Producer's Edge
Author: Austin W. Brister

Ellison v. Three Rivers Acquisition, 2022 Tex. App. LEXIS 9157 (Corpus 2022, no pet. h.)

Expert witnesses can play a pivotal role in determining the outcome of a lawsuit, particularly in the oil and gas industry where technical and specialized information is often at the heart of a dispute. A recent Corpus Christi Court of Appeals case serves as a stark reminder that having the right testimony is only half the battle in some cases – ensuring that the witness is properly designated and qualified as an expert can be equally crucial.

In this recent case, the Corpus Christi Court of Appeals held that testimony from an oil and gas company’s reservoir engineer, regarding the company’s alleged lost production damages, was inadmissible because he was not designated as an expert. The oil and gas company argued that the “Property Owner Rule” allowed the non-expert testimony because it pertained to the value of the company’s own property. The appellate court rejected that argument, holding that the value of mineral reserves is a “technical or specialized” matter that requires expert testimony.

This dispute was previously before the Texas Supreme Court. In 2021, the Supreme Court held that a boundary line stipulation was valid and enforceable, and that the neighboring lessee ratified it through by signing and returning a related letter.

This latest appellate decision, on remand, addresses a variety of issues. The main issue addressed in this article pertains to the jury’s award of $492,551.39 in lost profits to Concho arising out of the alleged failure to recognize the boundary stipulation and ratification. The trial court’s judgment omitted lost profits damages notwithstanding the jury’s verdict.

On appeal, Concho argued that there was sufficient evidence to support the jury’s award, pointing to detailed testimony and historical written analysis provided by Concho’s reservoir engineer.

The appellate court affirmed the trial court, reasoning that the engineer was not designated as an expert witness and his opinions were not disclosed in discovery — two requirements pertaining to expert witnesses.

Concho argued that the “Property Owner Rule” affords an exception, allowing lay witnesses the ability to provide opinion testimony on the value of their own property.

The appellate court again disagreed with Concho, noting that the value of mineral reserves must be proven by expert testimony, and holding that “the Property Owner Rule does not extend to matters ‘that are of a technical or specialized nature’ such as the value of mineral reserves.” Because Concho had no expert evidence on the issue of lost profits, the appellate court held that the trial court did not err in disregarding the jury’s findings as to lost profits.

This case emphasizes the critical role expert testimony can play in oil and gas litigation. Securing the right testimony is just one aspect of the challenge; it is also critical to plan ahead to ensure the evidence is properly admissible. After all, obtaining the best damages testimony does little good if it is not admissible at trial.


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