Burlington Resources Oil & Gas Company, LP v. Petromax Operating Co., Inc., Woodbine Acquisition, LLC, N/K/A MD America Energy, LLC, Petro Texas, LLC, CH4 Energy II, LLC, and Texcal Energy South Texas, LP

ACCEPTED
06-15-00044-CV
SIXTH COURT OF APPEALS
TEXARKANA, TEXAS
10/20/2015 7:43:29 PM
DEBBIE AUTREY
CLERK
No. 06-15-00044-CV

IN THE SIXTH DISTRICT COURT OF APPEALSFILED IN
6th COURT OF APPEALS
TEXARKANA, TEXAS
10/21/2015 8:59:00 AM
Burlington Resources Oil & Gas Company LP,
DEBBIE AUTREY
Clerk
Appellant,

v.

PetroMax Operating Co., Inc., Woodbine Acquisition, LLC,
Petro Texas, LLC, Ch4 Energy II, LLC, and
TexCal Energy South Texas L.P.,

Appellees.

On Appeal from the 12th Judicial District Court
Madison County, Texas, Cause No. 12-13130-012-10

BRIEF FOR APPELLANT

Fred Hagans Kirsten M. Castañeda
Kendall C. Montgomery Roger D. Townsend
HAGANS BURDINE MONTGOMERY ALEXANDER DUBOSE JEFFERSON
& RUSTAY, P.C. & TOWNSEND LLP
3200 Travis, Fourth Floor 1844 Harvard Street
Houston, Texas 77006 Houston, Texas 77008

Vincent L. Marable III John R. Mercy
PAUL WEBB, P.C. Mercy Carter Tidwell, L.L.P.
221 N. Houston Street 1724 Galleria Oaks Drive
Wharton, Texas 77488 Texarkana, Texas 75503

ATTORNEYS FOR APPELLANT

Oral Argument Requested
 IDENTITY OF PARTIES AND COUNSEL

Appellant: Kirsten M. Castañeda
State Bar No. 00792401
Burlington Resources Oil & kcastaneda@adjtlaw.com
Gas Company LP ALEXANDER DUBOSE JEFFERSON
& TOWNSEND LLP
4925 Greenville Avenue, Suite 510
Dallas, Texas 75206

Roger D. Townsend
State Bar No. 20167600
rtownsend@adjtlaw.com
ALEXANDER DUBOSE JEFFERSON
& TOWNSEND LLP
1844 Harvard Street
Houston, Texas 77008

John R. Mercy
State Bar No. 13947200
jmercy@texarkanalawyers.com
MERCY CARTER TIDWELL, L.L.P.
1724 Galleria Oaks Drive
Texarkana, Texas 75503
Appellate counsel

Fred Hagans
State Bar No. 08685500
fhagans@hagans-law.com
Kendall C. Montgomery
State Bar No. 14293900
kmontgomery@hagans-law.com
HAGANS BURDINE MONTGOMERY
& RUSTAY, P.C.
3200 Travis, Fourth Floor
Houston, Texas 77006

ii
 Vincent L. Marable III
State Bar No. 12961600
trippmarable@sbcglobal.net
PAUL WEBB, P.C.
221 N. Houston Street
Wharton, Texas 77488
Trial and appellate counsel

Bennie D. Rush
State Bar No. 17400425
1300 11th Street, Suite 300
Huntsville, Texas 77340-3857
Trial counsel

Appellee Brad D’Amico
PetroMax Operating Co., Inc. State Bar No. 00783923
bd@canteyhanger.com
CANTEY HANGER LLP
1999 Bryan Street, Suite 3300
Dallas, Texas 75201

David J. Beck
State Bar No. 00000070
dbeck@beckredden.com
Thomas E. Ganucheau
State Bar No. 00784104
tganucheau@beckredden.com
BECK REDDEN LLP
1221 McKinney Street, Suite 4500
Houston, Texas 77010-2010
Trial and appellate counsel

David Hammit
State Bar No. 08857660
DAVID HAMMIT, LLC
109 South Madison Street
Madisonville, Texas 77864
Trial counsel

iii
Appellees David J. Beck
Petro Texas, LLC, State Bar No. 00000070
Ch4 Energy II, LLC dbeck@beckredden.com
Thomas E. Ganucheau
State Bar No. 00784104
tganucheau@beckredden.com
BECK REDDEN LLP
1221 McKinney Street, Suite 4500
Houston, Texas 77010-2010
Trial and appellate counsel

John R. Bankhead
State Bar No. 01676600
Attorney at Law
110 W. Cottonwood
Madisonville, Texas 77864
Trial counsel
Appellee Greg W. Curry
Woodbine Acquisition, LLC State Bar No. 05270300
greg.curry@tklaw.com
Gregory D. Binns
State Bar No. 24027148
greg.binns@tklaw.com
Richard B. Phillips, Jr.
State Bar No. 24032833
rich.phillips@tklaw.com
THOMPSON & KNIGHT LLP
1722 Routh Street, Suite 1500
Dallas, Texas 75201
Trial and appellate counsel

Kevin R. Knight
State Bar No. 11601400
LAW OFFICE OF ROGER KNIGHT, JR.
P.O. Box 925
Madisonville, Texas 77864
Trial counsel

iv
Appellee Jesse R. Pierce
TexCal Energy South Texas State Bar No. 15995400
L.P. jpierce@pierceoneill.com
Brian K. Tully
State Bar No. 24039217
btully@pierceoneill.com
PIERCE & O’NEILL, LLP
4203 Montrose Blvd.
Houston, Texas 77006
Trial and appellate counsel

v
 TABLE OF CONTENTS

Page
Identity of Parties and Counsel ................................................................................ ii
Table of Contents .....................................................................................................vi
Index of Authorities .................................................................................................ix
Statement of the Case...............................................................................................xi
Issues Presented ..................................................................................................... xii
1. Burlington and the PetroMax Defendants disagree about
the proper interpretation of an oil and gas assignment,
which (in turn) determines whether certain leases are
jointly owned and continue in effect an area of mutual
interest (“AMI”) under an earlier letter agreement.
a. Did the trial court err in rejecting Burlington’s
interpretation as a matter of law, rather than holding
the assignment to be ambiguous?
b. Alternatively, did the trial court err in concluding
that the PetroMax Defendants’ interpretation is
reasonable, rather than enforcing Burlington’s
interpretation as a matter of law?
2. Burlington also moved for summary judgment on its right
to acquire 25% of oil and gas leases or mineral rights
acquired by the PetroMax Defendants in the AMI, without
any reduction or limitation based on the scope of
Burlington’s joint ownership of leases/rights within the
AMI. Did the trial court err in denying Burlington
summary judgment on this issue?
3. Did the trial court err in granting the PetroMax
Defendants’ summary judgment motion and denying
Burlington’s summary judgment motion?
Introduction ...............................................................................................................1
Summary of the Dispute ...........................................................................................2
Statement of Facts .....................................................................................................4

vi
 TABLE OF CONTENTS (CONT’D)
Page

I. The 1975 Letter Agreement created an Area of Mutual Interest
intended to endure as long as any lease in the AMI was jointly
owned. ..................................................................................................4
II. Upon succeeding Buttes as a party to the 1975 Letter
Agreement, the PetroMax Defendants performed those
obligations until 2012. ..........................................................................6
III. The PetroMax Defendants performed under the 1975 Letter
Agreement with knowledge of a subsequent 1994 assignment. .......10
A. Southland listed four wells for sale at an auction, as
reflected in the resulting assignment. ......................................10
B. The PetroMax Defendants obtained two title opinions,
both of which interpreted the 1994 Assignment as
conveying only Southland’s interest in the four wells.............12
IV. Regardless of its own experts’ title opinions, in 2012, the
PetroMax Defendants abruptly disavowed their obligations. ............15
V. The trial court concluded the 1994 Assignment unambiguously
conveyed not just the listed wells, but all of Southland’s
ownership interest in the four leases. .................................................16
Summary of Argument ...........................................................................................17
Argument.................................................................................................................19
I. The interpretation of the 1994 Assignment as conveying only
Southland’s interest in four wells—and not all of its interest in
four entire leases—is reasonable. .......................................................19
A. As reflected in the 1994 Assignment, Southland
auctioned its interest in four wells and expressly reserved
other interests. ..........................................................................20
B. Burlington’s interpretation comports with the 1994
Assignment’s language and harmonizes its provisions. ..........23
C. Burlington’s interpretation also is consistent with the
circumstances surrounding the 1994 Assignment. ..................26

vii
 TABLE OF CONTENTS (CONT’D)
Page

II. If the PetroMax Defendants’ interpretation also were
reasonable, the resulting ambiguity would preclude summary
judgment, requiring remand. ..............................................................28
III. However, Burlington offered the only reasonable interpretation
of the applicable agreements, requiring rendition in
Burlington’s favor. .............................................................................30
A. The 1994 Assignment conveys only Southland’s interest
in the four enumerated wells. ...................................................30
B. In addition, the 1975 Letter Agreement does not provide
for reduction of Burlington’s rights proportionate to the
scope of its joint ownership. ....................................................34
Conclusion and Prayer ............................................................................................36
Certificate of Compliance .......................................................................................38
Certificate of Service ..............................................................................................39
Appendix
1975 Letter Agreement (CR:589-625) .......................................... Tab 1
1994 Assignment and Bill of Sale (CR:1029-34) ......................... Tab 2
Order Granting Defendants’ Motion for Summary Judgment on
Title Issues (CR:1617).............................................................. Tab 3
Order Denying Burlington’s Motion for Partial Summary
Judgment Seeking Various Declarations (CR:1618-19) .......... Tab 4
Order on Joint Motion to Sever and Abate (CR:1640-45) ............ Tab 5

viii
 INDEX OF AUTHORITIES

Page(s)
Cases
Coker v. Coker,
650 S.W.2d 391 (Tex. 1983) ............................................................19, 28, 30, 32

Columbia Gas Transmission v. New Ulm Gas, Ltd.,
940 S.W.2d 587 (Tex. 1996) ..............................................................................30
DeSantis v. Wackenhut Corp.,
793 S.W.2d 670 (Tex. 1990) ..............................................................................36
Entergy Gulf States, Inc. v. Summers,
282 S.W.3d 433 (Tex. 2009) ..............................................................................29
Freeman v. Stephens Production Co.,
171 S.W.3d 651 (Tex. App.—Corpus Christi 2005, pet. denied) ......................25
Houchins v. Devon Energy Prod. Co., L.P.,
No. 01-08-00273-CV, 2009 WL 3321406 (Tex. App.—Houston
[1st Dist.] Oct. 15, 2009, pet. denied) (mem. op.) ..............................................30
Hous. Expl. Co. v. Wellington Underwriting Ags., Ltd.,
352 S.W.3d 462 (Tex. 2011) ........................................................................20, 26
J.M. Davidson, Inc. v. Webster,
128 S.W.3d 223 (Tex. 2003) ..............................................................................19

Luckel v. White,
819 S.W.2d 459 (Tex. 1991) ..............................................................................32

Neece v. A.A.A. Realty Co.,
322 S.W.2d 597 (Tex. 1959) ..............................................................................35

Philipello v. Taylor,
No. 10-11-00014-CV, 2012 WL 1435171 (Tex. App.—Waco Apr.
25, 2012, pet. denied) (mem. op.) .................................................................20, 27

R&P Enters. v. LaGuarta, Gavrel & Kirk, Inc.,
596 S.W.2d 517 (Tex. 1980) ..............................................................................32

ix
 INDEX OF AUTHORITIES (CONT’D)
Page(s)

Sun Oil Co. v. Madeley,
626 S.W.2d 726 (Tex. 1981) ..................................................................20, 27, 29

Treatises
Patrick H. Martin & Bruce M. Kramer, 2 WILLIAMS & MEYERS OIL &
GAS LAW § 432 (4th ed. 2010) .............................................................................6

x
 STATEMENT OF THE CASE

Nature of the Case: This is an oil and gas dispute. The parties disagree about
whether Burlington jointly owns an interest in some leases
in an area of mutual interest (“AMI”), as required to
continue that AMI in effect. CR:445, 593, 1384. This
question, in turn, is controlled by whether a 1994
Assignment: (1) conveyed an interest in four denominated
wells while reserving other interests in four leases; or (2)
conveyed all interests in four entire leases. CR:484-85;
1SCR:21-22.

Course of Appellant (Plaintiff Burlington) filed suit against
Proceedings: Appellees (collectively, the “PetroMax Defendants”),
asserting claims such as breach of contract and declaratory
judgment regarding its ownership rights and the AMI’s
continuing effect. CR:443-48. The PetroMax Defendants
denied these claims, Appellee PetroMax asserted a
counterclaim for suit to quiet title, and Appellee Woodbine
asserted counterclaims for suit to try title, trespass-to-try
title, and declaratory judgment. CR:365, 1378-87.
Burlington and the PetroMax Defendants filed competing
summary-judgment motions on Burlington’s ownership
rights relating to the AMI. CR:484-85; 1SCR:21-22.

Trial Court The trial court denied Burlington’s summary-judgment
Disposition: motion. CR:1618-19 (Apdx. Tab 4). The trial court granted
the PetroMax Defendants’ summary judgment on title
issues, ruling that:
(1) Burlington owns no interest in the AMI; and
(2) the AMI provision has terminated.
CR:1617 (Apdx. Tab 3).
On the parties’ joint motion, the trial court severed the
remaining claims in order to render its summary judgment
rulings final and abated the severed action pending this
appeal. CR:1640-45 (Apdx. Tab 5).

xi
 ISSUES PRESENTED

1. Burlington and the PetroMax Defendants disagree about the proper

interpretation of an oil and gas assignment, which (in turn) determines whether

certain leases are jointly owned and continue in effect an area of mutual interest

(“AMI”) under an earlier letter agreement.

a. Did the trial court err in rejecting Burlington’s interpretation as

a matter of law, rather than holding the assignment to be ambiguous?

b. Alternatively, did the trial court err in concluding that the

PetroMax Defendants’ interpretation is reasonable, rather than enforcing

Burlington’s interpretation as a matter of law?

2. Burlington also moved for summary judgment on its right to acquire

25% of oil and gas leases or mineral rights acquired by the PetroMax Defendants in

the AMI, without any reduction or limitation based on the scope of Burlington’s

joint ownership of leases/rights within the AMI. Did the trial court err in denying

Burlington summary judgment on this issue?

3. Did the trial court err in granting the PetroMax Defendants’ summary

judgment motion and denying Burlington’s summary judgment motion?

xii
 INTRODUCTION

When parties disagree about the proper interpretation of a contract, a trial

court cannot reject a reasonable interpretation through summary judgment. If only

one interpretation is reasonable, the trial court may grant summary judgment

consistent with that interpretation. If more than one reasonable interpretation exists,

no summary judgment may be granted. There is not a third option by which a trial

court may choose between two reasonable contract interpretations—discarding one

and embracing another—as a matter of law.

Burlington and the PetroMax Defendants disagree on the proper interpretation

of an oil and gas assignment. Burlington’s interpretation is reasonable. It comports

with the circumstances surrounding the assignment, honors the assignment’s

language, and harmonizes all the assignment's provisions. Indeed, two noted oil and

gas lawyers hired by the PetroMax Defendants to offer title opinions---years before

this lawsuit was filed---reached the same interpretation.

Yet, when each side moved for summary judgment on its interpretation of the

Assignment, the trial court not only denied Burlington’s motion, but also granted the

PetroMax Defendants summary judgment consistent with their interpretation.

The claims on appeal should be remanded (if the competing interpretation is

reasonable) or judgment rendered in Burlington’s favor (if the competing

interpretation is not reasonable). Either way, the summary judgment cannot stand.

1
 SUMMARY OF THE DISPUTE

The proper interpretation of the oil and gas assignment at issue will determine

whether Burlington currently has rights in an area of mutual interest (the “AMI”).

The AMI was created by agreement in 1975 (the “1975 Letter Agreement”), and it

continues in effect as long as the 1975 Letter Agreement’s parties jointly own any

leases within the AMI. It is undisputed that a lease called the Wilson Lease is located

in the AMI. Whether the AMI continues in effect turns on whether Burlington’s

ownership interest in the Wilson Lease was conveyed by a later assignment (the

“1994 Assignment”).

Burlington contends that it currently owns part of the Wilson Lease, which

means the AMI continues in effect. If the AMI continues in effect, the 1975 Letter

Agreement requires the PetroMax Defendants to offer Burlington a 25% working

interest in all leases and mineral rights they have acquired in the AMI.

The PetroMax Defendants contend that the ownership interests claimed by

Burlington were conveyed away by the 1994 Assignment, which would mean the

AMI terminated years ago. If the AMI no longer exists, Burlington has no right under

the 1975 Letter Agreement to acquire a 25% working interest in the leases/rights the

PetroMax Defendants have obtained in the AMI.

None of the parties in this case was an original party to the 1975 Letter

Agreement or the 1994 Assignment. Therefore, before delving into the relevant

2
facts, it is helpful to understand how everyone came to be involved in this dispute:

• The 1975 Letter Agreement creating the AMI, and its attached Joint

Operating Agreement, was between Aztec Oil & Gas Company and

Buttes Resources Company. CR:589-625 (Apdx. Tab 1).

• Aztec’s rights and obligations under the 1975 Letter Agreement passed

through company mergers to Southland Royalty and ultimately to

Burlington. CR:485 n.1, 626-30, 631-34, 635-36, 637.

 The 1994 Assignment, which was signed during the period that

Southland had succeeded to Aztec’s rights, is between Southland

and Samson Resources Company (which is not a party to this

lawsuit). CR:1029-34 (Apdx. Tab 2).

• Through a variety of agreements signed at various points in time, the

PetroMax Defendants acquired part of Buttes’ interests in the AMI,

subject to Buttes’ rights and obligations under the 1975 Letter

Agreement and 1975 JOA. CR:489-90, 638-46, 647-58, 659-60, 661-

62, 663-785.

 Most of the communications between the parties relevant to this

dispute occurred between Burlington and three of the PetroMax

Defendants: PetroMax Operating Co., Inc., Woodbine

Acquisition LLC, and TexCal Energy South Texas L.P.

3
 STATEMENT OF FACTS

To understand the 1994 Assignment, one must first understand the interests to

which it applied. Hence, we present our Statement of Facts chronologically.

I. The 1975 Letter Agreement created an Area of Mutual Interest intended
to endure as long as any lease in the AMI was jointly owned.

Forty years ago, Aztec and Buttes agreed to explore and develop oil and gas

leases together. See CR:589. Back in 1975, Buttes owned an undivided one-half

working interest in nine oil and gas leases. CR:589, 596. Through the 1975 Letter

Agreement, Buttes conveyed to Aztec an undivided 25% interest in the leases.

CR:589, 591-92. For future leases they might acquire, the parties established an Area

of Mutual Interest (“AMI”). CR:593.

If either party acquires a lease or mineral rights within the AMI, the 1975

Letter Agreement requires the acquiring party to offer the other party the same

proportionate interest as in the original nine leases. Id. Accordingly, if Aztec (now

Burlington) acquires leases in the AMI, Buttes (whose interests are now partially

held by the PetroMax Defendants) must be offered a 75% interest; likewise, if the

PetroMax Defendants acquire leases in the AMI, then Burlington must be offered a

25% interest. Id. To accept, the offeree must elect participation within 15 days and

reimburse the other for its share of the acquisition costs. Id.

A Joint Operating Agreement (the “1975 JOA”) governs operation and

participation in wells drilled on jointly-held leases within the AMI. To drill a well

4
on the jointly-held leases without all parties’ consent, the 1975 JOA requires the

party wishing to drill to notify the other parties in advance and give them a chance

to participate. CR:602-03 (§§11, 12).

The 1975 Letter Agreement provides that the AMI continues in effect as long

as jointly owned leases exist in the AMI. CR:593. After the first three years, the AMI

shrank to a boundary two miles outside the jointly-owned leases in the area at that

time. CR:593-94. As it turned out, at the end of three years, all nine original leases

remained jointly owned. CR:487; see also CR:74-75. So, the AMI continued in

effect with a boundary of two miles outside those leases. CR:594.

It is undisputed that five of the original leases no longer exist and that a sixth

lease is no longer jointly owned by Aztec’s successor-in-interest, Burlington.1 Three

of the original leases remain in the AMI: (1) the Wilson Lease; (2) the Gibbs Lease;

and (3) the Buchanan Lease. RR:7, 33. Burlington claims an ownership interest in

each of these leases, but for purposes of summary judgment, focused its attention on

the Wilson Lease. CR:436, 490-99; RR:7.

1
Four of the original leases terminated in 1979 at the end of their primary terms.
CR:74. With regard to a fifth lease, all but one well was assigned to a third party in
1981, and the remaining well was assigned to another third party in 1997. CR:74,
77. A sixth lease expired upon cessation of production in 1999. CR:74.

5
II. Upon succeeding Buttes as a party to the 1975 Letter Agreement, the
PetroMax Defendants performed those obligations until 2012.

The PetroMax Defendants succeeded to Buttes’ rights and obligations under

the 1975 Letter Agreement, and they initially acknowledged and performed those

obligations. In doing so, they repeatedly recognized Burlington’s continuing

ownership rights in the Wilson Lease.

For example, when defendant TexCal conveyed to defendant PetroMax

certain rights in the Wilson Lease in a 2009 farmout agreement, 2 they both

acknowledged Burlington’s rights to notice and participation in wells governed by

the 1975 JOA. CR:647, 651, 658-59. Indeed, TexCal limited PetroMax’s right to

earn under the farmout agreement to wells in which “Third Parties” did not

participate. CR:656. “Third Parties” included Burlington (denoted by the name of

its parent, ConocoPhillips). CR:656. And, in proposing the initial test well and

subsequent wells contemplated by the farmout agreement, PetroMax would be

required to give notices under the 1975 JOA. Id. 3

2
A “farmout agreement” is a contract to assign oil and gas lease rights in certain
acreage upon the completion of drilling obligations and the performance of any other
covenants and conditions set forth in the agreement. Patrick H. Martin & Bruce M.
Kramer, 2 WILLIAMS & MEYERS OIL & GAS LAW § 432 (4th ed. 2010).
3
See also CR:659 (amending Farmout Agreement to remove from excepted lands—
i.e., to add to the acreage subject to Farmout Agreement—the 160-acre drilling unit
for the Wilson #5 Well), 661-62 (amending the DeFacto Termination provision and
again including provisions regarding continuing rights to notice and participation
under 1975 JOA).

