Long v. Rim Operating, Inc.

345 S.W.3d 79, 2011 WL 1431476
CourtCourt of Appeals of Texas
DecidedMay 12, 2011
Docket11-09-00328-CV
StatusPublished
Cited by2 cases

This text of 345 S.W.3d 79 (Long v. Rim Operating, Inc.) 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
Long v. Rim Operating, Inc., 345 S.W.3d 79, 2011 WL 1431476 (Tex. Ct. App. 2011).

Opinion

OPINION

RICK STRANGE, Justice.

This is a dispute over the ownership of a working interest in a 160-acre tract of land in Dawson County. RIM Operating, Inc. filed suit against Larry T. Long seeking a declaratory judgment that Long relinquished his interest to other working interest owners when he did not consent to a workover operation. The trial court granted summary judgment for RIM and awarded it attorney’s fees. We reverse the attorney’s fee award and remand for a factual determination but otherwise affirm the trial court’s judgment.

I. Background Facts

The 160-acre tract for which this dispute concerns was leased with ten leases (Lindsey Leases). The properties covered by the Lindsey Leases are not uniform, but all include the eastern portion of Section 109. 1 In January 1995, the working interest owners executed an A.A.P.L. Form 610-1982 Model Form Operating Agreement (JOA) that covered all of Section 109. In 1997, the Lindsey Trust 109-A No. 1 Well (Lindsey Well) was drilled in the southeastern corner of Section 109. The Lindsey Leases provide that a well maintains the lease only as to the pro-ration unit designated by the Railroad Commission. In 1998, the operator filed an affidavit in the real property records of Dawson County designating a 160-acre proration unit surrounding the Lindsey Well. 2 A survey showing the unit and well location was attached to the affidavit.

The south 188.182 acres of the East 3/8ths of said Section 109, SAVE AND EXCEPT the 26.667 acre tract included in the pooled unit surrounding the Patrick — Lindsey Trust 109 No. 1 Well as described in Pooling Agreement and Declaration of Pooled Unit dated January 1, 1995, filed at Volume 371, Page 385 of the Oil and Gas Lease Records of Dawson County, Texas; and, LESS the South 100 feet of said 188.182 acre tract.

Forcenergy was a working interest owner in the Lindsey Well. It assigned its interest in the Lindsey Well and one other well, along with the underlying leases, to Long on December 1, 2000. Long concedes that his interest is subject to the 1995 JOA. 3 RIM became operator of the Lindsey Well in October 2004.

The Lindsey Well was the only producing well on the 160-acre tract. On December 19, 2006, the Lindsey Well ceased to produce because of parted rods. On January 10, 2007, RIM submitted an AFE (Authorization for Expenditure) to all working interest owners proposing a workover, or repair, operation. The total estimated cost was $820,686. Long’s share was $124,540. Long did not respond. RIM attempted to repair the Lindsey Well, and it determined that there was a partial casing collapse. In July 2007, RIM drilled a replacement well and reestablished production.

The JOA provides that, if a working interest owner goes nonconsent on a proposed operation, it relinquishes its right to any production from that well until its share of the costs, plus an additional 200% *85 or 500% depending upon the type of cost incurred, has been recouped by the consenting parties. However, for operations denominated as “Required Well or Operations,” JOA Article XV.K. provides:

Notwithstanding anything to the contrary herein contained, it is understood and agreed that the non-consent provisions of Article VI.B.2. shall not be applicable to any well or operation which is necessary to perpetuate an expiring lease or leases* or to earn an interest in a lease or leases pursuant to any farm-out or other agreement. To “earn an interest” as abovementioned is herein understood to include completion operations if production is required to earn, whether or not drilling has extended the lease or continued the right to drill. Any well drilling or other operation which is necessary to perpetúate or earn a lease or interest therein shall be deemed to be a “required well” or “required operation.” As to any required well or required operation proposed by any party hereto in which any other party hereto elects not to participate, the non-participating party shall release and relinquish forever proportionately to the participating parties all of non-participating party’s interest in and to the lease or leases or interest (“relinquished leases”) herein which would be perpetuated by such required well or required operation. The interest in such relinquished leases shall be assigned by the non-participating party to the participating parties without warranty of title except as to claims by, through or under assignor and shall be free of any additional burdens as is provided for in Article III.D hereof. All other leases or interests in which the non-participating party owns an interest which are pooled with the relinquished leases to form a proration unit under the regulations of the governmental authority having jurisdiction shall be subject to Article XV.L. herein. Nothing herein shall be construed to require the reduction of such non-participating party’s interest in any producing wells or units.
*As used in this section, an expiring lease(s) is defined to be any oil and gas lease which would expire within 60 days of the commencement of the proposed operation but will not then expire if such operation is commenced.

In January 2008, RIM forwarded Long an assignment of his interest in the 160-acre tract to the consenting parties. Long did not respond. RIM then filed this declaratory judgment action.

II. Issues

Long challenges the trial court’s judgment with eleven issues. Long argues first that the trial court erred because the JOA violates the statute of frauds. Long argues in Issues Two and Five that there are unresolved fact questions. In Issue Three, he contends that conditions precedent were unsatisfied. He argues in Issue Four that there was no evidence of the actual commencement date of the rework operation. In Issue Six, Long argues that the JOA contains an unenforceable penalty. In Issue Seven, he contends that the JOA’s forfeiture provision is unenforceable. In Issue Eight, he argues that the JOA violates the Rule Against Perpe-tuities. He contends in Issue Nine that the trial court lacked subject-matter jurisdiction because RIM did not have standing. In Issue Ten, he argues that the trial court erred by denying his plea in abatement. Finally, in Issue Eleven, he contends that the trial court erred by granting attorney’s fees because there were unresolved questions of fact.

III. Special Exception

Long’s brief begins with a discussion of his special exception to RIM’s motion for *86 summary judgment. We assume that this was intended as an introduction to his other issues because he raises no specific issue complaining of the trial court’s ruling. Even if we are incorrect, Long has identified no error with respect to his special exception.

■ IV. Jurisdiction

Long complains that the trial court lacked jurisdiction because RIM lacked standing.

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345 S.W.3d 79, 2011 WL 1431476, Counsel Stack Legal Research, https://law.counselstack.com/opinion/long-v-rim-operating-inc-texapp-2011.