Samson Exploration, LLC v. T.S. Reed Properties, Inc.

In this dispute involving mineral interests pooled for natural gas production, lessors and other stakeholders alleged that the lessee underpaid royalties owed to them under their mineral leases and pooling agreements. The issues presented in this appeal centered on the lessee’s efforts to avoid a contractual obligation to pay royalties to the overlapping unit stakeholders for production from a zone shared by the two pooled units. The lower courts held that the agreement to pay royalties was enforceable. The Supreme Court affirmed, holding (1) ineffective conveyance of title does not preclude the lessee’s liability under a contract theory; (2) the lessee’s quasi-estoppel and scrivener’s error defenses to contract enforcement failed as a matter of law; and (3) the lessee was not entitled to recoup royalty payments from stakeholders in another pooled unit; (4) this court’s decision in Hooks v. Samson Lone Star, Ltd. Partnership, 457 S.W. 3d 52 (Tex. 2015) precluded the unpooling stakeholders’ claims; and (5) the court of appeals properly construed a proportionate-reduction clause to award royalties owed to the overlapping unit stakeholders in accordance with their fifty percent mineral-interest ownership. View "Samson Exploration, LLC v. T.S. Reed Properties, Inc." on Justia Law