6
 Similarly, in 2011, defendants Woodbine, PetroMax, Petro Texas, and CH4

Energy expressly acknowledged in a Purchase and Sale Agreement that “Burlington

Oil & Gas Company owns an undivided 25% interest in and to 1537.83 acres out of

that certain Oil and Gas Lease dated August 29, 1974, between James D. Wilson, as

Lessor, and Curran R. Campbell, Inc., as Lessee . . . ,” i.e., the Wilson Lease.

CR:663, 781. The defendants further acknowledged that “[t]his is an outstanding

interest that has been non-consented in both the Wilson #1H and Wilson #2H wells.”

Id. They also “anticipated that Burlington (now Conoco-Phillips) will continue to go

non-consent on future wells.” Id.

In addition to these acknowledgments and agreements among themselves, the

PetroMax Defendants asserted the AMI’s continuing force and effect—and

Burlington’s continued joint ownership of the Wilson Lease—in communications

with Burlington. For instance, in 2009, TexCal and PetroMax sent Burlington

Authorities for Expenditure (“AFEs”) regarding participation in drilling the Wilson

#1H and #2H wells (i.e., the same wells referenced two years later in the

Woodbine/PetroMax Purchase Agreement discussed above). CR:786-87, 793-94.

The cover letters identify TexCal “as the current Operator of the Contract Area

covered by” the 1975 JOA. CR:786, 793. In proposing that PetroMax drill these two

wells on the Wilson Lease, both letters also notify Burlington that, “[i]n accordance

with the provisions of Article 12 of the JOA, you have 30 days after receipt of this

7
notice in which to indicate your election to participate in the proposed drilling of the

above referenced well and to pay the cost thereof.” CR:787, 794. The enclosures

(i.e., ballots and accompanying AFEs) reflect that, upon an election to participate,

Burlington would have a 25% working interest in the proposed wells. CR:789, 792,

796.

PetroMax also sent Burlington an AFE proposing to drill another well4 on the

Wilson Lease. CR:804-09. In the cover letter, PetroMax stated that, under the terms

of the 1975 JOA, Burlington had 30 days after receipt to return its election to

participate. CR:804. And, after Woodbine acquired interests from PetroMax,

Woodbine sent AFEs to Burlington for drilling five additional wells5 on the Wilson

and Gibbs Leases. CR:810-12, 814-17, 820-21, 825-26, 832-33, 837-38, 849-50.

As anticipated, Burlington went “non-consent” on several of the proposed

wells.6 CR:496-97. For each of these wells, Burlington wrote to Woodbine in 2012

and requested that Woodbine provide payout statements, regulatory information, and

plats. CR:497. Woodbine provided payout statements dated May 30, 2012, reflecting

4
This AFE concerned the Dunman/Wilson No. 1-H Well. CR:804.
5
These AFEs concerned the Wilson #3H, Wilson #6H, Wilson #5H, Gibbs #1H
(later drilled as the Gibbs #2H Well), and Dunman Wilson A #2H wells. CR:810-
12, 814-17, 820-21, 825-26, 832-33, 837-38, 849-50.
6
These non-consent wells were the Dunman/Wilson No. 1-H, Wilson #1H, Wilson
#2H, Wilson #3H, and Wilson #6H wells. CR:496-97.

8
Burlington’s working interest in the non-consent wells on the Wilson Lease as

follows (CR:497-98):

Non-Consent Well Burlington
Interest
Wilson #1H Well .25
Wilson #2H Well (a/k/a Wilson Unit “A” # 2H) .24531250
Wilson #3H Well .24531250
Wilson #6H Well .25
Dunman/Wilson No. 1-H Well .10535714

Burlington did elect to participate in other wells on the Wilson and Gibbs

Leases, including the Wilson #5H Well.7 CR:820, 1136-37. Woodbine accepted

Burlington’s election to participate in the Wilson #5H Well. CR:498, 1137.

Woodbine also availed itself of the benefits of the 1975 Letter Agreement, accepting

Burlington’s payments of its share of the required costs. CR:498; see also CR:1137.

In accordance with its obligations under the 1975 Letter Agreement, Woodbine paid

Burlington proceeds from the Wilson #5H Well totaling $1,335,253.59. CR:498,

1137.

7
The wells in which Burlington elected to participate were the Wilson #5H, Gibbs
#1H, and Dunman Wilson A #2H wells. CR:820, 1136-37.

9
III. The PetroMax Defendants performed under the 1975 Letter Agreement
with knowledge of a subsequent 1994 assignment.

During the years that the PetroMax Defendants performed their obligations

under the 1975 Letter Agreement and recognized Burlington’s ownership rights in

the Wilson Lease, they did so with knowledge of a 1994 Assignment of certain

interests by a previous Aztec successor-in-interest, Southland Royalty.

A. Southland listed four wells for sale at an auction, as reflected in the
resulting assignment.

In 1994, Southland listed for sale in an auction its interests in four wells in the

AMI: (1) the Wilson James D. Unit 2; (2) the Wilson James D. #3 (misspelled as the

“Wilson James D.O.” well); (3) the Buchanan 1; and (4) the Gibbs Bros. 1. CR:1497.

We will refer to the first two wells, both offered for auction from the Wilson Lease,

as Wilson #2 and Wilson #3. These two wells were located on one of the two separate

tracts of land that comprise the Wilson lease. Id.

As shown by the map on the following page, the Wilson Lease consists of two

non-contiguous tracts.

10
 • Tract 1 is the larger tract and contains the Wilson #1, Wilson #4, and
Wilson #5 wells.

• Tract 2 is the separate, smaller tract and contains the Wilson #2 and
Wilson #3 wells.

At the auction, Samson Resources Company purchased the interests sold by

Southland. CR:1029. Southland and Samson signed the 1994 Assignment. CR:1031.

The assignment provides for an Exhibit A that will both: (1) particularly describe

the Interests—including “oil and gas leases, leasehold interests, rights, and interests

attributable or allocable to the oil and gas leases or leasehold interests by virtue of

11
pooling, unitization, communitization, and operating agreements” being conveyed;

and (2) specifically note and reflect the “certain lands, leases, properties, interests,

leasehold rights, depths or formations” that Southland “reserves and retains unto

itself from the Interests . . . .” CR:1029. Thus, the Assignment provided that Exhibit

“A” would set forth both the interests being conveyed away and the interests being

reserved by Southland.

Indeed, Exhibit “A” contains two separate lists:

(1) a list of four leases owned by Southland, with an exception for

lands attributable to wells Southland previously had farmed out;

and

(2) a list of “Associated Wells.”

CR:1033. Unfortunately, Exhibit “A” does not specify which list sets forth the

conveyed interests and which list sets forth the reserved interests. Id. However,

consistent with the listing of only four wells in the auction catalog, the very first

words in the 1994 Assignment are: “Well Name: BUCHANAN 1, GIBBS BROS 1,

WILSON JAMES 2 AND WILSON JAMES 3”. Id.

B. The PetroMax Defendants obtained two title opinions, both of
which interpreted the 1994 Assignment as conveying only
Southland’s interest in the four wells.

The two lists in Exhibit A to the 1994 Assignment led to confusion for both

the PetroMax Defendants and Burlington. Consequently, before sending the 2009

12
AFEs to Burlington in connection with drilling on the Wilson Lease, TexCal and

PetroMax obtained two title opinions about whether Burlington still owned any

working interest in that lease.

In 2007, TexCal retained J. Jan Jircik, a Texas lawyer who is Board Certified

in Oil, Gas and Mineral Law by the Texas Board of Legal Specialization, to perform

a title opinion. CR:860. Jircik did not interpret the 1994 Assignment as conveying

all of Southland’s interest in the Wilson Lease, but instead interpreted the 1994

Assignment as if it included only Southland’s interest in the Wilson #2 and Wilson

#3 wells and the associated production units, i.e., Southland’s interest in Tract 2.

CR:896. Jircik opined that the interest Southland had reserved in the Wilson Lease

“was eventually acquired by Burlington Resources Oil & Gas Company, L.P.” Id.

Accordingly, as to the two Wilson wells listed for auction, expressly identified at the

top of the 1994 Assignment, and included as “Associated Wells” on its Exhibit “A,”

Jircik concluded that Burlington did not own any gross working interest. CR:863-

64. But as to wells located on Tract 1 of the Wilson Lease,8 Jircik opined that

Burlington owned a gross working interest of .2500000. CR:862, 865-66.

In 2009, PetroMax retained Ronald Moore, another Texas lawyer Board

Certified in Oil, Gas and Mineral Law by the Texas Board of Legal Specialization,

8
At the time, these wells were the Wilson #1, Wilson #4, and Wilson #5 Wells.
CR:862, 865-66.

13
to provide a title opinion on acreage in the Wilson lease. CR:1035. Moore likewise

concluded that Burlington owned a working interest in several portions of the Wilson

lease. CR:1035-37.

Jircik’s opinion was provided to PetroMax and Woodbine. CR:501. There is

no evidence, however, that either of the title opinions was provided to Burlington.

Upon receiving the 2009 AFEs from PetroMax proposing wells to be drilled on the

Wilson Lease, Burlington initially informed PetroMax that it “has completed a

diligent review of files internal and external and determined Burlington has no

working interest. The files show that all interest has been conveyed out to other

parties.” 3SCR:2075; RR:51-52.

In response to Burlington’s contention, Moore supplemented his opinion.

CR:1079. He set forth “Jircik’s and our interpretation” that Burlington did own a

“25% WI in Wilson Lease less 160 acre Production Units for Wilson No. 2 and 3

wells”. CR:1080 (emphasis added). He also opined that, in the 1994 Assignment,

“Southland Royalty Company assigned what appears to be only its interest in the

Wilson Well Nos. 2 and 3 Production Units to Samson Resources Company, leaving

the balance of its interest still owned by Southland (2210/34).” CR:1079.

Burlington later reached the same conclusion. As described above in Section

II, Burlington elected to participate in certain wells and paid its share of the costs.

14
Burlington also asserted its right to payout statements and other information

regarding non-consent wells in which it did not elect to participate.

In sum, for 18 years, Burlington and the PetroMax Defendants operated

consistently with the interpretation of the 1994 Assignment as conveying only the

interests offered at auction: the four wells and associated production units.

IV. Regardless of its own experts’ title opinions, in 2012, the PetroMax
Defendants abruptly disavowed their obligations.

In 2012, the PetroMax Defendants abruptly changed position. Woodbine

asserted that, contrary to the Jircik opinion, Burlington had “divested the last of its

interest in the Wilson Lease as of September 9, 1994” and “does not own an interest

in . . . the Wilson Lease . . . .” CR:1130. Woodbine attempted to return to Burlington

$190,692.84, purported to be the costs Burlington had paid in association with the

Wilson #5H well minus the well proceeds Woodbine had already paid Burlington.

CR:1130-31. Woodbine also stopped work on another proposed well in which

Burlington had elected to participate. 9 See CR:1131. Only after repudiating

Burlington’s right to participate did Woodbine drill that well. Id.

Burlington’s demands for the PetroMax Defendants to comply with the

ongoing requirements of the 1975 Letter Agreement have been met consistently with

refusal. CR:1130-31, 1138-40. Woodbine has obtained permits for at least 11 wells

9
This was the Dunman Wilson A #2H well. CR:1130-31.

15
associated with the Wilson lease, without providing Burlington notice or an

opportunity to participate. CR:1138-39. Woodbine and PetroMax also have acquired

leases within the AMI without offering the requisite 25% working interest to

Burlington. CR:1139.

V. The trial court concluded the 1994 Assignment unambiguously conveyed
not just the listed wells, but all of Southland’s ownership interest in the
four leases.
Burlington filed the underlying lawsuit in order to enforce its rights under the

1975 Letter Agreement and 1975 JOA. CR:433-49. Besides requesting declaratory

relief, Burlington brought separate claims for, inter alia, breach of contract, specific

performance, conversion, and breach of duty to pay proceeds. CR:443-48. In

addition to the PetroMax Defendants’ denials of these claims (CR:322, 364-65,

1390-91, 1397-98), PetroMax asserted a counterclaim for suit to quiet title, and

Woodbine asserted counterclaims for suit to try title, trespass-to-try title, and

declaratory judgment. CR:365, 1378-87. Burlington and the PetroMax Defendants

filed competing summary-judgment motions on the questions regarding

Burlington’s ownership rights relating to the AMI. CR:484-85; 1SCR:21-22.

Each side moved for summary judgment regarding Burlington’s ownership

interest in any leases within the AMI to continue the AMI in effect. CR:484-85;

1SCR:21-22. The trial court denied Burlington’s summary-judgment motion, but

16
granted the PetroMax Defendants’ competing motion on title issues. CR:1617-19.

The trial court ruled that:

1. Burlington does not own any interest in the AMI described in the 1975

Letter Agreement made the basis of this suit; and

2. The AMI provision in the 1975 Letter Agreement has terminated.

CR:1617.

On joint motion by all parties, the trial court severed the remaining claims into

a separate lawsuit in order to render its partial summary judgment final. CR:1632,

1635, 1640-43. The trial court then abated the severed case pending this appeal.

CR:1643. Thus, the severed issues remain pending and are not presented for review

in this appeal.

SUMMARY OF ARGUMENT

Burlington’s interpretation of the 1994 Assignment is reasonable.

Burlington’s interpretation comports with the very first words of the assignment,

setting forth only interests in four wells to be conveyed. Burlington’s interpretation

also honors the assignment’s reservation provision. Unless Exhibit A is interpreted

so that the list of wells sets forth the interests being conveyed and the list of leases

sets forth the interests being reserved, the reservation provision would be rendered

meaningless.

17
 Moreover, Burlington’s interpretation is consistent with the circumstances

surrounding the assignment. Only Southland’s interests in four wells were offered

for sale at auction. And the interpretation’s reasonableness is confirmed by two title

opinions from board certified lawyers who were hired long before suit was filed, not

by Burlington, but by the PetroMax Defendants.

Because Burlington’s interpretation is reasonable, the trial court’s summary

judgment rejecting that interpretation cannot stand. What happens next—remand or

rendition—depends on whether the PetroMax Defendants’ competing interpretation

also is reasonable.

If the competing interpretation were reasonable, the 1994 Assignment would

be ambiguous. On that basis, the matter should be remanded for trial. But if, as

shown below, the PetroMax Defendants’ interpretation is unreasonable, then as a

matter of law, Burlington is entitled to rendition of judgment that the AMI continues

in effect.

Burlington also moved for summary judgment that its right to obtain a 25%

working interest in leases and mineral rights is not proportionately reduced based on

any decrease in the scope of Burlington’s joint ownership interests generally in the

AMI. The 1975 Letter Agreement provides for proportionate reduction of the 25%

requirement under other circumstances, but not based on diminution of the number

18
or size of leases/rights held jointly by Burlington in the AMI. Accordingly,

Burlington also is entitled to summary judgment on this point.

ARGUMENT

I. The interpretation of the 1994 Assignment as conveying only Southland’s
interest in four wells—and not all of its interest in four entire leases—is
reasonable.

The 1994 Assignment expressly provides that its Exhibit A lists both the

interests being conveyed and the interests being reserved. CR:1029. The problem is

that, in setting forth the two lists, Exhibit A does not expressly identify which list

sets forth the interests being conveyed and which sets forth the interests being

reserved. See CR:1033. But the language and circumstances surrounding the creation

of the 1994 Assignment demonstrate that it is reasonable to interpret the 1994

Assignment to convey only Southland’s interest in the enumerated wells.

Whether a contract is ambiguous is a question of law. E.g., Coker v. Coker,

650 S.W.2d 391, 394 (Tex. 1983). A contract is ambiguous whenever it is reasonably

susceptible to more than one meaning. Id. at 393. When a contract is ambiguous, its

interpretation presents a question of fact precluding summary judgment. Id. at 394.

In determining whether a contract is ambiguous, courts examine and consider

the entire writing, striving to harmonize and give effect to all provisions so that none

is rendered meaningless. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.

2003); Coker, 650 S.W.2d at 393. Courts also consider the facts and circumstances

19
surrounding the contract’s execution. E.g., Hous. Expl. Co. v. Wellington

Underwriting Ags., Ltd., 352 S.W.3d 462, 469 (Tex. 2011); Sun Oil Co. v. Madeley,

626 S.W.2d 726, 731-32 (Tex. 1981); Philipello v. Taylor, No. 10-11-00014-CV,

2012 WL 1435171, at *7 (Tex. App.—Waco Apr. 25, 2012, pet. denied) (mem. op.).

In this case, the 1994 Assignment’s text and surrounding circumstances establish

that Burlington’s interpretation is reasonable.

A. As reflected in the 1994 Assignment, Southland auctioned its
interest in four wells and expressly reserved other interests.

The 1994 Assignment exists because Southland decided to auction off its

interest in four wells. CR:1497. Consistent with Southland’s auction listing, the first

words in the 1994 Assignment are: “Well Name: BUCHANAN 1, GIBBS BROS 1,

WILSON JAMES 2 AND WILSON JAMES 3”. Compare CR:1029 (emphasis in

original) with CR:1497 (auction listing). The 1994 Assignment expressly provides

that Southland is conveying some interests, but reserving others. CR:1029. The

assignment discusses both conveyance and reservation in general terms, expressly

leaving the particulars and specifics to be set forth in Exhibit A. Id.

In describing the conveyance and reservation generally, the 1994 Assignment

speaks in broad, generic terms. For instance, the assignment describes the interests

being conveyed (defined collectively as the “Interests”) to include:

The oil and gas leases, leasehold interests, rights and interests
attributable or allocable to the oil and gas leases or leasehold interests
by virtue of pooling, unitization, communitization, and operating

20
 agreements, licenses, permits, and other agreements, all more
particularly described on Exhibit “A” hereto, limited as to the lands and
depths indicated on Exhibit “A” (collectively the “Leases”), together
with identical undivided interests in and to all the property and rights
incident thereto . . . .
CR:1029. And, the assignment describes the interests being reserved equally broadly

(id.):

[Southland] reserves and retains unto itself from the Interests those
certain lands, leases, properties, interests, leasehold rights, depths or
formations as specifically noted and reflected on Exhibit “A” . . . .
As provided in the 1994 Assignment, Exhibit A sets forth two lists in the

following format: (1) a list of all the interests Southland owned in four leases; and

(2) a list of the same four wells on the assignment’s first page:

21
 The top list is untitled. CR:1033. It names the Odom, Gibbs, Wilson, and

Buchanan Leases:

The right side of the top list sets forth the legal description of each lease. Id. Under

the legal descriptions appears an exception for acreage Southland had farmed out

and retained only an overriding royalty interest:

22
Thus, the top list specifically notes and reflects all of Southland’s ownership interest

in the entirety of the four, denominated leases.10

On the other hand, the bottom list names only the wells that appear at the top

of the 1994 Assignment and in the auction catalogue:

B. Burlington’s interpretation comports with the 1994 Assignment’s
language and harmonizes its provisions.

Interpreting Exhibit A so that the top list describes the interests Southland is

reserving from the 1994 Assignment and the bottom list describes the interests

Southland is conveying is consistent with: (1) the list of four wells at the top of the

assignment; (2) the language providing that Exhibit A describes both interests being

conveyed and interests being reserved to Southland; and (3) the entire reservation

provision, which expressly provides that Southland reserves and retains to itself the

10
After the 1994 Assignment was signed, the Odom Lease expired upon cessation
of production in 1999. CR:74.

23
certain lands, leases, properties, interests, leasehold rights, depths or formations as

specifically noted and reflected on Exhibit A. Compare CR:1029 (setting forth

language in 1994 Assignment) with CR:1033 (Exhibit A). If both lists in Exhibit A

described the interests conveyed, then contrary to the reservation provision, no part

of Exhibit A would note or reflect any interest being reserved.

The exception, in the top list of leases, of acreage Southland had previously

farmed out from the four leases does not constitute a “reservation.” The exception

describes an interest Southland did not own. By definition, Southland could not

“reserve and retain unto itself” an interest it did not own. Rather than constituting

the reservation, the exception describes what is not included in the reservation: the

portions of the leases that Southland had farmed out under a previous agreement.

See CR:74-75, 82-85, 501-05, 1380-81. Without this exception, the top list would

not have accurately described all of the interest Southland owned in the four leases.

By accurately describing the interest Southland did own in the four leases, the top

list identifies with reasonable certainty the interest Southland reserved and retained

unto itself from its conveyance of the four wells.

The PetroMax Defendants suggest instead that use of the term “leases” in the

description of the interests being conveyed must mean that the 1994 Assignment

conveys the leases set forth in Exhibit A. Yet, the term “leases” appears in both the

provision describing the interests being conveyed and the provision describing the

24
interests being reserved. CR:1029. Because it is used to describe generally both types

of interests, the term does not aid in determining whether the list of leases on Exhibit

A describes the interests being conveyed or the interests being reserved. Moreover,

in describing both conveyed and reserved interests, the assignment speaks not only

of “leases,” but also of “interests” less than an entire lease. Id. So, just as it is possible

that an entire lease could fall into either category, it is possible for interests less than

an entire lease (i.e., four wells and their associated production units) to fall into either

the category of interests being conveyed or the category of interests being reserved.

The general use of the term “leases” must be read in conjunction with the list

of specific wells set forth at the top of the same page. For example, in Freeman v.

Stephens Production Co., 171 S.W.3d 651, 653 (Tex. App.—Corpus Christi 2005,

pet. denied), a deed purported to convey “that certain lot, tract or piece or parcel of

land . . . .” Despite this general description of the interests conveyed as a single lot,

the deed later specifically described the interests conveyed as “All of Lot 1, Block

15; Lot 2, Block 15; The West 17.51 acres of Lot 3, Block 15; All of Lot 10, Block

15,” etc. Id. Reading the entire deed as a whole, it was reasonable to interpret the

singular phrase “lot, tract or piece or parcel of land” to mean multiple lots. Id. at 654.

In this case, it is equally reasonable to interpret the interests collectively defined as

the “Leases” to mean only the wells and related production units specifically

identified at the top of the first page. Compare id. at 653-54 with CR:1029.

