. Martin Ayala and the Office of the Attorney General
511 S.W.3d 42 (Court of Appeals of Texas, 2014)
Caffe Ribs, Inc., a Utah Corporation v. State
468 S.W.3d 94 (Court of Appeals of Texas, 2014)
in the Interest of R.H., J.B., and T.B.
Court of Appeals of Texas, 2013
Ernesto Berlanga v. State
Court of Appeals of Texas, 2012

Cite This Page — Counsel Stack

Bluebook (online)
347 S.W.3d 855, 177 Oil & Gas Rep. 186, 2011 Tex. App. LEXIS 5911, 2011 WL 3211222, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allegiance-hillview-lp-v-range-texas-production-llc-texapp-2011.