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Volume 76, Issue 3

 Complete Index of Volume 76, Issue 3 


Articles

Closing the Deal in the Bayou State: The Purchase and Sale of Producing Oil and Gas Properties

Patrick S. Ottinger

This Article presents a broad overview of the most important rules and legal issues surrounding the purchase and sale of producing properties in Louisiana. Part I considers the fundamentals of the purchase and sale of producing properties, including the nature of producing properties and the factors that motivate a party to sell its producing mineral leases. As the Article examines this topic in the Bayou State, attention is given to the sources of laws. Part II examines pertinent provisions of the Louisiana Mineral Code as they relate to the assignment of mineral leases. Part III expands the examination of applicable law to include the relevant provisions of the Louisiana Civil Code, particularly the nominate contract of sale. As the purchase and sale of producing oil and gas properties is to be evidenced by a written agreement, Part IV takes up the contractual provisions typically encountered in purchase and sale agreements. This Part also explains in detail the steps taken in anticipation of a closing. Finally, the Article considers the range of remedies available to the parties in the regrettable circumstance that a transaction is not consummated as contemplated by the PSA.


Employing a Reservoir Community Analysis to Define and Marshal Correlative Rights in the Oil and Gas Reservoir

David E. Pierce

The quest for a more complete definition of property in oil and gas begins with the foundational concepts created by the ad coelum doctrine and the rule of capture, followed by qualifying principles created by correlative rights and conservation regulation. The contours of correlative rights are explored in the context of subsurface boundary disputes that require a precise delineation of rights in oil and gas reservoirs lacking physical boundaries. The study is completed with the author’s “reservoir community” analysis that defines and marshals each owner’s positive and negative correlative rights in a reservoir.


Fracking in Louisiana: The Missing Process/Land Use Distinction in State Preemption and Opportunities for Local Participation

Alex Ritchie

Even strong home rule must yield to significant state interests that create real conflicts. State interests in uniformity, the prevention of waste, the protection of correlative rights, and implications to the rule of capture make limitations on local authority to regulate oil and gas operations necessary. But the spirit of the movement that led to home rule suggests that local governments should have a meaningful voice in matters that impact their local communities. A meaningful local voice not only requires a procedural right to raise concerns, but also requires the state to listen and acknowledge those concerns and to address reasonable concerns when appropriate. Certainly, the state should not be obligated to address all local concerns in a substantive manner before issuing a permit. The state would not be overly burdened, however, by transparently conveying to the public how the state addresses local concerns that it decides to address and its reasons for not addressing other concerns that have been raised, particularly when at least some local concerns may be addressed in a balanced manner that preserves the state’s interest in the production of its resources.


Minimizing Counterparty Bankruptcy Risk

Mitchell E. Ayer

Part I of this Article discusses the treatment of claims in bankruptcy proceedings generally as well as the significance of a creditor’s unsecured claims in particular, providing background information for discussions of the consequences of bankruptcy for specific contractual relationships. Parts II through VI discuss the consequences of bankruptcy for parties to sales contracts for oil and gas production, joint operating agreements, oil and gas leases, purchase and sale agreements, and farmout agreements, respectively, as well as furnish relevant, practical strategies. Part VII discusses a final strategy that can be applied to various types of relationships—“Bad Boy” guaranties. This Article concludes with a summary of advice for protecting a party to oil and gas contracts from the consequences of counterparty credit risk.


Comments

Saving Sportsman’s Paradise: Article 450 and Declaring Ownership of Submerged Lands in Louisiana

Jacques Mestayer

Part I of this Comment introduces the growing controversy involving submerged coastal lands in Louisiana and illustrates the unique significance that these lands offer to the people of Louisiana. Part II focuses on the origin and historical treatment of submerged lands in Louisiana, specifically concentrating on the scope of Louisiana Civil Code article 450 and the jurisprudence dealing with its categories, namely “natural navigable water bottoms,” “arms of the sea,” and “seashore.” Part III recognizes that the State owns submerged lands that became natural navigable water bottoms, sea bottoms, and seashore prior to alienation by the State.[1] Further, Part III argues that no sound reason exists to distinguish natural navigable water bottoms, sea bottoms, and seashore that existed before state alienation and those that came into existence following state alienation. Finally, Part IV contemplates potential remedies to this arbitrary distinction regarding submerged lands and then proposes a legislative amendment that will clearly assert the State’s ownership over those submerged lands, thereby ensuring that private landowners shall no longer reap fruits lawfully belonging to the State of Louisiana.

Offer at Your Own Risk: Why Louisiana Employers Who Withdraw an Offer of Employment May Find Themselves Liable Under Civil Code Article 1967

Taylor Crousillac

In Part I, this Comment gives an overview of the approaches and solutions that various American jurisdictions have taken toward handling withdrawn offers of employment, then turns its focus to the Louisiana jurisprudence regarding reliance on an offer of at-will employment. Part II outlines Louisiana’s at-will employment doctrine and also discusses the evolution of detrimental reliance as a basis for recovery in Louisiana. Part II concludes with a discussion of the various aspects of Louisiana law that make reliance on an offer of employment even more reasonable in Louisiana than in common law states. Part III highlights the problems with the failure of Louisiana courts to apply detrimental reliance in the context of a withdrawn offer of employment. Finally, Part IV applies a solution to Bob’s problem that removes the categorical bar of recovery for claims of detrimental reliance.


Legislatively Capping an Energy Lawsuit: Problems Posed by Stripping a Pending Suit Against Ninety-Seven Oil and Gas Companies

Taylor Boudreaux

This Comment suggests that Act 544, though an unusual law, is both legally sound and appropriate. The law has legislative precedent, backed by jurisprudential support, which leads to the conclusion that Act 544 is constitutional. The legislature did not overstep its authority simply because a pending suit was affected, nor did the law improperly violate the flood protection authority’s constitutional protections. The SLFPA-E’s particular constitutional and statutory origins make the authority susceptible to this type of legislative action. Further, the entity’s actual purpose within the state’s regulatory scheme supports the conclusion that the legislature acted appropriately despite counterbalancing policy concerns.

Part I of this Comment sets out facts surrounding the board’s lawsuit and the legislature’s response, and provides context by comparing Act 544 to similar laws. Part II describes and analyzes the legality of retroactive laws that apply to a particular target involved in pending litigation, ultimately concluding that Act 544 does not violate any constitutional prohibitions. Lastly, Part III argues that, in light of the alternatives to this legislative response, both Act 544’s means and its end are legitimate. A survey of this lawsuit’s role within the established regulatory framework surrounding the oil and gas industry reveals that Act 544 was the preferred solution when considering the destructive alternatives.

Staying Out of Treble: A Comprehensive Civilian Approach to the Louisiana Mineral Code Provisions on Damages for Unpaid Royalties

Nathan Telep

This Comment seeks to end the debate over the interpretation of Mineral Code articles 138.1, 139, 140, and 212.23 by showing that treble damages are not appropriate for a lessee’s failure to pay royalties. Part I gives a brief overview of the applicable laws regulating the oil and gas industry, including a short history of how the Louisiana Supreme Court molded the body of mineral law through its decisions, which were later codified in the Louisiana Mineral Code. Part II uses civilian interpretive methods to illustrate the two conflicting interpretations of the Mineral Code articles. Part III concludes that the Mineral Code provides for double damages and proposes two possible legislative actions to make this abundantly clear.