Texas Supreme Court Grants Petition for Review in $54.5 Million Oil and Gas Dispute

On September 2, 2022, the Texas Supreme Court granted DGC client Petro Canyon Energy, LLC’s petition for review in a $54,500,000 dispute over the construction and application of a settlement-and-release provision in an acreage-swap agreement between oil-and-gas companies. The case will be argued to the Texas Supreme Court on November 30, 2022.

The primary issue is whether a comprehensive settlement-and-release provision—which states that each party releases the other, the other’s affiliates, and their “predecessors” from all liability related in any way to the conveyed oil-and-gas property—applied to a suit later brought against Petro Canyon’s predecessor in interest, title, rights, and liabilities. The trial court answered that question “yes.” But the Dallas Court of Appeals reversed, holding that releases of liability are “forfeitures” under Texas law and therefore their application must be rejected if there is any plausible way to construe them as not applying to a particular factual circumstance. The court of appeals ultimately held that the word “predecessor” in the release of liability must mean “corporate predecessor” only—even though Petro Canyon doesn’t have a formal corporate predecessor.

DGC shareholder Ryan Clinton was hired to prepare Petro Canyon’s appellate briefing at the Texas Supreme Court. The Court has granted Petro Canyon’s petition for review and set the case for oral argument in November.

Additional Resources:
Petro Canyon’s Brief on the Merits
Petro Canyon’s Reply Brief on the Merits
Dallas Court of Appeals Opinion