In McGinnis Lochridge’s most recent win, Houston Partners Don Jackson, Chris Halgren, and Austin Brister secured a $44M judgment in a suit against EP Energy. The win was covered in Law360, (“EP Energy Must Pay $44M For Oil And Gas Lease Payments”), and the San Antonio Business Journal (“A top-producing, but struggling, Eagle Ford driller hit with $44M court judgment”). La Salle County District Judge Russell Wilson found for the law firm’s clients Storey Minerals, Ltd., Maltsberger/Storey Ranch, LLC and Rene R. Barrientos Ltd. (MSB).
Chris Halgren, a partner in the firm’s Oil & Gas Practice Group, led the firm’s trial team on the case and successfully argued that MSB as property owners were entitled to increased bonuses due to the “most favored nations” clause included in EP Energy’s lease with MSB. The “most favored nations" clause ensures the leasing company will match the terms of newer leases in the area and is meant to protect landowners. The clause was triggered when EP Energy acquired additional leases in the area with higher bonuses.
"What mineral owners will try to do, and generally oil companies attempt to avoid this, is that they will want to put a provision in the leases … that says if you pay other people within a defined area more than you paid me for signing this lease, then you’ve got to pay me the same amount," Halgren said. "It’s a way to protect you against the market going up within the time frame covered by the lease."
In the Law360 article, portions of the firm’s successful motion for summary judgment was quoted: “EP Energy now is trying to walk back its plain obligations under the MSB leases at issue in the case and has concocted spurious defense and delay tactics to try to avoid its considerable and plain liability.” By granting the motion, Judge Wilson agreed that the higher bonuses were owed.
“Certainly our clients are happy, they made a deal with EP Energy ... 10 years ago and my clients are people who always strive to live up to their end of the deal and they want other people to live up to their word as well,” Halgren told Law360.
To read the article in Law360, click here. (Subscription required)
To read the article in San Antonio Business Journal, click here.