Anderson Energy Corp. v. Dominion Okla. Tex. Exploration & Production, 2015 Tex. App. LEXIS 6659 (Tex.App. 4th Dist) June 30, 2015

The San Antonio court of appeals, in construing a 1977 form AAPL-610 Form of Joint Operating Agreement ruled that the defined term Contract Area included leases that had not been held when the JOA was executed but that were within hash marks on 8 attached maps that did not follow section lines, had corners in the middle of sections, and, in some instances, did not accurately depict the area in question. The court further ruled that such maps did not violate the statute of frauds.

William Perlman and Sun Gas entered into a letter agreement in April of 1980, which provided for Sun to acquire 50% of 37 wells and 62,000 net acres of leases in 4 counties. Over the years, title to the lands changed. While the court stated that Perlman’s interest was acquired by Dominion and Sun’s by Anderson, actually, both parties acquired the interest of both Perlman and Sun in certain areas. At issue was a summary judgment ruling that the term Contract Area, as defined in the JOA was limited to leases in effect when the JOA was signed. The court, citing the fact that the 8 maps called themselves “A.M.I.” held that the parties intended the meaning to include after-acquired leases. This decision is contrary to the Louisiana Supreme Court decision in Clovelly Oil Co., LLC v. Midstates Petroleum Co., LLC, 112 So.3d 187 (La. 2013), which the Court held that the defined term Contract Area was limited to leases and mineral interests held by the parties when the JOA was executed.

The 8 plats were copies of Midland Map Company maps that contained broad hash marks and stippling. Nothing indicated whether the inside of the hash marks, the outside of the hash marks or the stippling was the operative area. In addition, Anderson argued that the operative area was the inside of the hash marks that cut across section lines, had corners in the middle of sections and, in at least one case, was put together so that the lines did not follow the accurate sections. The court, citing an affidavit from one of Perlman’s employees who authored the maps, held that the plats did not violate the Statute of Frauds.

This is the first case of which we are aware in which a plat that does not conform to established section lines, without more, was held to not violate the Statute of Frauds. We represented Dominion in this case.