25
 Unless Southland’s interest in the four wells was the only interest being

conveyed, there was no reason to list those four wells at the top of the first page or

in Exhibit A. If the 1994 Assignment conveyed all of Southland’s interest in the four

leases, there was no reason to highlight four of the wells on those leases. Southland’s

interest in the four wells already would be part of the conveyance of all its interest

in the leases. Nor can the list of “Associated Wells” be explained as an inventory of

all the wells on the four leases. For example, the “Associated Wells” list does not

identify the Wilson #1 well. See CR:1033.

The plain language of the 1994 Assignment establishes the reasonableness of

Burlington’s interpretation. Southland assigned only its interest in the enumerated

wells (i.e., the wellbores and related production units), while reserving the remainder

of its interest in the Wilson, Gibbs, Buchanan, and Odom leases.

C. Burlington’s interpretation also is consistent with the
circumstances surrounding the 1994 Assignment.

Even without considering the surrounding circumstances, Burlington’s

interpretation comports with the language in, and harmonizes the provisions of, the

1994 Assignment. See Argument §I(A), supra. Nonetheless, it is appropriate also to

consider the circumstances surrounding the assignment. Circumstances that existed

prior to and contemporaneous with the execution of the 1994 Assignment are

properly examined in determining whether the assignment is ambiguous. See Hous.

26
Expl., 352 S.W.3d at 469; Madeley, 626 S.W.2d at 731-32; Philipello, 2012 WL

1435171, at *7.

Southland offered for auction only its interest in four wells. CR:1497.

Southland did not list for auction only the wellbore, nor did it offer the entire

leasehold. Instead, Southland’s auction listings encompassed:

(1) its interest in the Wilson #3, Buchanan 1, and Gibbs Bros 1 wells; and

(2) an “after payout only” interest (“APO”) only with regard to the Wilson

James D. Unit 2 Well.

Compare id. (reproduced above, listing interests offered by Southland) with

CR:1459 (listing another seller’s wellbore interest with the notation “WELLBORE

27
ONLY”) and CR:1475 (listing another seller’s entire leasehold interest with the

notation “LEASEHOLD”).

The limited scope of interests submitted by Southland to the auction house is

echoed by: (1) the discrete list of four wells at the top of the 1994 Assignment; and

(2) the discrete list of four wells on Exhibit A. It is entirely reasonable to read the

1994 Assignment, including Exhibit A, as conveying only those particular interests

Southland actually offered for auction and reserving to Southland all other interests

it owned.

Because Burlington’s interpretation of the 1994 Assignment is reasonable, the

trial court erred in granting summary judgment in the PetroMax Defendants’ favor.

See Coker, 650 S.W.2d at 393-94. The only question remaining is whether reversal

of the summary judgment should be accompanied by: (1) remand for further

proceedings in the trial court consistent with this Court’s opinion and judgment; or

(2) rendition of summary judgment in Burlington’s favor. This remaining question

turns on whether the PetroMax Defendants’ competing interpretation of the 1994

Assignment also is reasonable.

II. If the PetroMax Defendants’ interpretation also were reasonable, the
resulting ambiguity would preclude summary judgment, requiring
remand.

Despite the logic and consistency with Texas law demonstrated by

Burlington’s interpretation, the PetroMax Defendants contend that the 1994

28
Assignment should be interpreted to convey all of Southland’s interest in the Wilson,

Gibbs, Buchanan, and Odom leases, except for the lands attributable to the H.K.

Odom Wells, James D. Wilson #4 Well and the Buchanan #2 Well. Even if this

interpretation were reasonable (see Argument §III(A), infra), it would not support

summary judgment against Burlington’s own reasonable interpretation. Faced with

two, competing reasonable interpretations, a court cannot conclude that, given all

the language, the 1994 Assignment “plainly and clearly discloses the intention of the

parties.” See Madeley, 626 S.W.2d at 731-32.

The inherent reasonableness of Burlington’s interpretation is confirmed not

only by the 1994 Assignment and its surrounding circumstances, but also by the fact

that not one, but two, accomplished oil and gas lawyers hired by the opposing parties

reached the same interpretation before any litigation arose. The PetroMax

Defendants’ repeated invocation of “plain language” to support their now-contrary

position does not diminish the reasonableness of the earlier title opinions they

themselves obtained. “[R]easonable people ‘will sometimes disagree about what

reasonable people can disagree about,’ but even so, it is difficult to maintain that

language is plain in the face of a substantial, legitimate dispute over its meaning.”

Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 446 (Tex. 2009) (Hecht, J.,

concurring).

29
 To the extent that the Court finds PetroMax Defendants’ competing

interpretation of the 1994 Assignment reasonable, the resulting ambiguity would

preclude summary judgment. See Coker, 650 S.W.2d at 394. That ambiguity would

require reversal of the trial court’s summary judgment rulings and remand for further

proceedings consistent with this Court’s opinion and judgment. Id.

III. However, Burlington offered the only reasonable interpretation of the
applicable agreements, requiring rendition in Burlington’s favor.

A. The 1994 Assignment conveys only Southland’s interest in the four
enumerated wells.

In truth, however, the PetroMax Defendants’ interpretation is unreasonable.

Competing interpretations of a contract do not create an ambiguity unless both are

reasonable. Columbia Gas Transmission v. New Ulm Gas, Ltd., 940 S.W.2d 587,

589 (Tex. 1996). Because the PetroMax Defendants’ interpretation is unreasonable,

this Court should render judgment in Burlington’s favor, ruling as a matter of law

that the AMI continues in effect.

To interpret the 1994 Assignment as conveying all of Southland’s interest in

entire leases fails to harmonize all provisions of the contract and renders some of the

contractual language meaningless. For example, reading both lists as collectively

describing the conveyed interests would render meaningless the 1994 Assignment’s

reservation provision. See Houchins v. Devon Energy Prod. Co., L.P., No. 01-08-

00273-CV, 2009 WL 3321406, at *4-5 (Tex. App.—Houston [1st Dist.] Oct. 15,

30
2009, pet. denied) (mem. op.) (stating principle that an interpretation that fails to

harmonize the provisions is not reasonable). This provision expressly “reserves and

retains” to Southland the “certain lands, leases, properties, interests, leasehold rights,

depths or formations as specifically noted and reflected on Exhibit ‘A’ . . . .”

CR:1029. What lands, leases, properties, interest, leasehold rights, depths or

formations are specifically noted and reflected on Exhibit A? Exhibit A gives us two

options: (1) the set of four leases; and (2) the set of four wells. CR:1033. No one

contends that the set of four wells was reserved and retained. Such a contention

would be unreasonable given that these were the same wells submitted for auction

and listed at the top of the Assignment’s first page. CR:1029, 1497.

That leaves only the set of leases at the top of Exhibit A to describe the

reserved interests. Yet, the PetroMax Defendants contend that the reservation is

limited to the narrow “exception” from the listed leases. As discussed above in

Section I(B), the exception describes acreage Southland had already farmed out. See

CR:74-75, 82-85, 501-05, 1380-81; see also 2SCR:14. Southland could not reserve

to itself an interest it did not hold at the time of the Assignment, i.e., “the lands

attributable to the H.K. Odom Wells, James D. Wilson #4 Well and the Buchanan

#2 Well.” CR:1033 (emphasis added). On the other hand, it was logical for

Southland to (1) convey its interest in the four listed wells, and (2) reserve the

31
remainder of its interest in the four listed leases, which it owned with the exception

of the lands attributable to the farmed-out wells.

Reading both lists on Exhibit A as describing the interests being conveyed

also would render impermissibly meaningless the list of four wells in the Assignment

and on Exhibit A. See Luckel v. White, 819 S.W.2d 459, 462 (Tex. 1991); Coker,

650 S.W.2d at 393; R&P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517,

518-19 (Tex. 1980). If the Assignment conveyed all of Southland’s interest in the

four listed leases, including interests in any wells drilled on them, there was no

reason to list four of the wells included in that transfer.

It is illogical to read the title of the list of wells—i.e., “Associated Wells”—

to mean “the wells associated with the four above leases.” For instance, the Wilson

#1 well, which also was located on the Wilson Lease, is not included in the list of

“Associated Wells.” CR:1033. Thus, the list does not set forth the wells “associated”

with the four leases, but instead identifies the wells “associated” with the sale at

auction, i.e., the only interests being assigned.

That the 1994 Assignment and Exhibit A afford different treatment to

different wells on the Wilson Lease is entirely consistent with the surrounding

circumstances. Recall that the Wilson Lease consists of two, non-contiguous tracts.

The Wilson #2 and #3 wells—whose wellbores and associated production units

formed the entirety of Tract 2—were included in the list of four wells being

32
conveyed. Because Southland had farmed out its interest in the Wilson #4 well,

Exhibit A excepted the lands attributable to that well from the Wilson Lease interest

that Southland reserved to itself. But, the Wilson #1 well was not conveyed (through

the list of four wells) or carved out from the reservation (through an exception to the

list of four leases).

Southland did not offer its interest in that well at auction, so it was not

included in the auction catalogue, the list of wells at the top of the 1994 Assignment,

or the list of “Associated Wells” in Exhibit A. Unlike the Wilson #4 well, Southland

still owned its working interest in the Wilson #1, though the interest was subjected

to an after-payout penalty when Southland went non-consent. Therefore, unlike the

Wilson #4 well, the Wilson #1 was not included in the exception from the list of

leases. As a result, Southland reserved and retained unto itself its interest in the

Wilson #1 well, which it holds to this day. 11

The PetroMax Defendants’ interpretation ignores these distinctions. It would

render meaningless the list of wells in the 1994 Assignment, the assignment’s

reservation provision, and the list of “Associated Wells” on Exhibit A.

11
In addition, although the Wilson #5 well has quit producing, Burlington still owns
an interest in the leasehold acreage pursuant to Humble Resources Company’s re-
assignment of all interest in the Wilson #5 and associated acreage after termination
of its farmout agreement. CR:922-1028, 1037.

33
Consequently, the PetroMax Defendants’ interpretation does not comply with

contract construction principles and is unreasonable.

Burlington’s interpretation is the only reasonable interpretation. It compels

the conclusion that, as a matter of law, Burlington still jointly owns an interest in (at

the very least) the Wilson #1 well, which continues the AMI in effect. Consequently,

in the alternative to the remand requested above, Burlington is entitled to rendition

of judgment that, pursuant to the 1975 Letter Agreement and 1994 Assignment, its

ownership interest continues the AMI in effect.

B. In addition, the 1975 Letter Agreement does not provide for
reduction of Burlington’s rights proportionate to the scope of its
joint ownership.

Finally, in its summary-judgment motion, Burlington sought a ruling that the

1975 Letter Agreement does not provide for a reduction of the undivided 25%

interest to be offered to Burlington in leases and mineral rights within the AMI if

Burlington’s joint ownership in the nine original leases diminishes over time.

CR:523-26. The 1975 Letter Agreement provides that the AMI continues in effect

“as long as leases are jointly owned within such area . . . .” CR:593. Upon acquiring

any oil and gas leases or mineral rights within the AMI, Buttes agreed to offer to

Aztec an undivided 25% interest in those leases/rights. Id. No provision was made

for a reduction in that percentage if Aztec’s (or later, Burlington’s) ownership share

of leases/rights within the AMI diminished over time. Id.

34
 Had the parties wanted to provide for that reduction, they knew how to do so.

The 1975 Letter Agreement does provide for a proportionate reduction in the interest

required to be offered to Aztec if Buttes acquires less than the full 100% interest in

an oil and gas lease or mineral rights in the AMI. CR:593. But the parties chose not

to make a similar provision for any reduction in proportion to Aztec’s joint

ownership of leases within the AMI. Texas courts are not allowed to rewrite the

agreement to add such a provision. See, e.g., Neece v. A.A.A. Realty Co., 322 S.W.2d

597, 600 n.3 (Tex. 1959).

As shown above, Burlington is entitled to reversal of the trial court’s holding

that the AMI provision terminated. Because Burlington offered the only reasonable

interpretation regarding its undiminished right to a 25% interest in leases/rights

acquired within the AMI, this Court should reverse the trial court’s denial of

summary judgment on that issue, as well. Further, the Court should render judgment

that Burlington’s rights under the 1975 Letter Agreement and AMI to the offer of a

25% interest in leases or mineral interests acquired in the AMI by Buttes’ successors-

in-interest are not subject to reduction or limitation based on Burlington’s ownership

share of leases and rights within the AMI.

35
 CONCLUSION AND PRAYER

In determining whether ambiguities exist in oil and gas assignments, it is

critical to analyze and apply consistently the principles that govern all contracts. The

most basic policy of contract law is to protect the parties’ justified expectations.

DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 677 (Tex. 1990). The ability to form

justifiable expectations about contractual rights and obligations depends, in turn,

upon the certainty with which parties may predict how the law will interpret and

enforce their agreement. Id. This essential legal framework is weakened by summary

judgments that stray from fundamental principles governing contract construction,

particularly in an area of widespread importance such as oil and gas assignments.

Appellant Burlington Resources Oil & Gas, L.P. asks this Court to reverse the

trial court’s summary-judgment rulings and (1) either remand the issues to the trial

court for further proceedings consistent with this Court’s opinion and judgment, or

render judgment that the AMI continues in effect; and (2) render judgment that

Burlington’s rights to acquire a 25% interest in leases or mineral interests acquired

by Buttes’ successors-in-interest in the AMI are not subject to reduction or limitation

based on the scope of Burlington’s joint ownership of leases and rights within the

AMI. Burlington also asks for all other relief to which it is entitled at law or in equity.

36
 Respectfully submitted,

/s/ Kirsten M. Castañeda
John R. Mercy Kirsten M. Castañeda
State Bar No. 13947200 State Bar No. 00792401
jmercy@texarkanalawyers.com kcastaneda@adjtlaw.com
MERCY CARTER TIDWELL, ALEXANDER DUBOSE
L.L.P. JEFFERSON & TOWNSEND LLP
1724 Galleria Oaks Drive 4925 Greenville Avenue, Suite 510
Texarkana, Texas 75503 Dallas, Texas 75206
Tel: (903) 794-9419 Tel: (214) 369-2358
Fax: (903) 794-1268 Fax: (214) 369-2359

Vincent L. Marable III Roger D. Townsend
State Bar No. 12961600 State Bar No. 20167600
trippmarable@sbcglobal.net rtownsend@adjtlaw.com
PAUL WEBB, P.C. ALEXANDER DUBOSE
221 N. Houston Street JEFFERSON & TOWNSEND LLP
Wharton, Texas 77488 1844 Harvard Street
Tel: (979) 532-5331 Houston, Texas 77008
Fax: (979) 532-2902 Tel: (713) 523-2358
Fax: (713) 523-4553

Fred Hagans
State Bar No. 08685500
fhagans@hagans-law.com
Kendall C. Montgomery
State Bar No. 14293900
kmontgomery@hagans-law.com
HAGANS BURDINE
MONTGOMERY & RUSTAY, P.C.
3200 Travis, Fourth Floor
Houston, Texas 77006
Tel: (713) 222-2700
Fax: (713) 547-4950

Attorneys for Appellant
Burlington Resources Oil & Gas Company LP

37
 CERTIFICATE OF COMPLIANCE
I certify pursuant to TEX. R. APP. P. 9.4(i)(3) that this Brief complies with the
length limitations of Rule 9.4(i) and the typeface requirements of Rule 9.4(e).

1. Exclusive of the contents identified by Rule 9.4(i)(1) and inclusive of all
textboxes, footnotes, and endnotes, this Brief contains 7,543 words as counted
by the Word Count function of Microsoft Word 2010.

2. This Brief has been prepared in proportionally spaced typeface using:

Software Name and Version: Microsoft Word 2010
Typeface Name: Times New Roman
Font Size: 14 point

/s/ Kirsten M. Castañeda
Kirsten M. Castañeda

38
 CERTIFICATE OF SERVICE

I hereby certify that on the 20th day of October, 2015, a true and correct copy
of the foregoing Brief, including Appendix and hyperlinked materials, is served on
Appellee by e-mail and e-service via efile.txcourts.gov to counsel of record as
described below:

Mr. Brad D’Amico Mr. David J. Beck
bd@canteyhanger.com dbeck@beckredden.com
CANTEY HANGER LLP Mr. Thomas E. Ganucheau
1999 Bryan Street, Suite 3300 tganucheau@beckredden.com
Dallas, Texas 75201 BECK REDDEN LLP
Counsel for Appellee PetroMax 1221 McKinney Street, Suite 4500
Operating Co., Inc. Houston, Texas 77010-2010
Counsel for Appellees PetroMax
Mr. Greg W. Curry Operating Co., Inc., Petro Texas
Greg.Curry@tklaw.com LLC, and CH4 Energy II, LLC
Mr. Gregory D. Binns
Gregory.Binns@tklaw.com Mr. Jesse R. Pierce
Mr. Richard B. Phillips, Jr. JPierce@pierceoneill.com
Rich.Phillips@tklaw.com Mr. Brian K. Tully
THOMPSON & KNIGHT LLP BTully@pierceoneill.com
1722 Routh Street, Suite 1500 PIERCE & O’NEILL, LLP
Dallas, Texas 75201 4203 Montrose Blvd.
Counsel for Appellee Woodbine Houston, Texas 77006
Acquisition, LLC n/k/a MD America Counsel for Appellee TexCal
Energy LLC Energy South Texas, LP

/s/ Kirsten M. Castañeda
Kirsten M. Castañeda

39
 No. 06-15-00044-CV

IN THE SIXTH DISTRICT COURT OF APPEALS

Burlington Resources Oil & Gas Company LP, Appellant,

v.

PetroMax Operating Co., Inc., Woodbine Acquisition, LLC,
Petro Texas, LLC, Ch4 Energy II, LLC, and
Texcal Energy South Texas L.P., Appellees.

On Appeal from the 12th Judicial District Court
Madison County, Texas, Cause No. 12-13130-012-10

APPENDIX TO BRIEF FOR APPELLANT

Tab

1975 Letter Agreement (CR:589-625) ..................................................................... 1
1994 Assignment and Bill of Sale (CR:1029-34) .................................................... 2
Order Granting Defendants’ Motion for Summary Judgment on Title
Issues (CR:1617) ...................................................................................................... 3

Order Denying Burlington’s Motion for Partial Summary Judgment
Seeking Various Declarations (CR:1618-19) .......................................................... 4

Order on Joint Motion to Sever and Abate (CR:1640-45) ...................................... 5

40
Tab 1

Tab 1
'
,_ .. :
BUTTES RESOUHCES COMPANY
SOUTHWEST DlVlSJbN
TELEX: 1100 MILAM MAIL] NG ADDR£55
'71!12:.?.:97 P. 0. BOX 20&7
SUITE 733
HOUSTON, TEX,t.S 7700 I
HOUSTON, TEXAS 77002
(713) 2Z~.i414

January 7, 1975

Mr. 'lhomas E. Scott
Aztec Oil & Gas Company
2000 First National Bank Building
Dallas, Texas 75202

Re: Drilling and Joint Operating
Agreement - Aztec Oil &
Gas Gompwy
00-660 - So. Zulch Prospect
Madison, Brazos and Grirhes
Cos., Texas

Dear Mr. Scott:

Buttes Resources Company (hereinafter referred to as "BRC") owns
an undivided one-half (1/2) working interest in and to the oil and
gas lea.ses. described. and 'r.eferred. to in. Exl;jib;Lt "A" attached hereto
and made a part hereof, which leases and the lands covered thereby
are referred to herein as "said leases". You have expressed' a desire
to participate with BRC in the drilling of a test well in search of oil
or gas subject to the terms and conditions hereinafter contained, and
this letter, when accepted by you in the space hereinbelow provided,
shall set forth the terms of our agreement concerning the drilling of
such test well and the operation and development of said leases.

-
I.
Prior to comnencing drilling operations of the test well, BRC shall
·cause title to the tract of land upon which such test well is to be drill-
ed to be examined by an attorney of its choice.

II.
BRC agrees to furnish you the following information:

A. A plat on which said leases and the proposed location of
the test well are noted.

589
 . ·1.·
Mr. Scott -2- January 7, 1975

B. The estimated cost of drilling the test well to 9,200 feet,
including the cost of all open hole logging Which will be
condUcted. Such estimated costs are set forth on the
author:ization for expenditure (ARE;); attached hereto ,Y withdraw from this agreement and all obligations hereunder
be.tween Aztec and BRC shall be terminated.

D. A copy of the title._opinion covering the lease or tract upon
which the test well is to be drilled setting forth the fee
ownership of the minerals and the ownership of the oil and gas
lease covering such mineral interests, based upon abstracts o;f
title or a search of the county records and q.pproving title
into BRC for drilling and production. No well shall be comnenced
under this agreement Jfuwever, until Aztec has approved title
to the drillsite lease or tract.

III.

Subject to all other terms and provisions hereof, BRC agrees to
comnence or cause to be corrmenced, at the earliest possible date,
operations for the drilling of a test well in search of on or gas at
a mutually agreeable location on said l12ases. such test well shall be
drilled with due diligence and in a good and workmanlike manner to a
depth of 9,200 feet beneath the surface of the earth, whichever is the
lesser depth, herein called the "objective depth,'', unless some "impene-
trable", as that term is defined below·, j_s encountered prior to reaching
the objective depth. The term "irl]penetrablE'l" as used in this agreeroont
shall mean formations or conditions which would render fwther drilling
operations by a prudent operator' impracticable or which cannot be pene-
trated by the use of customary drilling procedure or techniques.
If an impenetrable is encountered prior to reaching the objective
depth, the provis,tons of Section 3~ Ci (?f .the Join~:CJPe!'at:lrig Ai!i~etrent:
attached )lereof· as .EXhil'lit. "C" shalll;lt?Come effectiVe. · ·

Upon reaching the objective depth for the test well, BRC shall
cause such logs and tests to be made which are mutually agreed upon.

-- - --· - - --.-.·- --- - - - - -
~. --. -·- ---- ---------,----
590
Mr>. Scott -3- January 7, 1975.

