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In Cromwell v. Anadarko E&P Onshore, LLC (No. 23-0927 May 25, 2025), the Texas Supreme Court issued an opinion concerning the habendum clause in two oil and gas leases. An example of a typical habendum clause, that is required in some form in all oil and gas leases, is this:

“This lease shall be in force for a term of three (3) years from this date (called “primary term”) and as long thereafter as oil, gas or other minerals are produced from said land, or land with which said land is pooled hereunder, or as long as this lease is continued in effect as otherwise herein provided.”

David W. Cromwell and Anadarko E&P Onshore, LLC are oil-and-gas co-tenants, both owning shares of the working interest on the same land in Loving County, Texas. Cromwell entered into two leases and sent copies to Anadarko.  For almost 10 years, Cromwell asked Anadarko eight to ten times to enter a joint operating agreement and participate in production from Anadarko’s existing three wells, but Anadarko never provided Cromwell with a joint operating agreement. Instead, Anadarko repeatedly sent Cromwell AFEs (Authorization for Financial Expenditures) for Anadarko’s three wells and Cromwell paid them. Anadarko said these were sent in error.

The Texas Supreme Court recently granted petitions for review regarding the ownership of salt caverns created by salt extraction in Myers-Woodward, LLC v. Underground Servs. Markham, LLC, ___ S.W.3d ___, 2025 WL ___ (Tex. May 16, 2025).

In this case, the lessee, Underground Services (“USM”) owned the mineral estate, and Myers owned the surface and a 1/8 royalty in all the minerals. Salt caverns had been created where USM had been extracting salt. USM used the caverns to store hydrocarbons. USM sued Myers, seeking declaratory relief regarding the royalty’s calculation and the right to use the underground salt caverns. The Corpus Christi Court of Appeals reversed the trial court judgment and held that the salt caverns belonged to the surface owner and affirmed the portion of the trial court judgment that the surface owner was due a 1/8 royalty on the market value of the salt at the wellhead.

The Supreme Court held that USM owned the salt under the tract, however the subsurface voids encased in salt and created by the production of salt belonged to Myers. USM, as the owner of the dominant mineral estate, had a qualified right to use the salt caverns, but that use was limited to uses that are reasonably necessary to recover USM’s minerals. USM could not use the caverns for storage of hydrocarbons or off-site minerals. The Supreme Court reversed regarding the royalty issue and remanded that issue back to the trial court.

I recently caught up with my stack of reading material, and one article that I found especially interesting is an article by Dr.Iddo Wernick entitled “The Many Problems with Batteries”. It is an analysis well worth your time. Dr. Wernick is a senior research associate at The Rockefeller University’s Program for the Human Environment and was nominated for a Nobel Prize in 2013 and 2014. Some of the problems with batteries he notes are:

• batteries store energy less efficiently than hydrocarbon fuels, meaning that batteries require much more mass and volume than hydrocarbon fuels. Batteries are far less energy dense than other fuels. For example, the energy density of biomass fuels such as straw and cow dung is 20 times greater than lithium ion batteries, and the energy density of gasoline is 50 times greater than lithium ion batteries.
• half the power of the batteries in an EV go to moving the batteries themselves. (There will be increased highway wear and tear due to the weight of EVs that we as taxpayers will have to pay for).

Earlier this year, the Corpus Christi Court of Appeals was called on to interpret the rights provided by a production sharing agreement. A production sharing agreement is an agreement between an oil company-lessee and the lessor mineral owners setting out how a horizontal well’s production will be allocated to the various mineral owners. In Hamilton v. Conoco Phillips, the Plaintiff and Defendant had signed a production sharing agreement.

The production sharing agreement contained the following language:

5. Surface Use, To the extent Owner may own any interest in the surface estate within the Lease, Owner giants Burlington easements (including subsurface easements) and rights-of-way (including all reasonable ingress and egress rights) on, in, and under the Leases associated with any Sharing Well, including easements and rights-of-way for:

The American Society of Farm Managers and Rural Appraisers recently published its “Texas Rural Land Value Trends” for 2021. According to its website “Chapter members from all the regions of Texas provide data to develop the annual market study.” The study is a good source for current land values, leasing rates and even hunting lease rates. You can download a copy of the study without charge at the ASFMRA website.

