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Recently, Law360 reported on the Texas Supreme Court ruled in June 2017 in favor of McGinnis Lochridge clients, the T.S. Reed family interests and other royalty owners (represented by Partners Paul F. Simpson, Christopher L. Halgren, Don H. Magee and J. Derrick Price), in Samson Exploration LLC v. T.S. Reed Properties Inc.
In Samson v. Reed, the Court affirmed a prior ruling by the Beaumont Court of Appeals that upheld a judgment against Samson for multiple breaches of oil and gas leases. The largest part of the judgment was for not paying royalty to the Reed owners on production from a Samson-operated well in a Samson-operated unit into which Samson had pooled that lease. Because that unit overlapped an earlier Samson unit that included the same well, Samson argued it did not have to pay royalty on that well to the second unit’s royalty owners.
The Texas Supreme Court unanimously rejected Samson’s argument to hold that Samson had to comply with its contractual obligations. As partner Paul Simpson told Law360, the Texas Supreme Court again upheld the rule of law in the Reed case: "Those who, like Oklahoma-based Samson, rely on what the Court called 'contract-avoidance' theories to justify breaking their promises should know that, in Texas, a deal is still a deal."
The full Law360 article can be found (subscription required): https://www.law360.com/articles/937802/texas-high-court-says-contract-law-rules-in-royalty-row