N.
Your representative shall be allowed free access to the derrick
fioor and to any and all information, {l;eological or otherwise, pertain-
ing to the drilling of the test well. Prior to running any logging
device, coring or taking any fonnation tests, or other similar type test,
BRG shall first give you notice in sufficient time to allow your
representative to be present to witness such test. BRC agrees to
furnish you two (2) copies of each field print and two (2) Cbpies of
each final print of electric logs and shall telephone daily reports to
your representative. Any notice required hereunder to be given to BRC
shall be furnished to;

Buttes Resources Company
Attention: Mr. V. K. Kr'aus
llOO Milam Building, Suite 733
P. 0. Box 2067
Houston, Texas 77001
Office Phone: (713) 223-1414
Heme Phone: (713) 682-7327

Any notice required hereunder to be given by BRC to you shall be furnished
to:

Aztec Oil & Gas Company
2000 First. National Bar1k Bldg.
Dallas, Texas 75202
DRILLING REPORTS & GEOIDGICAL NOTICES:
Attention: Mr. Kenneth A. Wood
Office Phone: (214) 741-1272
Home Phone: (214) 254-8090
or
Mr. R. K. Taylor
Office (214) 741-1272
v.
In consideration of BRC's agreement to drill the test well described
above you agree to bear and pay the costs, risk:;; and expenses incurt'ed in
drilling and testing prior to the running of production casing. for a
completion attempt and plugging and abandoning if no completion
is attempted on such test well as set out below. Except as ptherwise in
this agreement provided, such payment shall be due and payable on or
b~fore thirty days after you receive invoices for the same.

A. 33-1/3% of all of BRC's costs, risks and expenses incurred in
drilling and testing for the test well and jn plugging the well
if no completion attempt is made.

591
ll!r:'. Scott -4- January 7, 1975

B. .$46,331. 50 as your share of the acquisition costs paid by BRC
for said leases, including broke:r-age and recording costs incur-
red in conne.ct.ion With the acquisition of the same as of the
date hereof.

C. Subject to the tenns of the Joint Operating Agreenent Exh:i.bit
"C" hereto, 25% of all costs incurred after the date hereof,
including, without lim1tation, :r-entals, curative wor'k, out-
side legal costs and costs of governmental regulatory
applications and hearings in connection with said leases.

All of the costs, risks and exPenses incurred in drilling, testing,
completing, etc. shall be supported by invoice or s.tateo-ents of charges,
copies of which BRC agrees to make available upon request . Such costs,
risks and expenses shall be invoiced to you when BRC receives invoices
fo!' the same.

VI.
Subject to the provisions of Paragraph VII, Upon receipt of payment
of your share of the costs and expenses set out inParagraph V-B, which
you have agreed to pay herein, BRC agrees to assign to you, with warranty
of title, by, through and under BRC but not otherwise, an undivided 25%
interest in said leases. Such assignment Shall be subject to the terms
of this agreement, the Joint Operating Agreement attached hereto as
Exhibit "C", (by this reference made a part hereof), and your proportion-
ate part of the lessors' royalty provided for in said leases and the
over-riding royalty provided for in Exhibit "E" hereto. It is understood
and agreed that all operations conducted after the test well nas been
drilled to the objective depth or plugged and abandoned as a dry hOle
i f no cornpletior1 is attelllpted shall be conducted under the terms of the
Operating Jlgl"eement attached hereto as Exhibit; '.'C'', with your interest
therein being an undivided one-fourth (1/4).

VII.
If any rental shall become due after the date hereof and prior to
the Joint Operating Agreement attached hereto as Exhibit "C" becom'ing
effective under any of said leases, then BRC shall pay the same and you
agree to reimburse BRC for 25% of such rental paynent Within thirty days
after rece:ipt of BRC' s invoice; provided, BRC shall not be liable for
erroneous payment or inadvertent failure to pay ·a:f!Y such rental.

592
 Mr. Scott -5- January 7, 1975

VIII.
It is. not the purpose or intention of this agr'eeirent to create,
nor shall the same b.e construed as creating .any pdning pqrl;nership,
conmercial partnership or other pqrtnership relation nor (>hall the
operations of the parties hereunder be construed to be considered as a
joint venture. 'Ihe liability of the pqrties hereto shall be several and
not joint or collective.

Each of the parties hereto elects, under the authority of Section
761 (a) of the Internal Revenue Code of 1954, to be excluded from
the application of all of the provisions of Subchapter K of Chapter 1
of SubtitJ.e A of t!:le InternaJ. Revenue Code of 1954. I f the· :Income tax
laws of the states in which the property covered hereby is 1ocated contain,
or may hereafter contaJn, provisions s:i.rnilar to those contained :in the
SUbchapter of the Interna], Revenue Code of 1954 above referred to under
which a Similar election is permitted, each. of the pqrties agt>ees that
such election shlUl be exercised. If applicable, BRC is hereby author- .
ized to execute and file on behalf of both parties hereto such elections
with t!:le appropriate governmental agencies.

IX.
Exhibit "I)P denotes an Area of J)lutu;ll Int¢rest , outlined in red.
Tf you acquire any oil and gas leases or mineral rights within the Area
of Mutual Interest after the <)ate hereof; then you agree to offer to BRC
an undivided three-fourths (3/4) interest in saJd leases or mineral
interest so acqlllred;. and i f BRC accepts said interest, then BRC will
immediately re:lnlburse you far its proportionate part of the acquisition
costs. If.BRC acquires any oil and gas leases or mineral rights within
the Area of Mutual Interest after the date hereof:, then BRC agt>i;'es to ·
offer to you an undivided one-fourth (1/4) interest in said leases or
mineral interest so ~quired; and if .AZTEC accepts said interest, then
AZTEC will immediately reimburse BRC for it.s proportionate j>!'rt of th.e
acquisition costs.* Such ot'fer or offers .arE: to. be made in wr'iting and
offeree shall have fifteen (15) days in Which to. accept or reject
such offer. If either so acquires·an oil or gas lease or mineral interest
and the other party does not desire to pqrticipate in such acquisition,
then the acquirihg party shall own said oil and gas lease or mineral ·
interest free and clear of all terms and conditions of this agr>eement.
If both parties participate in such acquisition, th.<'n the oil .aJ14 gas
.lease or mineral. interest Shall be subject to the terms and condition$
of the Joint operating Agreement attached hereto as Exhibit "C". If
the interest in oil and gas li;'ases or mine.ral rigl1ts acquired represents
less than the full 100% interest w such interest, then the rigbts of the
. parties hereunder to acquire such interest shall be proportionately re- .
duced. 'l'he Area of IYlutual :mterest as outlined in Exhibit "D" shall
last as long as leases are joint}y owned within 13uch area, ·hOWever,

*In the event an interest in oil. and/or mineral rights is acquired by llRC
pursuant to that certain Letter Agreement d!lted October 16, 1974, bat~een
Buttes Resources Company and Curran R. Campbell, then BRC agrees to of~er
to AZTEC one-half (1/Z) of the interest so acquired by llRC and i f AZTEC
accapts said intel:est, then AZTEC shall i11Unedfately rein1burse BRC for its.
proportionate part o:J;- J3RC 1 s aCtual acquisi,~ion cOsts.
593
 ''""

Mi:'. Scott -6- January 7, 1975

three years 1'rcm the date of this agreement;._if &<~,td area is still :In
effect, it shall be contracted to an area/~~·~lhe two miles outside
the then remaining jo:lntly owned leases.

x.
The terms, covenants and conditions hereof sball extend to and be
binding upon the parties hereto, the:i:r successors and assigns. 'Ihis
instrument shall not be assigned bY you either in whole or :In part
unless you have first obtained written consent frelrn BRC. In the event
that you are acquiring this .undivided working interest for the account
of more than one (1) person or entity, then you represent that you
have sole investment discretion to purchase such interest for such
accounts.

XI.
It is mutually understood that there is no obligation Ufion BRC
to carmence a well under the terms of this agreerent. and .there shall
be rio penalty for failure to conmence such well; however, BRC shall
make its best effort to commence the drilling of the ·well at the
earliest possible date. However, :In the event BRC does not corrmence
the test well here:ln provided for within one. year from the date of this
Ei:greement:

l. Then this Agreement, at Aztec's option (which shall be exercised
within 30 days after the end of one year from the date hereof),
shall terminate and be of no further force and effect. In the
event Aztec elects to so tenninate this agl'eement, then BRC
shall refund to Aztec the amount of money which Aztec has
paid to BRc as of the date of such termination plus $2,500,00,
being the finders fee which Aztec has paid to Mi:'. Bill Richardson,
and Aztec, upon receipt of such pa~nt, shall reassign to BRC
its interest in this agreement and :In the said leases.

XII.
TI'lis agreement and the Operating Agl'eement attached hereto are
both subject to the terms and conditions of the Letter Agreement dated
Septemer 4, 1974, between Curran R. Campbell, Inc. and W. A. Nowotny
and the Assignment of Oil, Gas and Mineral Leases dated October 18,
19711, from Curran R. Campbell, Inc. to Buttes Resources Company, both
attahced hereto as Exhibits "E" and "F", respectively··

'Ihe foregoing sets forth the entire agreement between the par1;ies,
and there are no verbal or oral agl'eernents between the parties not set
out herein in ~II'iting. If either party desires to anEnd this agreeli'Ent,
then such amen~nt shall be accomplished by an instrument in writing
executed by both parties hereto,

594
Mr. Scott -7- January 7, 1975

If the terms and conditions herein set forth meet with your approval,
please indicate your approval and acceptance by signing this agreement
in the space provided below and returning one (1) fUlly executed original
of this agreement to Buttes Resources Company, P.o. Box 2067, Houston,
Texas, 77001 - Attention: Mr. John D. FuJ.ton.
If this agreement is not signed and returned within fifteen (15)
days form your receipt hereof, then this agreement, at BRC's option,
shall terminate and be of no force and effect.
This agreement has been executed in duplicate, each of which shall
constitute an origianl.

Very truly your$,
BUTl'E3 RESOURCES COMPANY

BY:ROG~'f.~oo/'' ~
VICE PRESIDENI'

JDF/RCC/mjw
Attachments
AGREED TO AND ACCEPI'ED THIS 6ti._ DAY OF
.J ,. N.t,ll\.~.8 -,..:::;.19,--:')c:c'S";;.

AZTEC OIL & GAS CaviPANY

595
 Exhibit "A" to Letter Agreement dated 12-1-74
. batwee!] Buttes Resources Company and Aztec Oil & Gas Company

RECORDED
LESSOR LESSEE VOLUME - PAGE

A.Y. Benge et ux Curran R. Campbell, Inc. 203 - 4,59 - Madison County

J. Philip Gibbs, Jr., Curran R. Campbell, Inc. 203 - 414 ~ Madison County
Attorney

Faye Andrews Curran R. Campbell, Inc. 203 - 411 - Madison County

T.L. Hurry et ux Curran R. Campbell, Inc. 203 - 409 - !1adison County

James D. Wilson, Ind. Curran R. Campbell, Inc. 21 - 667 - Brazos County
& Ind. Ex.

Henry K. Odom et ux Curran R. Campbell, Inc. 21- 661 - Brazos County

George W. Boswell et al C:urran R. Campbell, Inc. 203 - 858 - Madison County

B.J. Cooley et ux curran R. Cam'pbell, Inc. 203 - 856 - Madison County

Raymond B. Buchanan Curran R. Campbell, Inc. 21- 679 - Brazos County
et ux

596
 A.A.P.L. FORM 610
MODEL FORM OPERATING AGREEMENT-1956
Non-Federal Lands

OPERATING AGREEMENT

DATED
J ........... .,J I
fiecemtrnr 1·

FOR UNIT AREA IN TOWNSHIP .. - - - - - - , RANGE---···
Counties
Madis=.,-]lu=s..&..GJ;imes_ ~ STATE OF...__1:.~xa£.. - - - ' - - -

South Zulch Area

A.MERlCAN .-.SsOCJ,.TION OF P.ETROLEUM LANDMEN
APPROVED FORM. A.A.I>.L. NO. 6\0
MAY Bl ORDERED DIRECTLY FROM THE PUBLiSHER
ROSS- M"'RTIN COMPANY, BOX 800, TULSA 7~1()\

Exhibit "C" r:o Agreement between Buttes Resources Company and Aztec Oil & Gas Company,
_dated~
JPr-'..j~ ~,._, \, \'i.l.r

597
~· '
;_.:
A-4.P.L. FORM 61 o

TAaLE OF CONTENTS

Tltlo ......
1. Definitions

l. Xitlo i'nllliiRatiAI-1, Loss of Leases and Oil and Gas Interests ·····-····

•
4. Inte.tes-U; of Par-ties 2

Operator of Unit
5.
'
6. Employees 3
7. 'f'esl Well
'
8. Costs and Ex.penses 3

9. O~rator's- Lien 4

10. Term of A~l'eemE:nt ... 4

11. Limitation. on Expenditures ..... •
12. Operations by Less Than All Pa!'ties ..... -~-·. 5

13. Right to Talt-e Production in Kind 6

14. Access to Unit Area 7

15. Drilling Contracts 7

16. Abandonment o£ Wells 7

17. Delay Rentals and Shut-in Well Payments -------- 8

Pa£e:wtial Rilhllo Puoel•a:lC ............... . B

19. Selection of New Ope:rato1· B

20. Maintenance of Unit Ownership 9

21. Resignation- o! Operatol" ········-- 9

22. Liability of Ptu·ties .... 9

23. Renewal or Extension of Leases ·-· 9

24. Surren-der of l.A:ases .. --·····-·· ········• 10

25. Acreag-e or Cash Contributions .. ······ ........................ 10

26. P1·ovlsion Concerning Taxation ---·--···---···-··· 10
.... 11
27. Insut·an-ce -···········
11
28. Claims and Lawsuil:s

Force Majeure 11
29.

3-G. Notices ··-··············· 11

31. Other Condi-tions ........... ----···--- 12

598
 A.AY.L. FORM 61c •.
·

OPERATING AGREEMENT
TliiS AGREEMENT, entered into this~-- day of December , 19E-., between
Buttes Resources C~pany

hereafter designated as "Operator'', and the signatory parties other than Operator.
WITNESSETH, THAT,
WHEREAS, the parties to this agreement are owners of oil and gas leases covering and, if so lndicated,
-unleased mineral interests in the tracts of land described in Exhibit "A", and all partie$ have reached an
agreement to explore and develOp these ieases and interests for oil and ga,s to ttle extent and a!l hereinafter
provided;
NOW, THEREFORE, it is agreed as follows:
l. DEFINITIONS
As used in this agreement 1 the foJlowing words and terms shall haye th~ meaningS here tlSet·ibed to
thetn.
( l) The words "party" and- "pa-rties" shall alt'fays mean a party, or parties, t-o this agre,ement.
(2) The parties to this agreement shall always be referred to as 1'it" or "they'', whether the parties be cor-
porate bodies, partnerships, associations, or persons real.
(3) '!'he term 1'-oil and gas" shall include oil, gas, casinghead gas1 gas condensate, Jand all other liqJ..1,id or gase~
ous hydrocarbons, unless an intent to limit the .inclusiveness of this term is specifically stated.
(4) The term "oil and gas intciesls" shall mean unleased fee and mineral interests in tracts of land lying
within the Unit A-,:ea which are owned by parties to this agreement.
(5) The term "lTnit Area" shall ref~r to and Include allot the lands, oil and gas leasehold inler-esb and oil
and gas interests intended t-o be developed and operated for oil and gas pu·rposell undeL· this agreement.
·such lan!ls1 oil and gas leaSehold interests and oil an~ gas interests are described in ;Exhibit ''A".
( 6) The term "drilling unit" shall mean the area fixed for the drilling bf on_e. well by OTI;k7: or rule o! any
state or federal Qody having authority. If a drilling WJit is not fixed _by any such rule or order, a drilling
unit shall be the dn1ling unit as established by the pattern of drilling iil the Unit Area or as fi_xed by ex,.
press agreement oi the parties.
(7) All exhibits attached to this agreem<:>nt are made a part of the contract as fully as though copied in ful'l
m· the contract.
(B) The wL__ _ _ _ days from
receipt of tiUe report for this purpose. If t ttle to any lease, or oil and gas interest, is finally rejected by
the examining attorney, all parties- s then be asked to state in writing whether they will waive the title
defects and ac~t the leases o · ter'ests, or ':"hether they will ~tand on the attorney's opinion. If one or more
parties refuse to waive t' detects. this agreement shall, in t~at case, be_ terminated and abandoned, and all
abstracts and title pers shall be returned to their senders. If all title.s are approv~ .by t~ enmining at~

torneys., or accepted by all partieS, and if' all leases are accepted as to primary terms, royalty provisions,
drilli. obligations and s-pecial burdens, all subsequent :provisions ot this agreement shall become operative

B. Failure of Title:

A«or aP ti\les aFe ap~'£9" e~ SF a:ae'O'p•o;! 1 Any defects ot title that may develOp shall be the joint re-
sponsibility of aU parties and, if a title loJi$ occurs, it shall be the lo~ of all parties, with eaeh bearing its pro-
portionate part of the loss and 0! any liabilities incurre~ in the loss. If such a loss occurs, there· shall be no
change in, or adjustment of, the interests of the patties in the remaining portion of the Unit Area.

C. Loss o[ Leases For Other Than Title Failure:

If any lease or interest subject to this agreeme11t be lost through failure to develop or because express
or implied covenants have not been performed, or if any lease be permitted to expire at the end of its primuy
tenn and not be renewed or extended, the loss shall not be Cf title and all such losses shall
be joint losses. and shall be borne by all parties in proportion to their interests and there shaU be no readjust-
ment of interests in the remaining portl.on of the Unit Area.

3. lRJLEt...SBB BIL .um GA:S IH'f'EBES'J!S

the purpose of this agreement as if it were a leased interest under the !ann of a· s ease attached as
Exhibit "B" and for the primary term therein stated. As to ests,. the owner shall receive roya1ty on
to,~.sJ'-'"hal1lrgwasu!l.e;a;s;e attached hcr.eto as Erl\ibtt ''B". Such party shall,
however, be of this agreement relating to lessees, to the extent that it ow~s

4. INTERESTS OF PARTIES

Exhibit "A" lists all of (he parties, and their :respective petcentagtf! or fx:actional interests undel thiii
agreement. Unless cllanged by, other provisions, all costs and liabilities lnc~d in operations under this con-
tract shall be borne and paid, and all equipment a,nd material acquired in operations on the Unit Area shall be
owned, by the parties as their interests are given in Exhibit "A". All productlon of oil and gas from the
Unit Area, subject to the payment of lessor's royalties, shall a:J.so be owned by ihe parties in the samt- manner.

-·-
"Joint Los&"

600
 A.A,P.J.:. FORM 610
' " .

U the_ futeres:t of any party in any ·.oil and gas lease covered Qy this agreement is subject to an overriding
royalty, production _payment, Or other charge over and above the usual one .. eigthh ( Ml) royalty, Such party shall
assume an(i alone bear all such excess obligations and shall account for them t_o th~ oWners: tbeteof out of. its
share of the working interest production of the Unit. Area.

5. OPERATOR OF UNIT
Buttes Resources Company _______________ shall
---::C.:..:C:..:C:::::.::.::::_c::.::r::::e:..._ be tl\e Operator of
the Unit .Area, and Shall ~ontlucr and direct and haVe full control ot all operations on the Unit Area as per-
mitted and required by; and within the limits_ of, this agreement. It shall conduct all such operations in a good .
and workmanlike manner, but it shaH have no liability as Oper.ator to the other parti~s for losses sustained,
or liabUities _Incurred, except such as may result froril gross negligence Or from breach of the provi~ions of
tbis agxeetnent.
6. EMPLOtEl:.S
The number of employees and their sel~ction, and the hou-rs of labor and the compensation for ~ervices
performed, shall ~ determined b:f Operator. All emplOyees shall be the- employees et Operator.

On or before the'"·---- day of _ _ _ _ _ _ _ _ _ _ 19 _ _! Operator .shall corornence t 1-
ing of a well for oil and gas in the following location:

and shall thereafter continue the drilling of the well with due diligen

unless granite or other practically impenetrab substance .is encountet·ed at a lesser depth or unless all parties
agree to complete the well at a lesser -d
Operator shall make reason e tests ol all formations encountered during drilling which give indica-
tion of containing oil and g n quantities sufficient to test, unless thi4 agreement shall be limited in its ap-
plication to ~ specific maWm or formations, in which event Op-eratur shall be required to test only the
formation or to co.tions to which- this agreenJent may apply.
perator's judgment the- wen wlll not pr.oduee oil or gas in paying quantities, and it wishes to
abandon the tetit as a dry hole, it shall firSt secure the consent ot all parties to the plugging, and the
•
8, COSTS AND EXPENSES
EXcept as herein otherwise specifically provided, Operator shall promptly pay and discharge aU costs
and expenses_ incurred in the developmetlt and operation of the Unit Area pursuant to this agreement and shall
charge each of the parties hereto with their respective proportionate shares upon the -coSt and expense basis
provided in the Acco\lnting Pr~cedure attached hereto and marked Exhibit ''C". If any provision o( E~­
hibit "C'• should be inconsistent with any provision contained in the body of this agreement, the provisiOns in.
the body of this agreement shall prevail.

