SCOTX: New Leases End Old Leases – Unless They Don’t

AUSTIN – The Texas Supreme Court has clarified an important oil and gas title question involving multiple leases on the same property, an old phenomenon becoming more prevalent with oil price fluctuations. The court held that an existing lease is terminated unless the new lease objectively demonstrates both parties’ intent otherwise.

The decision means that original lessee TRO-X L.P. is not entitled to a percentage interest in wells drilled under subsequent leases executed by Anadarko Petroleum Co. in Ward County. The decision, issued last Friday, upheld a lower appeals court ruling that had reversed a trial court judgment awarding TRO-X an undivided 5 percent working interest under its earlier lease agreements with the property owners.