Caveat Emptor: Texas Supreme Court Puts Greater Due Diligence Burden on the Backs of Oil & Gas Asset Buyers

Buyer Beware in purchase of oil and gas assetsThe Permian is a hotbed of deal activity, with the Dallas Morning News declaring that an “arms race” is breaking out to acquire the best acreage positions.

But what are purchasers really buying? Does the due diligence process move too fast (or not at all, making it an empty exercise)? Do purchasers really know that their title is good? Are they unknowingly wasting their money, only to discover that they have done so decades after the investment is made and the profits are owed to the true owner?

The Texas Supreme Court has now strongly moved to put the risk of title loss on the oil and gas interest purchaser or lessee, holding that a purchaser/lessee was not even entitled to a trial on the question of whether it had reasonably relied on the lessor’s own admitted misrepresentations about its title.

In an opinion delivered March 23, the court upheld the dismissal as a matter of law of the purchaser’s claims arising from title failure. In so doing, the court upended the rule that a seller always remains liable for its own fraudulent statements, instead placing the risk on sophisticated buyers. Read more

Final Judgment Entered in Mesa Lawsuit Against Baytech, Delaware Basin Resources 

After a successful mandamus petition to Texas’ Eighth Court of Appeals, lawyers for Mesa Petroleum Partners and legendary oilman T. Boone Pickens are celebrating the entry of a final judgment of approximately $135 million against Baytech LLP and Delaware Basin Resources LLC, both of Midland, Texas.

Chrysta Castañeda, of Dallas’ The Castañeda Firm, served as lead trial counsel to Mesa and Pickens in the 2016 trial that resulted in the jury verdict against Baytech and DBR. Final judgment was issued on December 8, just before the deadline set by the El Paso-based Court of Appeals, which ordered the trial judge to enter judgment by December 9.

In its November 23, 2016, verdict, the jury unanimously found that Baytech and DBR had breached their agreement to give Mesa rights to 15 percent of certain properties and wells in the “Red Bull” area of West Texas’ Reeves and Pecos counties.  Read more

Litigation Issues in Area of Mutual Interest (AMI) Agreements

AMI AgreementsAn Area of Mutual Interest (AMI) Agreement is a contract between people or companies who want to jointly explore for oil and gas in a specific area during a given time. It is a common tool for sharing risks of development, along with the associated ownership and profits.

Unlike the standardized Joint Operating Agreement, though, AMI contracts tend to be handcrafted by the parties promoting the deal, and often have unintended flaws and consequences. If you’re an investor or operator who wants to put together an AMI Agreement, what do you watch out for? And what about buying an interest or properties that might be encumbered by an AMI Agreement? Will your due diligence reveal the significant issues associated with AMI obligations? Read more

Castañeda Firm Victory Ranked Among Top Texas Verdicts of 2016 

Dallas trial attorney Chrysta Castañeda and The Castañeda Firm have been recognized on Texas Lawyer’s list of the Top Texas Verdicts & Settlements of 2016 for the firm’s multimillion-dollar oil and gas verdict for legendary oilman T. Boone Pickens and his company, Mesa Petroleum Partners.

The state district court verdict in Mesa Petroleum Partners LP vs. Baytech LLP was the fifth-largest in Texas in 2016, according to Texas Lawyer, which ran the list in its September issue. Read more

Castañeda Firm Victory for Oilman T. Boone Pickens Ranked Among Top U.S. Verdicts

Pecos, Texas, jury awards over $145 million against Midland and Dallas oil companies 

DALLAS –  Dallas trial attorney Chrysta Castañeda and The Castañeda Firm are being recognized on The National Law Journal’s Top 100 Verdicts of 2016 list after winning a multimillion-dollar oil and gas verdict for legendary oilman T. Boone Pickens and his company, Mesa Petroleum Partners.

The state district court verdict against two Midland oil and gas companies and a Dallas-based operator ranked as the 12th highest in the country, according to the National Law Journal. Read more

Oil Prices are Falling: Get Ready for Litigation

Oil prices are falling and deals are getting scrapped.  As was the case with the last several business cycles, litigation will undoubtedly ensue.  The old-timers refer to this as “drilling at the courthouse.”  Here are five tips for preparing for possible litigation: Read more