Operator, .at its election, shall have the right from t,ime to time to demand and reCeive from the other
parties payment in ad'Vance of their respective shar.es of the estimated amount of the costs to be incurred in
a:perations hereunder during the next SUC(Ieeding month, which right may be exercised only by submission to
each such party of an itemized statement of sud). e$Umated costs, togetb~T with an invoiCe for its S}lare there-
of. Each such statement and invoice for the paym~nt in advand! of .estimated costs shall be submitted on or
before the 20th day of the next preceding mont-h. Each: party shall pay to Operator ifs proportionate share of.
such estimate within fifteen (15) days after such esthna~ and invoice is received.. If any par_ty fails t~r its
0
share of said es-timate within said time, the amount due shall beaT interest at the rate of.:N. percent( per
annum until paid. Proper adjustment shall be made rno»thly between advances and actual cost, to the end
that each party shall bear and pa'y its. proportiOnate shate· of actl.ltl1 cost$ incurred, and no more.
_,_
Revjsed 1967

601
 9. OPERA':\'OR'S LIEN
Operator is given a first and pref-erred lien on the interest ot each party covered by this contract, and
In each party's interest ln oi1 and gas produced and the proceeds thereof, and upon each party's interest in ma-
terial and equipment, to secure the payment Of a:ll sums due from each such party to Operator,
In the event any party fails to pay any amount owing by it to Ope•ator as its share of such costs and
ex'pense or such advance estimate within the time J.irnited for payment thereof, Operator, w~thout prejudice to
. other elj:isting remedies, is authorized, at iU election, to collect from the: purchaser or Pu•chasers Of oU or gas,
the proceeds accruing to the working interest or interests in the Unit Area of the delinquent party up to the
amount owing by such party, and each purchaser of oil or gas is authori~ed to rely upoh Operator's statement·
as to the amount O'W'ing by such party.
In the event of the neglect or failure of any non-operating party to promptly pay its proportionate part
of the cost and expense o! development and operation when due-, lhe other non-operating parties and Operator;
within thirty (30) days after the rend.ition of s_!:atements therefor by Operatot", shall proportionately contribute
to the payment of such delinquent indebteCiness"'and the non~operatin&: parties so contributing shall be entitled
to the same lien rights as are granted to Operator in· this section. 'Upon the payment· by such delinquent or
. defaulting party to Operator of any amount or amounts on such delinqu.entindebt~dneSs, Or upon .any recovery
on behalf of the non-operating parties \lnder the lien conferred aboVe, the amount or amounts- so paid or rep
covered shall be· distributed and. paid by Operator to the other non-op.erating parties .and Oper~tor propor-
tionately in accordance with the contributions theretofore made by them.

10. TERM OF AGREEMENT
This agreement shall remain in full force and effect for as long as any of the oil and gas leases subjected
to this agl'eement remain or are continued in force as to any part of the Unit Area, whether by production, ex-
tension, renewal or otherwise. ,.... ;,.o&,_..,...,..,,....,._.,.........,....,,._y,,_.;.,..,¥<'1l-jo,....
a dry hole and no other well is producing oil or gas in paying quantities from the Up.it A•.-...""'__,_ ..
of ninety {90} days after abandonment of the first test well, this inate

"''""'~" agree-ment, in which event this agreement shall con-
'"..,='" have been drilled and completed. If production r-esults there-
"'""~annnue in force thereafter as if said first test well had been J?roductive in paying
"result therefrom this agreement shalt tenninate
It is agreed,, however, that the term-
ination of this agreement shall riot.:relieve any party hereto from any liability which has accrued or attached
prior to the. date of such tennination.
ll. LlMITATIO:N" ON EXPENDITURES
Without the consent of all parties; (a) No well shall be drilled on the Unit Ar~a e1·ee}lt It"') "eU eK
pnsslJ ptodded Evt h• this >eetuw4; .ani except any well drilled pursuant to the provi'sions of Section 12
ot this agreement, it being understood that the consent to the drilling of a well shall include Consent to all
n~s.o;aty expenditu•es in the drilling, testing, completing, and equipping of the well, including necessary
tankage; (b) No well shall be reworked, plueged back or deepened except a well reworked., plugged back or
deepehed pursuant to the provisions of Section 12 of this agreement, it being understood that !he consent to.
the reworking, plugging back OI' <;leepening of a well shall include consent to all nee~ expenditures in
conducting such operations and completing and equipping of said well to produce, including neceSsary tank-
age; (c) Operator shall not undertake any single pro]ect reasonably estimated to require an ·expenditure in
excess o_t Ten Thousand and no/1,00-----------------------.---- Dollars ($ 10,000.00
except in connection with a w,ell the driBing, reworking, deepening, -or plugging back of which has been pr_e-
viously authorized by or pursuant to this agreement; provided, howeve;r, that in case of explosion, fire, flood,
or other sudden emergency, whether of the same or different nature, Operator may lake 6Uch s_leps and incur
such expenses as in its opinion are required to deal with the emergenc_y and to safeguard life and property,
but Qpetator shall, as promptly as possible, report the emergency to the other parties. Operator shall, upoh
request, furnish copies of its- "Authority for Expenditures" for any single project costing in ex~
cess o1 $ 5sOOO.OO

-4..-

602
A..f\,P.L, FORM 61
-
12. OPER~TIONS BY L£55 THAN ALL l"ARTIES

If all the parties cannot mUtually agree upon the drilling of any well on the Unit Area ether ll.&a t1
tesf, e-Jl prr ·hhll In it~ .iulis~ ~, or upon the rew.or-king, deepening or plUgging baCk of a dry hole dtilled
at the joint expense of all pat1ies or a well jointly owned by all the parties and not then producing in paying
quantiUes on the Unit Area. any party or parties wishing to d1iill, rework, deepen or p1uC back such a well
n'lay give the other parties written notice of the proposed operation, specifyin& the work to be performed,
the location, proposed depth, objective formation and the estimateQ cost of the operation, The parties receiv~
ing such a notice shall ha-ve thirty (30) days (except as to reworking, plugging back or drilling deeper', where.
a drilling rig is on location, the period shall be liinited to (orty-eight (48) "hours enehtsi e af Sat 1:1 !Ia) er s~e
.Qa.rl- after reei!ipt of the ·notice within which to notify thi! parties wishing to do the work whethet they eled
to patticipate in the- cost of ~he proposed operation. Failure of a p;;tty receiving such a notice to so reply to
it within the period above fixed shall eonstitu.te an election by that party not. to participate in the cost of the
proposed operation.

If any party receiving such a no.tice elects not to· participate in the proposed oPet:ation (such party or
parties. beintt hereafter referred to as '"Non-Consenting Party''), th~n in order to be entitled to the benefits
of this section, the party or parties giving the notice and such other parties as shall elect to participate in t e
. . . ninety 90)
operation (all sueh parbes· bemg hereafter referred to a·s the "ConSenting Pa"rlies"} shall, withirt ll>o·w-'t~
days after the expiration of the notice period of thirty {3(,) days (or as promptly as possible after the expir-
ation of ·the -t8-hour period where the drilling rlg is on location., as the case tnay be} actually commence work
on the proposed operation ami complete it with due diligence.

The entire cost and risk of conducling such operations shall be borne by the Consenting Parties in the
proportions that their respective interests as shOwn in Exhibit "A" bear lo thf:! total interests of all Consenti.ng
Parties. Consenting' Parties sball ke!!p the leasehpld estates involved in such operations free and clear o! all
liens and en<:umbrances or every kind created by or arising from the operations of the· Consenting Patties. I!
such an operation results in a dry hole, the Consenting Parties shall plug and abandon the well at tbelr sole
cost, risk and expense. It any well drilled, reworked, dee~ned or plugged back under the provisions of this
section results in a producer -of bil andlor gas in paying quantities, the Consenting Parties shall complete and
e~uip the well to produce at their sole cost and risk, and lhe well shall then be· turned over to Operator and
shall be operated by "it at the expeme and for the account of the Consenting Parties. Upon commencll'!ment ot
operations for the drillil'lg, reworking, deepening or plugging back of any such well by Consenting Parties
in :<~ccordance with the provisions of this section, each Non-Consenting Piarty shall be· deemed to have relin-
qulshed to- Consentin&: Parties, and lhe Consenting Parties shall own and. be entitled to teceive, in proportion
to their respective interests, ·all of such Non-Consentin~ Party's inter~st in the well, its leasehold operating
rights, and share of production therefrom until th~ proceeds or market value thereof (after deducting pro-
duction taxes, royalty, overriding royally and other interests payable out of or meas"Ured by th;e product!Qn
from such well acc:ruing w.ith respect to such interest until it reverts) shall equal the total of the following.:

{A)~ of each such Non-Consenting Party's Share of the cost of any newly acquiJ"ed surf'ace equipment
.beyond the wellhead connections (including, but J).Ot limited to, stock tanks, separaiors, treaten,
pumping cquipm~nt and pipl.ng), p]U!; ~of each such "Non-<;:oMent!ng Parly's share of the cost of
operation of the well commencing with first production and continuing until each such Non-Consenting
Party's relinquished interest shall revert to it under other provisions of this section, it being agreed that
each Non-Consenting Party's share of such cost$ and equlement wjll be that interest which would have
been chargeable to e:~eh Non-Consenting Party had it participated in the well !rom the beginning oi
the operation; and

(B) ~of that portion of the costs and expenses· of drilling, reworking, deepening or plugging ba~,
testing and completing, after deducting any cash contrib~.tt~ons ref SubchapWr K of Chapter 1 of Subtitle A of
the Internal Revenue Code of 1954. If the income tax laws of tbe state. or states J.n which the property covered
hereby is located contain, rl
rn'iiW'
EXHIBIT .. c ,. I

Attached to and made a part ot .. .21?:..£~.~-~~e~me.nt - - - - - - I
-----------------------·----------·----

ACCOUNTING PROCEbURE
JOINT OPERATIONS
L GENERAL PROVISIONS
1. Definitions
"J"oint Account" shall mean the account showing the charges and credits accruing because ot the Joint Operations
and whi<:h are to be shared by the Parties,
"Joint Property" shall titean the real and personal property subject to the agreement to wblch this. Accounting
Procedure is attached. -
t•Joint Ope-rations" shall mean ,aU operation's ·necessary or proper-for the development, operation protection and
ma-intenance of the Joint Property. '
"Operator" shall mean the party designated to conduct the Joint Operations.
"Non-Operator_s" shall mean the parti~ to this agreement other than the Oper!ltor.
''Parties" shall mean Operator and Non-Operators,
"Material" shall m·~an personal property, equipment or supplies acquired or held tor use on the J.oin.t Property.
"Controllable· Material" shall be defined as set forth uhder the subparagraph selected below:
A. [ ] Material which at the time is so classified ID the Material Classification Manual as most recently rec-
or.nmended by the Council of Petroleum Accountants Societies· ot. North. America.
B. [X] Matetial which is ordiJlarlly so <:lassified _and controlled by Operator in the conduct of its operaticsns.
List shall be funrlshed Non-Op~ators upo.n request.
2. Statements and Billings
Ope~tor shall bill Non-Operators on or be1ore the last day of eaeh month --for their proportionate share ot costs
and expenses for the preceding month. Such bills will be accompanied -by statem~nts reflecting the total charges
and credits as set forth under the subpar!lil""aph selected below:
A. [ ] Statement in detail of all charges and credits to the Joint Account.
B. [X] Statement of all charges and credits to the Joint Account, summarized by appropriate- classifications
indleative of the nature. th-ereof.
C. [ ) Statement of all charges and credits to the Joint AccoUnt, swnrnarized by appropriate dassification
indicative of the. nature thereof·, except that items of ControllAble Material md unusual charges ·and
credits shall be detailed.
S. Advances and "Payments b;y "Non-Opcntors
Unleu otherwise provided tor in the agreement,_ the Opetator may require the ]ion-Operators to advance their
share of estimated cash outlay for the succeeding .month's operation, Operator shall adjust each monthly billing to
reflect advances received from the Non-Operators.
Each Non-Operator shall pay its proportion of aU bills within fifteen (l~) days after receipt If payment is not
made witlUn sueh time, the unpaid balance shall bear interest monthly at the rate of ten per cent ~lO'f'0 ) per annum
or the maximum contract rate ~ermitted by the applicable usury laws in the state in which the Joint Property is
located, whichever is the lesser.
4. Adjustments
Payment of any such -bills shall not prej.udice the right of any Non-Operator to protest or q'Uestion the correctness
thereof; provided however, all bills and statements 'rendered to Non-Operators by Operator during any calendar
year shall conclusivey be presumed to be true and co·rrect af~r twenty-four (_2.4) months following the end of
any such calendar year, unless wi~ the said. twenty-four ~2.4) month period a Non-Operator takes written
exception thereto and J?B-kes claim on Operator ~or ~djustment. No adjustment favcir~ble to Operator shall be
made- unle$ it is made within the same prescri~d period. The. provisions of this paragrap)t shall not prevent
adjustments. resulting from a physical in-ventory of the Join,{;- Property as provideQ. for in Section vn.
5. Audits
A Non.-Opet:ator, upon notice in wtiting to "Operator and aU other' N"on-Operatot:s, sb~l have the ri·ght 'o audit
Operator's accoup.t.s and recor&J relating to the acco1-1nting hereunder for any calendar year within the twenty-fOllr
(2.4) JllOnth period following tl"le _end of- such calendar yea"T; provided howev-er, the making: of an audit shall not
extend the time for the taking of written exception to arid the adjustments of aCCounts as provided for ln Paragraph
4 o1 this Section I. Where there ate two or more .lilon-'OPerators, the N-on-Operatori!l Sl"!-all make eyery reasonable
effort to conduct joint .or s4n~ltaneous audits, in a manner which Will result in a minimum ot inconvenience to the
Operator. Operator shall bear no portion of the Non-Operators' audit oost iDeurred under this paragraph unless
agreed to by the Operator.
6. Appr~valby Non-Operaton
Where an approval or other agreement of Non-Operators is expressly required under Paragraphs 5A.. 5B, 6A and
a of Section Il:, Section III, Section V, Section VI, and Pa'ragr.al?h 4 of Section Vll,. of this Accounting Procedure and
if the weement to which this· AccoUnting Procedure. is attache_d cQntains no contrary provisions: in reJ!:ard thereto,
the Operator shall notify all Non-Operators and the agreement or approv;tl of a majority in interest of the Non-
Operators shall be controlling' on· all Non-Operators,

-1-

615
 'F· . . .

I'•Ii'''
' ··'
).,, .q(J
H. DIRE.CT CHARGES
Operator shall cJ::iarge. the Joint Accouht with the following items:
1. Rentals and Royalties
Lease rentals and. x:oyalties paid by Operator for the Joint Operations.
2. Labor
A. (1) Salaries and wages of Opetator's employees directly employed on the Joint Property in the conduct of
Joint Operations.
(Z) Salaries of Arst-level supervisors in the field if such charges are excluded !rom overhead rates in Option
A of Section m.
(3) Salaries and wages of technical employees temporarily assisned to and directly employed on the Joint
Property if such charges are excluded from overhead rates in Option :B of Section m
(4) Salaries and wage!; .ot technical employees either teml)orarily or perm~ently as.slgned to an.d directly
employed in the opeJ11.tion of the Joint Property if such cilarges -are excluded from overhead rates in
Option C ot. Section Ill.
B. Oper~t.O".f's cost of holiday,. vacation, sickness and diSability bene!its and other customary allowances paid to
the employees whost! salaries and wages are chargeable to the Joint Account under Paragraph .2A of this
Section II and Paragraph rA of Section Ill; except that in the case of those employees only a pi'o rata portion
of whosfl! salaries and wages are chargeable to -the Joint Account under Paragrat:~h lA of Section 10 1 not more
than the same pro rata portion oi the benefits and allowances he1·ein provided for shall be charged· to the Joint
Account. Cost under this Paragraph 2)3_ 11\ay be charged on a "when and as paid basis'' or by ''percentage
asse:smeht" Qn the amount of salaries and wages chargeable to the J()lnt Account. under Paragraph 2A of this
Se;cbon II and Paragraph IA of Section m. lf percentage as&eSsment is used, tbe rate shall be b~d on the
Operator's cost ex~rience.
C. Expenditures or. contributions made pursuant to assessments imposed by governmental authority. whi.ch are
applicable to. Operator's labor cost of sal~ies ami wages chargeable to the Joint Account under Paragraphs
2A and 2:S of this Section n and Paragraph 1A of. Section III.
D. Reasonable personal expenses of those employees whose salaries and wages are chargeable to the Joint Ac-
~unt under Paragraph 2A of this Section U and fot which expenses the enipl~ees are teiJI~bursed under
Operator's usual practice.
·3. Employee Benefits
dperator;s current cost of established plans for emplOyees' group life insUrance, hospitalization, pension, retire.,.
ment, stock purchase, "Utrift, bonus, and other bene;fit Pians of a like nature, applicable to Operator's labor cost
chargeable to the· Joint Account under Paragraphs 2A and 2B of this SE!ction II and Paragraph IA of Section III
shall be chargeable as indicated in the subparagraph selected below-:
A. ( ] 0perator1s actual cost.
B. (XI" Operator's actual cost not to ~:xceed fifteen per cent (15%).
4. Material
Material purchased or furnished by Operator for use on the Joint Property as provided under Section IV. So· far
as it is reasonably practical and consistent with efficient and economical operation, only such Material shall be
purchased for or transferred to the Joint Property as may be required for· irrunediate use; and the accumula~on of
surplus stocks shall be avoided.
5.. Transportation
Transportation of ~ployees and Materia~ necessary for the Joint Operations hut subject to the following limita-
tions:
A. If Material is moved tO the Joint Property from: the Operator's warehoUse or other properties, no charge shall
be made to the Joint Acaojmt_ for a distance greater than the distance from the .nearest reliable supply store,
recognized barge terminal, or railway receiving point where like material is normally available, unless
agreed to by Operator and Non-O~erators.
B. If surplUS Materi•l.is moved. to Operator's. warehoU're or other storage point, no charge shall be made to the
Joint Account for a distance g"eater t.hal1 the distance to the neatest relia\;lle supply store, recognized "barg~
terminal, or railway Tll!:ceiv.ing point unless agreed to by Operators and Non-Operators. No charge shall be made
to the Joint Account for moving Material to oth~r propt!rties belongblg to O:Perator, unless agreed to by Operator
and Non-Operators.
c. In the appllcation of Subparagraphs A and B above, there sh•ll be nJJ equalizatian of ac~al ~oss trucking
costs of $100 or less.
6. Services
A. The cost of contract services and utilities procured. from outside ~oUrces Qther than services covered by Para-
Jraph 8 of this Section II and Paragraph lB of Section UI. The cost of professiopal consultant -services shall
not be charged to the Joint Account unless agreed to by Operat-or and Non-Operators:.
B. Use and service of equipment and facilities ·furniShed by Operator as provided in ParagraPh 5 of Section IV.
7. Darrragt;S and Lo~s to Joint Pro11erty
All costs or expenses necessary for the repair or replacement of Joint Propert:y made necessary because of damages
or losses incurred by ftr.e, flood, stb"rm, theft; accident; or o_tber ca';lse, except to the extent that the damag!!" or Joss
could have been avoid-ed through the exerc~se of reasonable dihgence. on th~ part of Operator,· Operator· shall
f!ll"nish Non-OperatorS written notice of damages or lossef iJ:~.C\.!.rred as soon as pra"ticable after a report the1·eof
has been received by Operator.
8. Legal Bx,pense
Ait cQsts and expens.es of handling investigating, and set~b)g Ittiga,tion ·or claims ansmg by reason of tl:te. Joint
Operations or neceSsa-ry to proted or recove_r the Joint Property, inclu~g, .but not limited. ta, !ttorney's fees,
court cos.ts, cost of inve~tigation or procuring evidence and amounts. p~1d m setUemen~•.or satisfachon of anys;u~h
litigation or claims; provided, (a) no t:barge sh.Ul be n1ade for tl!.e serv1ces. of Operators legal staff or ot~er reg-
ularly .employed pen~onnel (such services- being considcted. to be Ad,mUnstntive Ov~htad under Section Ill),
unless agreed t-o by Opetator and Non-Operators, and {b) ~o ch~rge shall_ be_ made for the fees and expenses of
oUtside attoljleys unless the en'lployni.ent of such attotneys lS agreed to by Operator and Noh-Op~ators.
9. Taxes
All taxes of every kind and nature assessed or l~vied upon or fu co.nnection wlth the Joint Property, the ~peration
thereof, ot the production therefrom:, and which taxes have been paid by the Operator for the benefit of the
PartieS.

-2-

616
,-'-----;'----------------------~~~~~I
-
Ia~-- I
Net premiums pt~id for insure.nce req.uir:ed to be carried on the Joint PropertY fot the protection of the Parties.
In the event Joint Operations 11-re conducted in a state in which Opera_tor may act m self-insurer for Workmen'$
I
Compensation andjo:r Employers Lla.bility unde~ the respective stnte's l.a:wS' Operator may at its election include '
the risk under- its self-insurance prcrgram ·and in that event, Operator shall i~cJude a charg~ therefor on th~ follow-
ingbasis:
---·--·---------~e£_~-~---~~---~~E-~-~~p~~---~~_,l;.?~_f::~--~~~-~::.~~E:.~~~~L~~:.~.?!.~---·-------------------·----------
-------·--·-·········· ····-·-----···-····---·-------------- -----·-····-··-- .... ··--------~-- ······-··---------------·--------·-----·----
··-----··--··········-----·· ······---··--··-······--·-·-·-----·····--········-··-············ --·-------···- ·-···-···-···········---··-···---·----·
11. Oth~tr Expenditures
Any other eXpenditure not covered or dealt with In the foregoing provisions of this Section II, or in Section Ill,
and which is incurred by the Operator for the nece:sl)ary and proper conduct ot the Joint Operations.

lll. INDIRECT CHA~ES

Operator may charge the Joint Account. for indirect costs either by use of an allo~ation of district expenSe items plu$
the rate for administrative overhead, and phu the warehousing charges·, all as ptovided klr in Paragraph 1 of this Sec-
tion lll or by combining all three ?f said items under the r:a~es provided for in Paragraph 2 or 3 o% thb Section ill,
.u indicated next below:
OPERATOR SHALl. C"6ARGE INDUlEC:r COSTS TO THE JOINT ACCOUNT· UNDER THE TERMS OF:
[ ] Paragraph 1. (District Expense, Admini$trative Overhead and Warehousing")
[X] Paragraph 2. (Combined ltates - Well Basis)
[ ] Paragraph 3. (Combined Rates - Percentage Basis)
The cost and eXpense ot services from outside sources in C()nnection with matters of taxation,. traffic, accounting or
matters before or involving governmental agencies shall be considered as included in the overhead rates provided for
In the above selected Pa1:agraph oi this Section m unless such caSt and expense are agreed to by Oper.atol' and Non-
Operators as a direct charge to the Joint A-ccount.
THE OVERHEAD RATES PROVIDED FOR IN ANY OF TBE PARAGitAPRS SELEOTE·o AB.OVE
A. [ ] shall [XJ shall not include salaries and personal expenses of first-level s~pervisors in the field.
B. [ J shall [J(] shall not include salaries, wages and personal expenses -of teehni<;al employees temporarily as-
signed to and directly em{)loyed on the Joint Property.
C. [ Xl shall ( ] :shaU not include salaries, wages and personal exp.enS!Os e>t techni~l employe:e;s ~ithe~; tempo-
rarily or permanently assigned tel and dil'ectly em.i?loyed in the ope;ation of the .::roint
Propert;Yo
1. District Expense, Administrative Overhead and Wareltousing
A. District Expense
Operator sh<~ll charge the Joint Account with a. pro rata portion of the salaries, wages and expem;es of
Operator's production superintendent and other employees serving the Joint Property and ather properties
of the Operator in the same operating area, whose time. is not allocatefl Do!plh"}
"Eoch"W411 Ht11-l fM All Wolh; 0T¥!" Tu

(2) [ ] Percentage Basis
PERCENTAGE BA;.SIS
Development:
···--··-··-----·· Percent· ( ·%) ot·the cost .Of development ot the JOint Property exclusive of cost.~ pn,-
vided under Paragrapb 8 of. Section .n and. all salvage .credits.
Operating:
-----··--··---······· Per:cent ( %) of the cost of operating the Joint Pro~~ty e.:11:du~ve of Costs _-provided
under: Paragnphs 1 and ·8 of Section II, all sal:va~e credits:; the v~Iue of ll1.]ected subs~ces purchase_d for
seconda:ry recovery and all taxes and assessments which are lev1ed, .assessed .and ;pa1d upon the Itnrtt>ral

-·-
interest in and to the: Joint Property.