The Texas Supreme Court recently decided a case involving a covenant to protect against drainage. In Rosetta Resources Operating, LP v. Martin, the Court considered several issues, one of which was whether the covenant had been triggered by language in the addendum to the oil and gas lease.

Rosetta and two other companies drilled a well on property that was near but not adjacent to the pooled unit that contained a portion of the Martin’s property. The Martins sued, based on language in the addendum, claiming Rosetta and another oil company failed to protect them from drainage by the nearby well. The Court held that the covenant in the addendum was subject to competing reasonable interpretations as to when the covenant was triggered and reinstated the trial court’s ruling denying relief to the Martins for violation of the covenant.

All of this underscores how important clear and unequivocal language in the oil and gas lease is.

There are no doubt a number of honest and reputable companies installing residential solar systems in Texas. However, based on the number of folks who call me each month about problems with the company they dealt with, there are a certain number of dishonest and disreputable companies as well.

Residential solar systems are incredibly expensive, often costing between $25,000 and $35,000. Before you spend or finance this kind of money, there are a number of things you can do to make sure you’re dealing with one of the good guys:

• Check out the company’s rating and complaint history at the Better Business Bureau website. In each case where I’ve handled a complaint for a client against a solar system company, that company had numerous complaints listed on the BBB website.

The Fifth Circuit recently denied a landowner damages in their suit against a pipeline company. In Mary v. QEP Energy Co., No. 21-30195 (5th Cir. 2022) the Louisiana landowner had given the pipeline company an easement on their property. The easement had a right angle turn in it. Hard to imagine why the pipeline company agreed to this since pipelines really can’t be installed at right angles. At any rate, when the pipeline was laid, it “cut the corner” at the right angle and was laid partially outside the easement. 31 feet of one pipeline and 15 feet of the other were outside the easement.

The landowner sued for removal of the encroaching pipelines and disgorgement of all profits the pipeline company made from the gas that flowed through the pipeline. The Fifth Circuit held that the landowner could request removal of the pipelines or claim ownership of the portion of the pipelines outside the easement, subject to the pipeline company’s right to receive reimbursement for the current value of the materials and labor or the enhanced value of the land. However, regarding disgorgement of profits, the Court held that “Disgorgement in this circumstance is limited to the additional profits QEP earned, if any, as a direct result of installing the … (p)ipelines partly outside the servitude boundary, as compared to the profits QEP would have earned if it had installed the pipelines entirely within the servitude. ” The Court refused to hold that the landowner was entitled to all profits from gas flowing through the pipelines. Since the landowner did not offer any evidence of additional, incremental, profit due to the misplaced pipelines, the landowner’s claim for disgorgement was denied.

easement

The Texas Supreme Court has recently agreed to hear an appeal in a case involving the Texas Central Railroad. Oral argument is scheduled for January 11, 2022.

The case is Miles v. Tex. Central R.R. & Infrastructure, Inc., 2020 WL 2213962 (Tex. App.—Corpus Christi–Edinburg 2020), pet. granted, (Oct. 15, 2021) [20-0393]. As you may recall, Texas Central wants to build high speed passenger rail service between Dallas and Houston. To do that, while some land may be purchased voluntarily, it will probably need to use eminent domain to obtain most of the land needed for the railroad.

The Plaintiff, Miles, claims that Texas Central has not shown a reasonable probability of project completion, as required by Texas Rice Land Partners, LTD. v. Denbury Green Pipeline-Texas, LLC, 363 S.W.3d 192, 198, 202 (Tex. 2012). Miles asserts that the Denbury decision requires entities show a reasonable probability that a project will be completed before obtaining eminent domain power.Miles contends that Texas Central has not met this standard, and so it does not have eminent domain authority. For example, Miles points out that Texas Central has not yet laid any track or done anything else that could be called operating a railroad. In fact, the Texas Central website admits they have not even bought any land yet, but instead “have control over” about 600 acres of land” (probably through options to purchase).