SCOTX On Retained Acreage Conflicts: Lawful Contracts Rule

AUSTIN – In a pair of decisions released Friday, the Texas Supreme Court defended seemingly contradictory positions pertaining to oil and gas leases applied to less acreage than the Texas Railroad Commission allows.

The pair of cases is being closely watched by the oil and gas industry as horizontal drilling activity sparks disputes over who owns what tract. Nine of the state’s intermediate courts of appeals have reached conflicting decisions in the last four years on “retained acreage” questions. The Railroad Commission sets a proration unit for each well to prevent waste and promote conservation and development of oil and gas resources.