''
------·----· J

617
r-'-··
C. Operator's Warehouse Operaling an.d Maintenance Expense
[ ] Indude_d in district :expense
[ ] No chnrge either dlfect or indirect
( ] Perc~tage basis (describe full)') .. ····-··+>••••·······-------·········-·······-~------···----~--------·······-·--·------

---------····------········-----,.------· ··-------·····-····-·

2. Combine(l Rates- Well Basis
Oper-atOr shall charge the Joint A-cCount for the seJ.·vices covered by Paragraph 1 of this Section III on the basis
indicated below:

3. Combined. Rates- Perctmtag-eBnsis
Operator· shall charge the Joint Account for Jhe services covered by Paragraph 1 of this Section III ·on the b<~sili
indieated below:
A. Pevelopment:
.. Percent ( %) ot the cost of development ective of individual leases. ·
D. The well rates shall be adjusted as of tbe first day of April eaCh y-ear following the effeCtive dat-e of the
agreE~rtlent to whieh this Aecounting Procedure. is attaehed,· 'l'he adju.stment shall be computed by multiplying
the rate currently in use. by tlle percentage· increase or decrease in the average weekly c.arh)n.g~ of Crude
Petroleum and Gas ProduCtion Workers fOr the las~ calendar year compared to the preceding ~alendnr year
as shown by ''The Inde:x of Average Weekly Earnings of CruQe. Petroleum and G-is ':luder .P~r_agraph. 1_~ (2) or ~a.-a.gtll!'h 3 of t~•s
Section III. Development. shall include all costs in ~qnnectipn w1th dn1Ung, redt:Jlhng, deepemng or any ren:~llal
operations on.. any or al1 we~ Is j~vt;lvi"g the use o! drilli~g Cl'ew _and equil?~el}.t; also, prel~minary · expcndl1iU:fCS
necessary In preparation tor dnllmg a-nd exponditut:es tllcurred m abandomng when. well ·15. not comp1eted as a
prerator from vendee. Any claim by vendee related to such sale shall be charged back
to- the Joint Account if and when paid by Operator.

VJ. BASIS OF PRICING lUATERIAL TRANSFERRED FROM JOINT ACCOUNT

Material ~urchased by either Operator or Non-Operators or divided. ii)_ kind,. unless agreed to ~Y OPerator and Non-
Operators shall be priced on the following l;:!asis:
L New Prico Defined
New pr-ice as used in this- Section VI shall be the price specified fot new Material in Section IV.
2. New MatCI'iat
New Material {Condition "A"), being new Material procured for the JOint Property but never used1 at one
hundred per .cent (100%) oLcurrent new price (plus sales tax if any),
3. Good Used Material
Good used Material (Condition "B"), being qsed M3te.Tial in sound and serviceable condition, suitable for- reuse
without reconditioning: '
A. At seventy-five per cent (7S%) of current new price ii Material was charged to Joint Attount as nC!w, or
B. At sixty-five per cent (65o/c) at current new price if Material was originally charged to the Joint Account
as secondhand at seventy-five per cent (75%) of new price.
4. Other Used Matel'ial
Used Material (Condition "C"), at fifty per cent (SO%) of cummt new price, belD.g used Material which:
A. Is not in sound and· serviceable condition but suitable for reus¢ after reconditioning, or
B. Is serviceable for original function but not suit~ble for reconditioning.
5. Bad-Order Material
Material (Condition "D"), no longer suitable for its original purpose without excessive repair c-ost but Usable fut·
:rome other pUrpose at a price Comparab-le with that of It-ems normally used :or suOWh

---··
'·'

,.;
'
\ I

I
\
622
 CUR\<.AN R. CAMPBELL, INC.
l!tll\ tti\f'll\. Ol" ·r Ht~ SOl• I tiWl";:-;T tH;II DI~G llO\'.:noN. TliXAS 1100~
\"Till ~~.(.J).l.II'J

S:O.:...rt11-
·N91\.""'fti ZULCU PROSPECT

lMES COUNTIES. TEY~S

l1r. W. A. NotWtl\Y
8106 Mulli.ns
Houston, Texas , 77036

This letter is tO evidence and confirm an agreemen~ between
you (Novotny) and the undersigned (CaQpbell) as !allows:

l. (a) As used herein, the term "Existing Burdens" means all royalties
and overriding royalties burdening any lease re.fcrred to he·rei.n at the..
time it is acquired by Campbell or its s\lcces.S·ors o:r assigns.

(b) As u!>c.d herein, the t.erm u~.rea of Hutual lnterest 11 moans the
area outlined in blue on thc plat attached h·ercto and made .a part hereof
and signed by the. President of Campbell for purposes of id"entificar.ion.

2. As t.o all leases acqui;red by C:a-rupbell, its s\lcc-essor.s or assigns,
on actea.ge loc.a~ed '-'!thin the Area of Mutual Interes·t. 1 N.owotny shall be
assignad the following overrid-ing royalties:

(i) lf the ~ist.in& Burdens are 1/Sth or less • then the over-
riding royalty shall be l/24th of 8/8ths.

(ii) If the Existing Durdcns are g;r·eate:r than ~/8th. but. not
greater than l/Gt.h, t.hen the ovcrridin~ royalty shall be l/48th of 8/8ths.

(iii) H k~x.istinr, Burdens a-re .greater than 1/6th, then Nowotny.
shall not be entitled t.o s.ny ovex(iding royalty .

.3. All assignments of ove:rridj:t\& toyaltiC!s to be made under t:.\\e
p1·ovied.on.s hereof Shall be made·without: warranty; either expressed Or
iutplied, and (·ach ctsstsnoient shall rorovide, as to each lease. that should
the Lessor, tli"erein own less than the entire fee simple estar.e in the oil,
~as and other r:li.nerals in ; by si-gning t.he .attached
copy hereof at the place pr:ovided and returning sallle to. Campbell.

Yours ve1-y truly,

C:UP.RAN R. CA.'iP.BELL, INC.

/JJ ' /[• . ' ·i
Cd~!1r1 (J~L''cl!<£(
Curran R. Gamp.bell, ~resi-d-ent
APPROVED A."iD ACCEPTED:
this_;.._day of~,~i-~-' 1914.

W. A. )1owotny....-

......... - .... ·~-~ .. ·-·-··-- ·---.-----~....,--~~-·---....·-----·-~···

' ........

624
 ,· f
T II: MA11:51Qt".-l

.~ I
t----+----:'·Ct:
'll
WDUNHAM
J. M

ct:mt\:': 1:. c:-.~~~·~~-Etl.,
,1n11 \'. .\. :~~~~;oT::\'

s]•'''q nnt lDl ..
. "'•'"•'
. '.
I ( ' I', '•(' { (
~-\1\"!I:Xr!'':\: ·,~}
:'f''':,• { , ~~-:~--L--, .
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)
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1 •· , t
, ' ·• ·t ',.
'.., · ~:.;...~··-··· .,.r·-_,-,,.,_,.r
; 'I ' ·-·-

---,- ~~~:~r·-·~:. .---_........ . . . .--~-----
Il ... : - ' - ' ....... .,......-

625 -- .·
Tab 2

Tab 2
,.'\o ··; ... _..

VOL 417 ""' 709
Well Name: BUCHANAN 1, GIBBS BROS. 1, WILSON JAMES 2 AND WILSON JAMES 3

1.2235
ASSIGNMENT AND BILL OF SALE

STATEOFTEXAS §
§ KNOW ALL MEN BY THESE PRESENTS THAT:
COUNTY OF MADISON §

SOUTMl.AND ROYALTY COMPANY, a Delaware Corporation, whose address i& 400 N.
Sam. H<>uston Parkway Eas~ Suite 1200, flouston, Texas noso C'Asslgnor"), for and in
conoiderallon of ONE flUNDRED DOLLARS ($100.00) and other good and valuable
conskieration, receipt of which is here acknowledged, does hereby assign, transfer, grant
~ convey unto whose address is

("Auignee"), an of Assignor's right, tiDe and interest in and to the following:

0) The oil and gas leases, leasshold interesls, righ!a and interests a1bibutable or
aBocable to the oil and gas leases or leasehold in.terests by virtue of poo6ng,
unitization, communitiUtion, and operating agreementS, Hcenses, pennits, and
other agreements, all more particularly described on ExhiM "A' hereto, Hmfted
as to the lands and depths indicated on Exhibft "A" (collectively the 'Leasss"),
together with identical undivided interests in and to all the property and rights
incident thereto, including, but not limited to, a!\ rights tn, to and under all
agreements, product purchase and sale contracts, leases, permits,
rights..of-way, easements, licenses, farmouts, options, orders, and other
contracts or agreements of a similar nature to the extent same relate to the
Leases;

(ii) The wells, equipment, materials and other personal property, fiXtures and
improvements on the Leases as of the EffecUve Date (as hereinafter def~ned),
app1.:.1rtenant thereto or used or obtained in connection with the Leases or with
the production, treatment, sale or disposal of hydrocarbons or waste produced
therefrom or attributable thereto, and all other appurtenances thereunto
belonging (the "Equipment"); provided, however, Equipment shall not include
vehicles, communications equipment, tools, warehouse stock, compressors or
leased equipment located on the Leases;

(iiij All unitization, communltization, pooJing, and operating agreements, and the
units created thereby which relate to the Leases or interests therein described
on Exhibit "A" or which relate to any units or wens located on the Leases,
including any and all units formed under orders, regulations, rules, and other
offiCial acts of the governmental authority having jurisdiction, together with any
right, title and Interest created thereby in the Leases; and

(iv) All of Assignor's rights to claim revenues or gas resulting from any
underproduction attributable to Assignor's interest in the Leases.

Al·of Assignor's interest in the above-mentioned assets is herein collectively mferred to as the
"Interests" .
.Assignpr reserves and retains unto itself from the Interests those certain lands, leases.
;properties, interests, leaSehold rights, depths or formations as .specifically noted and reflected
on:~ibit ~'A" ,and the right of joint use of any agreements ass1gned hereunder where needed
f_or tAe exp~n, d~Welopment, and operation of any rights or acreage (either horizontally or
\fel'ti.e:a&ly) retaine(i by Assignor or where needed in order to exercise ancillary rights in, or for
. - to, adjoinlng or nearby properties .owned by Assignor.
TO HAVE AND TO HOLD the Interests unto Assignee, its successors and assigns, forever,
:s.u_bject to -the
follow!~ terms and conCrtions:

SM:ASSIGNR.DOC
~~8130194

11-~\§0rract
EXHIBIT Copy of OrigineJ
Rled in Madison
County Clerk's Office
z~
1029
 - .. .... ,.
,
-
•.,

1. This Assignment is a~pted subject to, and Assignee agrees to assume and perform
any and all of the iabl6ties and obUgations. or allegad or thraatonad liabilities and
obligations, of Assignor under the Interests and existing on and gas teases
assignments, operating agreements, product purchase and sale contracts leases'
permits, rights--of-way, ficenses, easements, options, orders, and a~y oth.,;
agreements or contracts ~utable to and affecting tha Interests, Including but not
1111'11ted to, any and aD obligations (I) to pay and deiver royalties, overr1dlng royelties,
non-participating royalties, and other burdens on production, (ii) In connection with or
arising out of balancing of overproduction or underproduction from the Interests and
(~i) in compliance with aU laws and governmental regulations wtth respect ~ the
Interests including, but not llmltad to, the lawful plugging and abandonment of oil and
gaa wells and the restoration of the surface of the land as nearly as possible to its
prelease condition, whether or not such liabilities and obligations, or aUeged or
threatened liabirlties and obligations, are caused by Assignor's negligence and 'Mlether
or not such liabilities and oblgatlons, or alleged or threatened liabiUUes and
obligations, arise .during the period of, or from, or In connection With Assignor's
ovmership or operation of the Interests. Without limltatlon of the foregoing, Assignee
agrees to assume and perform any and aD of the UabilitieA and obligations, or aUeged
or threatened liabilities and obligations, of Assignor for claims, losses, damages, costs,
expenses, diminutions In vatue, suits, and causes of action of any ldnd or character,
with respect to the environmental condition of the Interests, regardless of when the
events occurred that caused such condition to exist and whether or not caused by or
attributable to Assignors negligence. Assignee shall, to the fullest extent permitted by
law, protect, defend, indemnify and hold Assignor and its directors, officers,
employees, agents and representatives of each of them, harmless from and against
any and all claims, losses, damages, casts. expenses, diminutions in value, suits,
causes of action or judgments of any kind or character with respect to any and all
liabilities and obligations or alleged or threatened liabilities and obligations, including,
but not limited to, any interest, penalty and any attorneys' fees and other costs and
expenses incurred in coMection with Investigating or defending any claims or actions,
whether or not resulting in .any liability, attributable to or arising out of (I) ownership or
operation of the Interests subsequent to the Eff.ectlve Date, and (ii} Assignee's
assumption of any !iabfiity or obligation In accordance with this paragraph.

THE INDEMNIFICATION, RELEASE AND ASSUMPTION PROVISIONS PROVIDED
FOR IN THIS ASSIGNMENT SHALL BE APPLICABLE WHETHER OR NOT THE
LOSSES, COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE SOLELY OR
IN PART FROM THE GROSS, ACTIVE, PASSIVE OR CONCURRENT
NEGLIGENCE, OR OTHER FAULT OF ASSIGNOR.

2. THIS ASSIGNMENT AND BILL OF SALE IS EXECUTED, DELIVERED, AND
ACCEPTED WITHOUT ANY REPRESENTATION, WARRANTY OR COVENANT OF
TmE OF ANY KIND OR NATURE, EITHER EXPRESS, IMPLIED OR STATUTORY.
THE INTERESTS ARE BEING CONVEYED AND ASSIGNED TO AND ACCEPTED
BY THE ASSIGNEE IN THEIR "AS IS, WHERE IS" CONDillON AND STATE OF
REPAIR, AND WITH ALL FAULTS AND DEFECTS, WITHOUT NN
REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR NATURE,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES OF MARKETABILITY, QUALITY, CONDITION, MERCHANTABILITY,
ANDIOR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE
EXPRESSLY DISCLAIMED. IT IS UNDERSTOOD AND AGREED THAT ASSIGNEE
SHALL ACCEPT ALL OF THE SAME IN THEIR "AS IS, WHERE IS" CONDITION
AND STATE OF REPAIR AND WITH ALL FAULTS AND DEFECTS, INCLUDING,
BUT NOT LIMITED TO, THE PRESENCE OF NATURALLY OCCURRING
RADIOACTIVE MATERIAL (NORM). IN ADDITION, ASSIGNOR MAKES NO
REPRESENTATION, COVENANT OR WARRANTY, EXPRESS, IMPLIED OR
STATUTORY, AS TO THE ACCURACY OR COMPLETENESS OF NN DATA
DELIVERED TO ASSIGNEE WITH RESPECT TO THE INTERESTS, OR
CONCERNING THE QUALITY OR QUANTITY OF HYDROCARBON RESERVES, IF
AtfY, ATTRIBUTABLE TO THE INTERESTS, OR THE ABILITY OF THE INTERESTS
TO PRODUCE HYDROCARBONS, OR THE PRICES WHICH ASSIGNEE IS OR
WILL BE ENTITLED TO RECEIVE FOR ANY SUCH HYDROCARBONS.

3. TO THE EXTENT APPLICABLE TO THE INTERESTS OR NN PORTION THEREOF,

2
'I ATrue and Correct

(---~------~--~~-----------------------~--yct~O-ri~-M-1----­
Filad in Madison
County Clerl<'s Office

~·

1030
 , .•.>.:..,:

' ...

vo: 417 "" 711
ASSIGNEE HEREBY WAIVES THE PROVISIONS OF THE TEXAS DECEPTIVE
TRADE PRACTICES ACT, CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41
THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION 17.555, WHICH IS NOT
WAIVED), TEXAS BUSINESS & COMMERCIAL CODE.

-4. This Assignment and Blll of Sale shall inure to the benefit of and be binding upon the
parties hereto, their heirs, successors and assigns.

5. This Assignment end Bill of Sale may. be executed by Assignor and Assignee in ony
number of counterparts, each of which shan be deemed an original instrument, but all
of which together shaJI e;onstitute one and the same instrument.
4"'-
IN WITNESS WHEREOF, this instrument is executed the-.:!_ d&y of September, 1994,
but shall be etrecthle as of lhe 1st day of September, 1994 (the "Effective Datej.
ASSIGNOR
SOUTHLAND ROYALTY COMPANY
ATTEST:
By~
~--------------- Name: Kent Beers
Title; Attomey-jn-fact

ASSIC¥NEE

~S>s> ~"'L~pu.'-,t'j <) c'S>~~~. . ~.
ATTEST:

~---------------

·i
i

I

A True and Correm
Copy of OriginaJ
Aled in MadisOn
County Clerk's Office

1031
 ·------~-
-
1
'IOL 4.17 t"'b 712
I STATE OF TEXAS §
§
COUNTY OF HARRIS §

BEFORE ME, the undersigned au1hority, on this day personally appeared Kent Beers,
Attorney-in-Fact for Southland Royalty Company, a Delaware Corporation, known to me to be
the person whose name is Subscribed to the foregoing Instrument, and acknowtedged to me
that he executed the same for the purposes ancl consideration therein expressed and in the
capacity therein &tilted. /7/J
GIVEN UNDER MY HAND AND OFFICIAL SEAL OF OFFICE on this~ day of September,
1994.

CORPORATION ACKNOWJ EOGMENT

STATE OF TEXAS §
§
COUNTY OF HARRIS §
BEFORE ME, the undersigned authority, on this day personally appeared

~==;;;==;;=~;;=;,;;;:;;;=;=~;;;;~;:;;~~~~~~~~
~ known to me to be
of
the person and officer whoSe name Is subscribed to the foregoing instrument. and
acknowladged 1o me that he/she executed the same for the purposes and consideration
therein expressed and in the capacity therein stated as the act and deed of said corporation.

GIVEN UNDER MY HAND AND OFFICIAL SEAL OF OFFICE on this _ _ day of
September, 1994.

MY COMMISSION EXPIRES:
Notary Public in and for the S1ate of Texas

ATTORNEY-IN..fACT

STATEOFTEXAS §
§
COUNTY OF HARRIS §

BEEOR~ ME, the undersigned authority, on this ~}"'rsonally,JI!'~ed~~
~1( I l )')t, , Attomey·-Fact for ~ ~I llalll!ln/J
known to me to be the person whose name is subscribed to the foregoing Instrument~ :1
acknowledged to me that sheJhe executed the same for the purposes and consideration
therein expressed and In the capacity therein stated.

GIVEN UNDER MY HAND AND OFFICIAL SEAL OF OFFICE on this & day of September,
1994.

4 ATrue and Gorrec\
Copy at Original
Filed in MadisOn
-~ Gountv Clerl<'s Office
. J.

---,------~-____.....,.-.,~I
'.. \· 1032
'
 ·---------

EXHIBIT A
Page 1 or E:dl1bit
CO filE IlL ..•..• lYPE lNSTitlKNT .•... IMST DAlE. GRAifltfllESSO!t•..•.•••...•• ............ GRNITEE lESSEE ............................... RECilmlNB DATA. LEGN. DESCRlPTlOII .............. ,, ......... .
OZ1187QO Oll NIO Gt!S LEASE 10/08114 HENRY K.. llOOK, ET UX CURRAII R. CAMPBELL. INC, 2:11661 BRAZOS 943 IGES, IIH IR LESS. t£SCRIBEO IIIIDSE.
COONTY
(
I 021186110

02.118900
OIL NIO GAS l.EASl

OIL NO GAS LEASE
08/lA./74

08/29/74
GIBBS BI!OD£iiS Alii CCI4PAHY

JAI£5 D. WILSON, IND. & IND. EX.
CUJIAAH R. CAMPBEll. lltC.

