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

On March 22, 2018, the highly respected and influential Texas Oil and Gas Association filed amicus briefs supporting Davis, Gerald & Cremer's clients in two high-profile Texas appeals currently pending before the Texas Supreme Court.

The two cases are Endeavor Energy Resources, L.P. v. Discovery Operating, Inc., No. 15-0155, and XOG Operating, LLC v. Chesapeake Exploration Ltd. Partnership, No. 15-0935.  Both cases involve a dispute over the number of acres retained by the lessee or transferee after the expiration of an oil-and-gas contract's primary term.  The contracts in each case define retained acreage differently, but the Petitioners in both cases have argued that the two contracts should be construed to lead to the same conclusion.

Respondents Discovery Operating and Chesapeake Exploration, both represented by Ryan Clinton of Davis, Gerald & Cremer, assert that the court of appeals's judgments in each case correctly determine the number of acres retained under the particular language of each contract. 

The Texas Oil and Gas Association agrees.  In a brief to the Court, TXOGA wrote:

TXOGA urges the Court to carefully consider the technical drafting associated with each of the retained acreage clauses involved in these two cases.  Retained acreage clauses that refer to Railroad Commission rules potentially are confusing, and the industry relies on careful interpretation of these clauses to avoid unnecessary risk in development areas that may be subject to retained acreage clauses.

TXOGA believes that the courts of appeal in each case correctly interpreted the retained acreage clause in each lease.  Although the courts reach different results for what may seem to be similar clauses, TXOGA notes that the wording in each clause is different.  Accordingly, TXOGA encourages the Court to affirm the decisions of the courts of appeals in these matters.

To reach TXOGA's amicus brief in full, click here.