Strong Pipkin Obtains Court of Appeals Victory for its Client with Affirmation of Take Nothing Judgment

The Ninth Court of Appeals in Beaumont issued an opinion and judgment affirming the trial court’s judgment that Plaintiff recover nothing from Strong Pipkin’s client, an oil and gas producer.

The case involved several properties purchased by Plaintiff at a foreclosure sale.  The prior owners of the properties entered into mineral leases with Strong Pipkin’s client, wherein they received royalty payments.  Strong Pipkin’s client pooled several leases together and drilled two wells.  The two wells were located on properties within the pooled unit but not on the properties obtained by the Plaintiff.  After Plaintiff obtained the properties at a foreclosure sale, the Plaintiff refused to enter into a separate lease to collect the royalty payments previously paid to the former owners, arguing that because he is not a party to the lease he is entitled to receive a working interest (a percentage of total profit) in the two wells.

At trial, Strong Pipkin attorney Greg Dykeman successfully argued that Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419 (Tex. 2008) does not support the proposition that any unleased property within a pooled unit has a right to receive a proportionate share of total profits of the pooled unit. In the subsequent appeal, Strong Pipkin attorney Dan Mabry successfully argued that Plaintiff is not entitled to a percentage profit in the pooled unit citing the Rule of Capture and distinguishing Sheppard.  Unlike in Sheppard, the Plaintiff in this case was not the mineral owner of the property on which the wells were drilled, and citing the Rule of Capture, Strong Pipkin argued that Plaintiff is not entitled to royalty payments because Plaintiff did not enter into a mineral lease with the oil & gas producer.

The Ninth Court of Appeals agreed with Strong Pipkin’s analysis and affirmed the trial court’s Judgment that the Plaintiff take nothing from Strong Pipkin’s client.  A copy of the opinion can be found at 2020 Tex. App. LEXIS 443 or 2020 WL 238538.

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