CURRAH R. CAMPBEll. INC.
203/414 tMnlSO. 184.1 ACRES, lfliE OR lESS, DESCRIBED IN
crutnY

~·~LEASE.
l£ASE.
203/-464 HNJISON 20n.33 ACREs. NlRE OR USS, DESCRIBED IN

02119500 Oll NtD &AS -LU.SE 10111174 RA'OOND B. B~. ET UX COORAN R. CAMPBELL. IN.C. 211679 BRAZOS
COUHTY
222.06 ACA!S, tO\E OR LESS, DESCRIBED IN
\.EASE.
1
LESS H«J EXCEPTED FROH 11£ AIIOVE ME TilE
lA.1m ATlRIBliTABLE 'Rl 1liE tl. K. 0004:1/EU.S.J..
JAMES D. Wll.SOH #4 ~!ELL MD ll!E. BUCIIAIWI w:
wru..
J
,j

'I I
j
ASSOCtmP WEl!.S •
PROPERlY MJIIBER ••• DP WELL HUMBER WELL NI\ML .................. , , ••••..•••••••..••. • LOCATION ......... ·························
21188 GIBBS BROS 1 A. NIJNLEV SvY., A·l76
21189
21189 ""'
1409,81464
85900
WILSOM JN£5 0 13
Wll.SOM JAHES 0 12
JESSE K. OAVIS SVY. A·103
J£SSE K. DAVIS SVY., A-103
twUllN NEVELL£ SVY .. A-185
21195 6900 BOOW!AIIl ~

P-

c ;!:':
-.l
g:ng»
c 8:~
~3's_ a;
;;' "'"
~
c..:>
Q~o~
c. ::l.
(0

~!ii~ §' I
~~I!!\)
'6 ·,

1033
 ~·----~---· _ .. --· ....
_;.., '
-
...
-·~·-·'"'"···~.~----. -
.!< .•

FILED
IJ~' a/ •

. $£P 2 I 1994

~ :,~:~~Fo;•;:,SON }G 'i•,;~if.:~\lq,LEMAN, O«k of th• CouniY c.,.,'"'"' I
for said County do hervbv certify that the ab(We \n~~L;~~~~:i:~ ~~d ihe ~-
,day o f ¥ - - . 19 9. ¥.'.
"" fllodfoc """din mv offi" tho -::~-
"'v of~ 19. :·'~'· .. " . . /1,·: ". 'i'. .... o'dock
.. ,(J.....m.anddiJiyrecordedthe, ....~ayof. - - - •· ... 19 .. f. ... at ...~P.6...... o'dock
/J
... "'1: A~(:;A.•I! •.I.Jl acordsohaidCountv,inVol..,
.m.in . •W};: ~- .,-,-~7 "Q"
• . , .. , .. , ofPatp!S ,ll ./.
WITNESS my hand and seal of said office, this~~-~- .dtH of. ~;(j;A 4!4"""".... .,,19 .?f. ... ,
f)!k:_ln.~
County aerk., Madison County, Texil$

,_. 1034
Tab 3

Tab 3
 No. 12-13130-012-10

BURLINGTON RESOURCES OIL & GAS § IN THE DISTRICT COURT OF
COMPANYLP, §
§
Plaintiff, §
§
V. §
§
PETROMAX OPERATING Co., INC., MD § MADISON COUNTY, TEXAS
AMERICA ENERGY LLC §
f/k/ a/WOODBINE ACQUISITION LLC, §
PETRO TEXAS LLC, CH4 ENERGY II, §
LLC, and TEXCAL ENERGY SOUTH §
TEXAS, LP, §
§
Defendants § 12TH JUDICIAL DISTRICT

ORDER GRANTING DEFENDANTS'
MOTION FOR SUMMARY JUDGMENT ON TITLE ISSUES

On this day came on for consideration Defendants Motion for Summary Judgment

on Title Issues (the "Motion"). This Court having considered the Motion, all responses

and replies, together with any exhibits, and the arguments of counsel, has determined

that the Motion should be, and hereby is, GRANTED.

It is therefore, ORDERED, ADJUDGED, and DECREED that:

1. Burlington does not own any interest in the AMI described in the 1975 Letter
Agreement made the basis of this suit; and

2. The AMI provision in the 1975 Letter Agreement has terminated.

Signed this /0 day of--+'~""------'--'-'-'----'----~· 2014

~
...1
Filect~his ' "- Day
of i
,r_-~•'iL • I
,20/C,·
, ' \e at~··'· ~
. · 1• 0<. ~O'clock Judge Presiding
-l t{_. /.5 ,_ - . Cieri<
L<_ c · -
t2fh 1278th Judicial District c 0 ,, .
MADISON COUNTY' r",: c
C.\.. ..._.

- - - - - - D·s•·· · 1617
Tab 4

Tab 4
 No.12-13130-012-10

BURLINGTON RESOURCES OIL & GAS § IN THE DISTRICT COURT OF
COMPANYLP, §
§
Plaintiff, §
§
v. §
§
PETROMAX OPERATING Co., INC., MD § MADISON COUNTY, TEXAS
AMERICA ENERGY LLC §
f/k/ a/WOODBINE ACQUISITION LLC, §
PETRO TEXAS LLC, CH4 ENERGY II, §
LLC, and TEXCAL ENERGY SOUTH §
TEXAS, LP, §
§
Defendants § 12TH JUDICIAL DISTRICT

ORDER DENYING BURLINGTON'S MOTION FOR PARTIAL SUMMARY
JUDGMENT SEEKING VARIOUS DECLARATIONS

On this day came on for consideration Burlington Resources Oil & Gas Company

LP's ("Burlington") Motion for Partial Summary Judgment Directed to Defendants

Woodbine and PetroMax and Seeking Declarations that: 1) the Area of Mutual Interest

of the January 7, 1975, Letter Agreement Remains in Force and Effect, 2) Burlington

Jointly Owns a Leasehold Interest Within the Area of Mutual Interest and 3)

Burlington's Rights Under the 1975 Letter Agreement and AMI Are Not Subject to

Reduction or Limitation Based on the Amount of Burlington's Leasehold Ownership

(the "Motion"). This Court having considered the Motion, all responses and replies,

together with any exhibits, and the arguments of counsel, has determined that the

Motion should be, and hereby is, DENIED. ,_!._
) i ',......_
Filed Tpis 1 Day
-~ of (~ -e , 20 I~·
·.. \ at£. ~l~:L m O'clock
'//..:1 oc.J · ~ · . Clerk
12th /278th Judicial District Court
1618
-1- MADISON COUNTY, TEXAS
_ _ _ _ _ _ Deputy
Judge Presiding

1619
-2-
Tab 5

Tab 5
Mar131512:48p
p.4

CAUSE NO. 12-13130-012-10

BURLINGTON RESOURCES OIL & § IN THE DISTRICT COURT OF
GAS COMPANY LP §
§
v. §
§
PETROMAX OPERATING CO., INC., § MADISON COUNTY, TEXAS
WOODBINE ACQUISITION, LLC, n/k/a§
MD AMERICA ENERGY, LLC, §
PETRO TEXAS, LLC, CH4 ENERGY II,§
LLC, and TEXCAL ENERGY SOUTH §
TEXAS L.P. § 12TH JUDlCIAL DISTRICT

ORDER ON JOINT MOTION TO SEVER AND ABATE

The Court, having considered the Joint Motion To Sever And Abate,

has concluded that the motion should be granted and hereby renders the

following order:

It is hereby ORDERED, ADJUDGED and DECREED that the

following claims asserted in this case by the following parties are hereby

severed and made the subject of a separate action styled Burlington

Resources Oil & Gas Company LP v. PetroMax Operating Co. Inc.

Woodbine Acauisition. LLC n/kla MD America Energy, LLC, Petro Texas,

LLC. CH4 Energy II, LLC, and TexCal Energy South Texas L.P., in the 12th

Judicial District Court of Madison County, Texas, and having docket

number 12-13130-012-10-A:
Filed This / q Day
ot 7)~ ,20 IS
at.~mf'clock
~ .•• Clerk
12th I 270th Judlcl~;~l District Court
1640
MAOISON COUNjf. TEXAS • . "'
-·- ~ s~ANNED
Mar 13151248p p.5

a) Counts 1, 2, 4 and 5 of Defendant MD America Energy, LLC
f/k/a Woodbine Acquisition LLC's First Amended Counterclaim,
filed on September 26, 2014;

b) The following portions of Count 3 of Defendant MD America
Energy, LLC f/kla Woodbine Acquisition LLC's First Amended
Counterclaim filed on September 26, 2014:

(1) the request for a declaratory judgment related to record
ownership in the Wilson #4 Well and the Buchanan #2
Well;

(2) the request for a declaratory judgment that the notices of
lis pendens related to this matter filed by BROG be
dissolved;

(3) the request for relief under Texas Property Code section
12.008 and Texas Civil Practice and Remedies Code
section 12.002 arising from the wrongful nature of the
notices of lis pendens;

c) Defendant TexCal Energy South Texas, L.P.'s request for
attorneys' fees contained in its Plea to the Jurisdiction, First
Amended Answer and Special Exceptions to Plaintiffs' Second
Amended Petition, filed on September 26, 2014, and

d) Defendant PetroMax Operating Co., Inc.'s counterclaims for
equitable suit to quiet title and attorneys' fees in its First
Amended Plea to the Jurisdiction, Answer and Counterclaim
and Special Exceptions to Plaintiffs First Amended Petition,
filed on June 27, 2013.

The district clerk is directed to file in Cause No. 12-13130-012-1 0-A the

following pleadings previously filed in this case and orders previously

rendered in this case:

Plaintiff Burlington Resources Oil & Gas Company LP's Second
Amended Petition, filed on July 3, 2013.

1641
Mar131512:48p p.6

v2. PetroMax Operating's First Amended Answer to Plaintiff's First
Amended Petition, filed on June 27, 2013.

>3. Defendants Petro Texas, LLC's and CH4 Energy II, LLC's Plea
to the Jurisdiction, Answer and Special Exceptions, filed on
June 26, 20"13.

MD America Energy's Plea to the Jurisdiction, Answer, and
{/
Special Exceptions to Plaintiff's Second Amended Petition, filed
on September 26, 2014

'; 5. TexCal Energy South Texas' Plea to the Jurisdiction, First
Amended Answer, and Special Exceptions to Plaintiff's Second
Amended Petition, filed September 26, 2014

' 6. Defendant MD America Energy, LLC f/k/a Woodbine
Acquisition LLC's First Amended Counterclaim, filed on
September 26, 2014.

Plaintiff's Original Answer to Woodbine's Counterclaim and
Special Exceptions filed on August 26, 20'19.

'8. Defendant TexCal Energy South Texas, L.P.'s Plea to the
Jurisdiction, First Amended Answer and Special Exceptions to
Plaintiffs' Second Amended Petition, filed on September 26,
2014.

., 9. Defendant PetroMax Operating Co., Inc.'s First Amended Plea
to the Jurisdiction, Answer and Counterclaim and Special
Exceptions to Plaintiffs First Amended Petition, filed on June
27, 2013.

The two summary judgment orders signed by this Court on
December 10, 2014
.·
11. This Order on Joint Motion to Sever and Abate.

1642
SCANNED
Mar131512:48p p.7

The effect of this order is to render final for appeal the summary

judgment orders signed by this Court on December 10, 2014.

It is ORDERED, ADJUDGED and DECREED that the severed case,

Cause No. 12-13130-012-1 0-A, is hereby abated during the pendency of

the appeal by Burlington Resources Oil & Gas Company LP of this Court's

December 10, 2014, orders.

Dated: ___,_I_,_7-..L~--=.:..::.:.__ _ _ _ , 201s

DISTRICT JUDGE PRESIDING

APPROVED AS TO FORM:

HAGANS BURDINE MONTGOMERY &
RUSTAY, P.C.
2 /- '
l/
By: -F...:.~:..!.e~~H~a-g_a.,t.ftr-;;,-r,
;:·'S,.:z:--c.......::=-------
State Bar No. 08685500
fhagans@hagans-law.com
Kendall C. Montgomery
State Bar No. 14293900
kmontgomery@hagans-law.com

3200 Travis, Fourth Floor
Houston, Texas 77006
Telephone: (713) 222-2700

1643
SCANNED
 Mar 131512:49p
p.8

Telecopier: (713) 547-4950

ATTORNEYS FOR PLAINTIFF BURLINGTON
RESOURCES OIL & GAS COMPANY LP

THOMPSON & KNIGHT LLP

By~~ State Bar No. 05270300
greg.curry@tklaw.com
Richard B. phillips, Jr.
State Bar No. 24032833
rich.phillips@tklaw.com

1722 Routh Street, Suite 1500
Dallas, Texas 75201
Telephone: (214) 969-1700
Telecopier (214) 969-1751

ATTORNEYS FOR DEFENDANT WOODBINE
ACQUISITION, LLC, n/k/a MD AMERICA
ENERGY,LLC

BEcK REDDEN LLP

~·~f
IJ!M, pr-~~ t/David J. Beck
State Bar No. 0 000070
dbeck@beckredden. com
Thomas E. Ganucheau
State Bar No. 00784104
tganucheau@ beckredden. com

1221 McKinney Street, Suite 4500
Houston, Texas 77010
Telephone: (713) 951-3700
Telecopier: (713) 951-3720

1644 SCANNED
Mar 131512:49p p.9

ATTORNEYS FOR DEFENDANTS PETROMAX
OPERATING CO., INC., PETRO TEXAS LLC
and CH4 ENERGY II, LLC

PIERCE & O'NEILL, LLP

,.~[ r--~il~~~ State Bar No. 15995400
jpierce@pierceoneill.com
Brian K. Tully
State Bar No. 24039217
btully@pierceoneill.com

4203 Montrose Boulevard
Hou~on,Texas77006
Telephone: (713) 634-3600
Te!ecopier: (713) 634-3601

COUNSEL FOR DEFENDANT TEXCAL
ENERGY SOUTH TEXAS, LP

1645 SCANNED
HYPERLINKED MATERIALS
[Not included in paper copy]
Freeman v. Stephens Production Co., 171 S.W.3d 651 (2005)
162 Oil & Gas Rep. 563

171 S.W.3d 651
Court of Appeals of Texas,
Corpus Christi–Edinburg.

Paul FREEMAN, Appellant,
v.
STEPHENS PRODUCTION COMPANY, A Division of Stephen Group, Inc., et al., Appellees.

No. 13–04–208–CV. | Aug. 18, 2005. | Rehearing Overruled Sept. 29, 2005.

Synopsis
Background: Production company alleging it was lessee of all oil, gas and other minerals under certain land brought action
against grandson of grantor who conveyed land to lessors' predecessors in interest, seeking declaration that grantor did not
reserve a one-half interest in the mineral estate. Grandson counterclaimed, and lessors filed plea in intervention. The 389th
District Court, Hidalgo County, Leticia Lopez, J., granted production company summary judgment, and grandson appealed.

Holdings: The Court of Appeals, Dori Contreras Garza, J., held that:

[1] genuine issue of material fact as to whether reservation clause in grantor's deed applied to all land conveyed by deed or just
one lot precluded summary judgment on production company's declaratory judgment claim;

[2] genuine issue of material fact precluded summary judgment on estoppel by deed defense raised by grandson; and

[3] evidence submitted by grandson on his adverse possession claim was insufficient to establish that grantor and his successors
in interest actually possessed the mineral estate for the requisite period of time.

Reversed and remanded.

West Headnotes (10)

[1] Judgment Particular Cases
Genuine issue of material fact as to whether reservation clause in grantor's deed to lessors' predecessors in interest
applied to all land conveyed by deed or just one lot precluded summary judgment, in declaratory judgment action
brought by production company seeking declaration that grandson of grantor did not own a one-third of the one-half
interest in the mineral estate allegedly reserved by grantor in all of land conveyed by deed.

Cases that cite this headnote

[2] Deeds Language of Instrument
If the language of a deed is unambiguous, the court's primary duty is to ascertain the intent of the parties from the
language of the deed by using the four corners rule.

Cases that cite this headnote

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
Freeman v. Stephens Production Co., 171 S.W.3d 651 (2005)
162 Oil & Gas Rep. 563

[3] Contracts Ambiguity in General
Whether a written instrument is ambiguous is a question of law for the court.

Cases that cite this headnote

[4] Contracts Existence of Ambiguity
A written instrument is ambiguous if its meaning is uncertain and doubtful or it is reasonably susceptible to more
than one meaning.

Cases that cite this headnote

[5] Estoppel Nature and Elements in General
“Estoppel by deed” stands for the general proposition that all parties to a deed are bound by the recitals therein, which
operate as an estoppel, working on the interest in the land if it be a deed of conveyance, and binding both parties and
privies; privies in blood, privies in estate, and privies in law.

4 Cases that cite this headnote

[6] Estoppel Persons Estopped in General
Estoppel by deed can be applied against grantors and grantees alike, along with their privies.

2 Cases that cite this headnote

[7] Estoppel Persons to Whom Estoppel Is Available
Although the party against whom estoppel by deed is sought must be a party or a privy, there is no corresponding
requirement for the party invoking estoppel.

3 Cases that cite this headnote

[8] Judgment Particular Cases
Judgment Landlord and Tenant Cases
Genuine issue of material fact as to whether acknowledgements in subsequent conveyances and mineral lease
regarding mineral reservation in grantor's deed to mineral lessors' predecessors in interest acknowledged that all of
property conveyed by deed or just one lot was subject to the reservation, precluded summary judgment on estoppel by
deed defense raised by grantor's grandson, in declaratory judgment action brought by lessee of mineral estate seeking
declaration that grandson of grantor did not own a one-third of the one-half interest in the mineral estate allegedly
reserved by grantor in all of land conveyed by deed.

Cases that cite this headnote

[9] Judgment Evidence and Affidavits in Particular Cases
Inventory of grantor's estate and affidavit of grantor's grandson regarding grandson's knowledge regarding the estate's
inventory was insufficient to establish, in grandson's motion for summary judgment on his adverse possession claim,
that grantor and his successors in interest owned a one-half interest in mineral estate allegedly reserved by grantor in
all of land conveyed by grantor's deed, where such evidence did not prove or purport to prove that either grandson,

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Freeman v. Stephens Production Co., 171 S.W.3d 651 (2005)
162 Oil & Gas Rep. 563

grantor, or any of grandson's predecessors in interest actually possessed the mineral estate for the requisite statutory
period of time.

Cases that cite this headnote

[10] Mines and Minerals Adverse Possession
Actual possession of the minerals must occur in order for a person to obtain ownership of a mineral interest by adverse
possession.

Cases that cite this headnote

Attorneys and Law Firms

*652 Carlos H. Ochoa, McAllen, Gary E. Ellison, Houston, Mickey Olmstead, Austin, for Appellant.

Steven W. Ellis, Corpus Christi, Charles C. Murray, Atlas & Hall, J.W. Dyer, Dyer & Associates, McAllen, for Appellees.

Donald G. Sinex, Houston, Peter A. Vermillion, Austin, for intervenors.

Before Justices YA#NEZ, CASTILLO, and GARZA.

OPINION

Opinion by Justice GARZA.

In this appeal from the trial court's final summary judgment, the parties dispute the terms of a 1946 deed by which Paul Freeman
conveyed title to certain property to Kenneth R. Hixon and Mary Katherine Hixon (the “Freeman–Hixon Deed”). Freeman's
grandson, also named Paul Freeman (“Paul”), claims that the Freeman–Hixon Deed reserved to his grandfather a one-half
participating interest in and to all oil, gas, and other minerals in or under the land conveyed by the deed. Paul contends that he
owns a one-third interest in this reservation. His claim is opposed by Stephens Production Company, which asserts rights to
certain portions of the mineral estate through a mineral lease executed by the Hixons' successors in interest, some of who are
intervenors in this matter and also oppose Paul's claim.

Stephens filed suit for declaratory judgment against Paul and four other defendants, asking the trial court to declare that the
disputed reservation in the Freeman–Hixon Deed only affected a portion of the *653 conveyed land known as Lot 288. 1 Paul
counterclaimed, seeking a declaration that the reservation was not limited to Lot 288 but affected the entire property conveyed
by the deed. Subsequently, the lessors of Stephens' mineral lease filed a plea in intervention, seeking a declaration that the
Freeman–Hixon Deed did not reserve any mineral interest in the land covered by their mineral lease with Stephens (“the Closner
Lots”) and to establish their ownership of the mineral estate of the Closner Lots. 2

1 The other defendants are Hemus, Ltd., which was non-suited; Paula Kendall Taylor, individually and as independent executrix of the
Estate of Byrd Freeman Kendall, deceased; Clemmie Dora Freeman; and Charles Macon Freeman.
2 The intervenors are Charlie A. Hudson; Gregory T. Smith; Bruce Ihrig; Charlie Hudson, Jr.; David Drinkard; Meredith Land &
Minerals Company; Winne Land & Minerals, Inc.; and M.G. and B.B. Smith Partners, Ltd.
Stephens, Paul, and the intervenors each filed traditional motions for summary judgment, arguing that the Freeman–Hixon
Deed was unambiguous and supported their respective positions. In addition, Stephens and the intervenors argued that Paul's

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3
Freeman v. Stephens Production Co., 171 S.W.3d 651 (2005)
162 Oil & Gas Rep. 563

claim for declaratory relief was barred by res judicata. In response, Paul argued that the claims asserted by Stephens and the
intervenors were barred by estoppel by deed and limitations. Before the trial court ruled on their motion, the intervenors settled
their claims with all defendants other than Paul, and all claims between these defendants, the intervenors, and Stephens were
dismissed with prejudice. The trial court then entered a final summary judgment for Stephens and the intervenors against Paul,
who now appeals by four issues. Because genuine issues of material fact remain unresolved, we reverse the judgment of the
trial court and remand for further proceedings consistent with this opinion. 3

3 The well-settled standard of review for summary judgments is concisely stated in Fiallos v. Pagan–Lewis Motors, Inc., 147 S.W.3d
578, 582 (Tex.App.-Corpus Christi 2004, pet. denied).

I.

[1] In his first issue, Paul contends that the trial court erred as a matter of law by interpreting the reservation clause to apply
only to Lot 288. Paul contends that the following language from the deed unambiguously reserves an undivided one-half interest
in the mineral estate of all lots conveyed by the deed:

I, Paul Freeman, ... do Grant, Sell and Convey, unto the said Kenneth R. Hixon and Mary Katherine Hixon of the County of
Hidalgo of Texas all that certain lot, tract or piece or parcel of land lying and being situated in Hidalgo County, Texas, to-wit:

All of Lot 1, Block 15; Lot 2, Block 15; The West 17.51 acres of Lot 3, Block 15; All of Lot 10, Block 15; All of Lot 9, Block
15; All of Lot 11, Block 15; All of Lot 12, Block 15; out of the Closner Subdivision of Porciones 71 and 72, also known as
the San Juan Tract, Hidalgo County, Texas; EXCEPT such minerals as Grantor does not own; AND ALL of Lot No. 288 of
the Kelly–Pharr Subdivision of Porciones 69 and 70, Hidalgo County, Texas; EXCEPT that there is reserved in Grantor an
undivided one-half participating interest in and to all of the oil, gas or other minerals in or under said tract of land....

[2] [3] [4] If the language of a deed is unambiguous, the court's primary duty is to ascertain the intent of the parties from
the language of the deed by using the “four corners” rule. *654 French v. Chevron U.S.A., 896 S.W.2d 795, 796 (Tex.1995).
Whether a written instrument is ambiguous is a question of law for the court. Lopez v. Munoz, Hockema & Reed, 22 S.W.3d
857, 861 (Tex.2000). A written instrument is ambiguous if its meaning is uncertain and doubtful or it is reasonably susceptible
to more than one meaning. Towers of Tex., Inc. v. J & J Systems, Inc., 834 S.W.2d 1, 2 (Tex.1992). Such is the case here.

No single reasonable meaning clearly emerges from the language of the instrument. To the contrary, we are equally uncertain
and doubtful of the opposite interpretations advanced by the parties. The reservation speaks of its subject as a “tract.” Use of
this singular noun indicates that the reservation applies only to Lot 288 and not to the other lots. Nevertheless, the first clause
of the grant also speaks of a “lot, tract or piece or parcel of land,” even though the deed conveys eight different lots. Thus, the
reservation's use of the singular noun “tract” to describe its subject is consistent with the deed's use of the singular noun “tract”
to describe multiple lots and, in fact, the entire conveyance. This indicates that the reservation applies to all lots. Still, the deed
refers to the Closner Lots collectively as the “San Juan Tract” and then proceeds to list Lot 288 separately, indicating that the
Closner Lots and Lot 288 are treated as two different tracts. The reservation would then apply only to the second tract, Lot 288.
Further complicating matters is the reservation's location in a clause rather than a separate sentence. It thus appears to modify
only the noun immediately preceding it, Lot 288. Given the foregoing considerations, this Court can only speculate as to the
effect of reservation. We are uncertain and doubtful of both interpretations advanced by the parties.

Because the deed is ambiguous, the trial court erred by granting summary judgment based on its interpretation of the deed.
A jury should hear evidence and determine the parties' intent. See Columbia Gas Transmission Corp. v. New Ulm Gas, 940
S.W.2d 587, 589 (Tex.1996); see also J. Hiram Moore, Ltd. v. Greer, 172 S.W.3d 609, ––––, No. 02–0455, 2005 WL 1186334,
*4, 2005 Tex. LEXIS 428, *10 (May 20, 2005) (publication pending). Paul's first issue is sustained in part and overruled in part.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4
Freeman v. Stephens Production Co., 171 S.W.3d 651 (2005)
162 Oil & Gas Rep. 563

II.

[5] In his second issue, Paul contends that the trial court erred by denying his motion for summary judgment based on estoppel
by deed. As this Court recently noted in Sauceda v. Kerlin, “Estoppel by deed stands for the general proposition that ‘all parties
to a deed are bound by the recitals therein, which operate as an estoppel, working on the interest in the land if it be a deed of
conveyance, and binding both parties and privies; privies in blood, privies in estate, and privies in law.’ ” Sauceda v. Kerlin,
164 S.W.3d 892, 915 (Corpus Christi, 2005, no pet. h.) (quoting Wallace v. Pruitt, 1 Tex.Civ.App. 231, 20 S.W. 728, 728–
29 (Tex.Civ.App.-Houston 1892, no writ)).

In support of his motion for summary judgment, Paul produced evidence that Kenneth R. Hixon and other subsequent interest
holders executed multiple conveyances, as well as an oil, gas, and mineral lease, acknowledging that the mineral reservation
covered all land conveyed by the Freeman–Hixon Deed, including the Closner Lots. Based on this evidence, Paul argues that
the doctrine of estoppel by deed prevents Stephens and the intervenors from taking a position contrary to that of Hixon and
their other predecessors in interest.

Stephens and the intervenors, in turn, argue that estoppel by deed cannot be *655 applied against grantees but only against
grantors. They further contend that Paul cannot use estoppel by deed because he was not a party to the instruments upon which
he relies. Finally, they maintain that the instruments produced as evidence by Paul conveyed interests in Lot 288, as well as the
Closner Lots, and thus their references to the prior mineral reservation simply placed later grantees on notice of the reservation's
existence as to certain acreage out of the land conveyed (i.e., Lot 288).

[6] [7] We disagree with two of these contentions. First, estoppel by deed can be applied against grantors and grantees alike,
along with their privies. See id. at 915–916. Second, this Court is aware of no requirement that the litigant invoking estoppel
by deed be a party to the deed. Although the party against whom estoppel is sought must be a party or a privy, to this Court's
knowledge, there is no corresponding requirement for the party invoking estoppel. No cases imposing such a requirement have
been cited by Stephens or the intervenors.

[8] We turn to the evidence produced in support of Paul's motion. As argued by Stephens and the intervenors, the instruments
relied upon by Paul convey interests in both the Closner Lots and Lot 288. Because there is no dispute that Lot 288 is subject to
the reservation of the Freeman–Hixon Deed, the acknowledgment of the reservation in these instruments is not necessarily an
acknowledgment that the reservation applies to the Closner Lots. In fact, two of the instruments use the same murky language
and format as the Freeman–Hixon Deed, making this Court no more certain of their meaning than that of the Freeman–Hixon
Deed. 4

4 These instruments are (1) a warranty deed from Kenneth Hixon and Katherine Hixon to Morris Granville Smith recorded on December
10, 1947 and (2) a special warranty deed from Morris Granville Smith and his wife, Barbara Smith, to intervenor M.G. and B.B.
Partners, Ltd., which is dated August 29, 1997.
However, one of the instruments uses a different format and provides some evidence that the reservation applies to the Closner
Lots. This document, a special warranty deed, was executed on September 18, 2001 between intervenor M.G. and B.B. Smith
Partners, Ltd. and Keller Real Estate Investments, Inc. (the “Smith–Keller Deed”). It specifically conveys 66.23 acres out of
Lots 1, 2, 3, and 10, Block 15 of the Closner Subdivision, which it refers to as “Tract 1.” The Smith–Keller Deed states that
Tract 1 is subject to the undivided one-half reservation provided for by the Freeman–Hixon Deed. Although the Smith–Keller
Deed thus appears to be conclusive proof that the reservation applies to the Closner Lots, its evidentiary value is belied by a
second conveyance made within the same deed. Along with Tract 1, the Smith–Keller Deed also conveys land referred to as
“Tract 2,” which is comprised of 239.01 acres out of Lots 2, 3, 8, 9, 10, 11, 12, and 13, Block 15 of the Closner Subdivision
and Lots 287, 288, 289, and 290 of the Kelly–Pharr Subdivision. Notably, the deed does not list the reservation provided for
by the Freeman–Hixon Deed as one of the 47 reservations applicable to Tract 2. This is especially noteworthy because Tract

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 5
Freeman v. Stephens Production Co., 171 S.W.3d 651 (2005)
162 Oil & Gas Rep. 563

2 includes not only portions of the Closner Lots but also Lot 288. Tract 2 also includes Lots 2, 3, and 10, portions of which
are included in Tract 1 and expressly made subject to the reservation of the Freeman–Hixon Deed. Further diminishing the
evidentiary value of the Smith–Keller Deed is the exclusion of Lots 9, 11, and 12 of the Closner Subdivision from Tract 1.
These lots are included in Tract 2, which is not expressly subject to the reservation *656 of the Freeman–Hixon Deed. In sum,
the Smith–Keller Deed is some evidence that the reservation extends to the Closner Lots, but it is inconsistent and therefore
insufficient to eliminate all genuine issues of material fact. See Tex.R. Civ. P. 166a(c).

The final instrument submitted by Paul is a November 19, 1975 oil, gas, and mineral lease executed by Morris Granville Smith
and Barbara Smith in favor of Paul S. Freeman, Paul's grandfather. The lease grants

All our mineral interest in Lots One (1), Two (2), Three (3), Eight (8), Nine (9), Ten (10), Eleven (11),
Twelve (12) and Thirteen (13) ... in Block Fifteen (15), John H. Closner, et al Subdivision, Hidalgo
County, Texas; and Lot Two Hundred Eighty–Eight (288), out of the Kelly–Pharr Subdivision, Hidalgo
County, Texas.

The lease provides a “pooling” area of 320 acres and then states that “for purposes of calculating the rental payments hereinafter
provided for, said land is estimated to comprise 160 acres, whether it actually comprises more or less.” According to Paul, the
difference between the 320–acre pooling area and 160–acre estimation of the land proves that the Smiths only owned one-half
of the mineral interest in the land, which is the same land conveyed by the Freeman–Hixon Deed. Paul argues that the Smiths
thus acknowledged that the reservation of the Freeman–Hixon Deed extends to the Closner Lots.

Although the mineral lease is some evidence to support Paul's contention, it fails to eliminate all genuine issues of material
fact. See id. The exact acreage of the land covered by the mineral lease is not stated anywhere in the lease. Paul assumes that
the acreage is 320, but this amount is derived from the pooling provision, not from any statement regarding the exact acreage
of the land. If the correct acreage of the land were 160 acres, Paul's theory would fail because the mineral interest conveyed
would be 100% of what the Smiths owned. Without parol evidence, it is impossible to know with any certainty whether the
actual acreage is 160, 320, or some other amount. Accordingly, Paul did not establish his entitlement to judgment as a matter
of law on his defense of estoppel by deed. Paul's second issue is therefore overruled.

III.

In his third issue, Paul contends that the trial court erred by granting intervenors' motion for summary judgment based on res
judicata. The trial court's judgment specifies that its decision was based on its interpretation of the Freeman–Hixon Deed, not
on res judicata. The judgment states that the Freeman–Hixon Deed did not reserve any mineral interest in the Closner Lots to
Paul Freeman Senior. Accordingly, this Court need not consider whether the judgment could be upheld based on res judicata.
See Tex.R.App. P. 47.1; State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex.1993). Paul's third issue is overruled.

IV.

[9] [10] In his fourth issue, Paul contends that the trial court erred by failing to grant his motion for summary judgment
against the intervenors based on limitations. According to Paul, the intervenors or their predecessors-in-title have been on notice
of his grandfather's claim of ownership of the minerals since at least 1949 and are therefore barred by the statute of limitations
from disputing ownership. We construe this as a claim of adverse possession, as the only authority relied upon by Paul is Natural
Gas Pipeline Co. of America v. Pool, 124 S.W.3d 188, 192–93 (Tex.2003), a case involving a claim of adverse possession
of a mineral estate. Paul's motion *657 for summary judgment alleges that his grandfather “long continued possession and
exercise of dominion as an owner of one-half of the mineral in the subject lands”; however, the evidence attached to the motion

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 6
Freeman v. Stephens Production Co., 171 S.W.3d 651 (2005)
162 Oil & Gas Rep. 563

is insufficient evidence to prove this assertion. 5 Because actual possession of the minerals must occur, see id., the trial court
did not err by denying Paul's motion for summary judgment based on adverse possession. Paul's fourth issue is overruled.

5 Attached to the motion are an inventory of the estate of Pat Freeman and an affidavit by Paul, which discusses Paul's knowledge
regarding the inventory. The evidence does not prove or purport to prove that either Paul, his grandfather, or any of Paul's other
predecessors-in-interest actually possessed the mineral estate for the requisite statutory period of time.

V.

As it relates to the claims between Stephens, Paul, and the intervenors, the judgment of the trial court is reversed and the case
is remanded for further proceedings consistent with this opinion. The remainder of the judgment, specifically, the dismissal
with prejudice of the claims between Stephens, the other defendants, and intervenors, has not been challenged in this appeal
and is therefore affirmed. See Tex.R.App. P. 44.1(b).

All Citations

171 S.W.3d 651, 162 Oil & Gas Rep. 563

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 7
 The Oil&Gas Asset I
CLEARINGHOUSE I
P.O. Box 67l787 Houston, Texas 77267-l787
7ll/87J.4600 Fax 7ll/87l-IJOS5

Lot# Description Buyer Total I
164.13 FI.SXEN F-44 1
BPO W1 .135877 I-PO WI
TX
.136817
ANDREWS
BOPD
I
BPO NRI .110400 APO NRI .110400 MCFD
BPO ORRI .000000 APO ORR\
OPER'-TOR: M W PETROLEUM CORP
DEPTH UMITI.TION
.000000 MIDLAND FARMS
SEllER: EL PI-SO PRODUcnON I
164.14 FI.SKfN N 1
8PO W1
BPO NRI
.136817
.110400
APO WI
I-PO NRI
TX
.1 35877
.110400
I-N DREWS
BOPD
MCFD
I
BPO ORR! .000000 APO ORRI .000000 MIDLAND FARMS
OPERI.TOR: M W PETIIOLaJM CORP
DEI'TH LMITI.TION
SEU.ER: EL PASO PROOUCTlON
I
165.1 UNIVERSm' E
lll'O WI
BPO NRI
.062732
.043257
APO Wl
APO NRI
TX
.062732
.043267
ANDREWS
BOPD
MCFO
15.00
4.00
I
BPO ORRI .000000 APO ORR\ .000000 HUTEX
OPERI.TOR: AA1ERICAN EXPt
WEll80RE ONLY
SELLER: SAMSON RESOURCES COMPANY
I
166.1 NEWTON 1·'-
BPO W1
BPO NRI
.000000
.000000
I-PO WI
APO NRI
TX
.000000
.000000
BORDEN
BOPD
MCFD
12.00
.00
I
BPO ORRI .094492 APO ORRI .094492 DUNIGAN
OPeRATOR: PERMIAN RESOURCES
ROYALTY IH'TEREST
SELLER: ARCO
I
157.1 BUCHANAN 1
BPO W1
BPO NRI
.250000
.203333
APOWI
MONRI
TX
.250000
.203333
BRAZOS
BOPD
MCFO
14.00
28.00
I
BPO ORRI .000000 APO ORR\ .000000 KURTEN WOODBINE

157.2
OPERATOR: BUTTES RESOURCES CO

GIBBS BROS 1
sa.L!R: SOUTHLAND ROY1-LTV

TX BRAZOS
I
BPO WI
BPO NRI
8PO ORRI
.250000
.188125
.000000
APOWI
APO NRI
I-PO ORRI
.250000
.198125
.000000
BOPD
MCFD
4.00
9.00
KURTEN WOODBINE
~ § I
OPERATOR: BUTTES RESOURCES CO SEL.LER: SOUTiiLAND ROYALTY
""'- /<]'
I
157.3 WILSON JAMES C 0 TX BRI-ZOS
BPO WI
BPO NRI
Bp0 ORAl
.250000
.203333
.000000
APO WI
APO NRI
I-PO ORRI
.250000
.203333
.000000
BOPD
MCFO
3.00
SHUT-IN
KURTEN WOODBINE
~fY]
I
OPERATOR: BUTTES RESOUflCES CO SELLER: SOUTHLAND ROYALTY

151.4 WILSON JAMES 0 UNIT 2 TX BRAZOS
BPO WI .000000 APO wt .250000 BOPD 11.00

I
BPO NRI .000000 Ap0 NRI .2.03333 MCFD 12.00
BPO ORRI .000000 APO ORRI .000000 KURTEN WOODBINE
OP£RATOR: 8UTTES RESOURCES CO SELlER: SOUTHLAND ROYALTY
APO ONLY

1lQ cllt8lag hi PfO'Iided for oonvenlence purpos• only. AU Information Is providod wfthout warranty a to ecouracy or completenass.
I
Bidders shouk:l verify llllinform.tlon and the condition of proper1fe• being aold prior to biddtng.

1401 I
1497 BURCOP00001606
I The OiJ&Gas Asset
I CLEARINGHOUSE
P.O. Box67!787 Houston, TcXlLI77267-1787
71l/87H600 Fax 713/873-0055
I Lot# Description Buyer Total

I t. t POR'TER-MA Y-FOWLER AL FAYETTE

~
BPOwt .112271 APO wt .097427 BOPO .oo
8PO NRI .098103 APO NRI .083783 MCfD 100.00

I 8PO ORR! .000000 APO ORAl
OPERATOR: SAMSON RESOURCES
.000000 t2 t4S-t3W
SEU£11: SAMSON RESOURCES COMPANY
"Q\

I 2.1 AUS'TlN W AIt ·9 •
BPO wt
8PO NRI
.103847
.087848
APO wt
APO NRI
AL
.103647
.087848
LAMAR
BOPO
MCFD
.oo
SHUT-IN
BPO ORR! .000000 APO ORAl .000000 9 135-tfiW

I OPERATOR: MERIDIAN OIL SERVICES
WELLBORE ONLY
SEU.!R: SAMSON RESOURCES COMPANY

2.2 AUSTIN W Al&-1 3 AL LAMAR

I BPO wt
8PO NRI
.051508
.042611
BPO ORRI .000000
APO wt
APO NRI
APO ORRI .000000
.051608
.04251,
BOPD
MCFD
9 t4S-t5W
.oo
SHUT·IN

OPERATOR: BRIDGE OIL COMPANY SELLER: SAMSON RESOURCES COMPANY

I 2.3
OVERPRODUCED BY 1,502 MCF AS OF 10/93

BONZELL MCGEE t:l-8 AL LAMAR
BPO wt ,C>4t 887 APO Wl .041667 BOPD .oo
I BPO NRI .036319
BPO ORRI .000000
APO NRI
APO ORRI
OPERATOR: PRUET PRODUCTION
.036319
.000000
MCFD
13 68-16W
190.00

SEUER: SAMSON RESOURCES COMPANY
OVERPRODUCED BY 3,076 MCF AS OF 4194

I 3. t BROWN 11-9 AL LAMAR
BPO wt .637214 APOWI BOPD
.363641 .oo
I BPO NRI .481217
BPO ORRI .000000
APO NRI
APO ORAl .000000
OPERATOR: SAMSON RESOURCES
MCFD
.313128
1 15S.14W
95.00

SEUER: SAMSON RESOURCES COMPANY
OPERATED PROPERTY, WELLBORE ONLY

I 4.1 cu C.03-09 AL MOBILE
BPO wt .060000 APO wt .060000 BOPD 5.80
.oo
I BPO NRI .037600 APO NRI .037500 MCFD
BPO ORRJ .000000 APO ORRI .000000 3 1N-3W
OPERATOR: CITRONELLE UNIT MGR SELLER: ADVENT TRADING COMPANY

I •• t TALLEY UNIT 18-1
BPO wt .044384 APO WI
AR
.044384
,03883tl
COLUMBIA
BOPD 20.00
.oo
BPO NRI .038836 APO NRI MCFD
,000000
I
BPO ORRI .000000 A.PO ORRI 1 20S-22W
OPERATOR: PHIWPS PETROLEUM SEllER: SAMSON RESOURCES COMPANY

I
I TttJs catalog I• provided for convenience purpone only, Alllnfonnation le provided without wamtnty .. to .ocuracy or completeness.
Bidder- skould verify •II lnfon'Mtion and the condttlon of properdee be(ng eold prior to bidding.

I ill

1459 BURCOP00001567
I The Oil&Gas Asset
I CLEARINGHOUSE
P.O. Box 67\787 Houston, Texas 77267-1787
713/873-4600 Fax 713/873-0055
I Lot# Description Buyer Total

I 63.1 GEl& 11
BPO WI 1.000000 APOWI
OK
1.000000
BlAINE
BOPO 3.30
BPO NRI .805736 APO NRI .006736 MCfD 18.00

I BPO ORRI .802002
OPERATOR: MARATHON OIL
APO ORRI .802002 3318N-10W
SELLER: MARATHON OIL COMPANY
GAS NRI•.802081 DISBURSEMENT RESPONSIBIUTY, WEL1.BORE ONLY

I 84.1 GOULD 2~1
BPO WI .600000 APO WI
OK
.484375
BLAINE
BOPD .90
BPO NRI .393760 APO NRI .381387 MCFD 16.00

I BPO ORRI .000000 APO ORRI
OPERATOR: WARD PETROLEUM
WB.J..BORE ONLY, OVERPRODUCED BY
.000000 20 17N-13W
SELLER: MAR4THON OIL COMPANY
10,423 MCF AS OF 1194

I 66.1 HELMER 1211-1
BPO WI .045747 APO WI
OK
.045747
BLAINE
SCPO .00
BPO NRI .038684 APO NRI .038664 MCFD 119.00

I BPO ORRI .000000 APO ORRI
OPERATOR: LOUIS DREYFUS NAT GAS
LEASEHOLD, POSSIBlE BEHIND PIPE
.000000 26 18N-11W
SELLER: MARATHON OIL COMPANY

I 65.2 AUDREY 11-28
BPOWI
BPO NRI
.000000
.000000
BPO ORRI .oo55n
APO WI
APO NRI
APO ORRI
OK
.000000
.000000
.0056n
BOPO
MCFD
BLAINE

26 18N-11W
3.10
79.00

I OPERATOR: LOUIS DREYFUS NAT GAS
LEASEHOLD
SELLER: MARATHON OIL COMPANY

I 66.1 JANTZEN 34-1
BPO WI
BPO NRI
.260000
.206078
BPO ORRS .000000
APOWI
APO NRI
APO ORRI
OK
.260000
.206078
.000000
BLAINE
BOPO
MCFD
34 19N-10W
.00
96.00

I
OPERATOR: PETROLEUM RESERVE SELLER: MARATHON OIL COMPANY
WB.J..BORE ONLY

86.2 JAI>lTZEN 34-2 OK BLAINE
.408273 APO WI .263908 BOPO ,00
I
BPOWI
BPO NRI .341820 APO NRI .208252 MCFD 1.00
BPO ORRI .000000 APO ORRI .000000 34 19N-10W
OPERATOR: PETROLEUM RESERVE SELLER: MARATHON OIL COMPANY
WB.LBORE ONLY

I 67.1 KARBER FARMS It OK BLAINE
BPO WI .988760 APO WI .87181li BOPO .so
I BPO NRI .maoo
8PC ORRJ .000000
APO NRI
APO ORRI
OPERATOR: MARATHON OIL
.696363
.000000
MCFD
28 19N-12W
SELLER: MARATHON OIL COMPANY
51.00

DISBURSEMENT RESPONSIBIUTY, WEUBORE ONLY, OVERPRODUCED BY 1,708

I MCF ASOF 4~

I This catliog ill provided for oonvenlence purpo1" only. Alllnfonnadon 11 provided without watnlnty a to 1oouraoy or completenet~•.
Biddetl 1hould verify all Information and th1 conclhion of propertie• being •old prior ta bidding.

I 1171

1475 BURCOP00001 583