Lewis v. Enerquest Oil & Gas, LLC

Plaintiffs own mineral interests in Chalybeat Springs and granted 21 oil and gas leases based on those interests. EnerQuest and BP America are the lessees. The property interests in Chalybeat, including the leases at issue, are subject to a Unit Agreement that establishes how the oil and gas extracted from certain formations will be divided and provides for a unit operator with the exclusive right to develop the oil and gas resources described in the Unit Agreement. In the late 1990s, PetroQuest became the operator of the Chalybeat Unit. Unhappy with the level of extraction, lessors filed suit against EnerQuest and BP, seeking partial cancellation of the oil and gas leases on the ground that EnerQuest and BP breached implied covenants in the leases to develop the oil and gas minerals. The district court granted the companies’ motion for summary judgment, reasoning that the lessors had not provided EnerQuest and BP with required notice and opportunity to cure a breach. The Eighth Circuit affirmed, rejecting an argument that the plaintiffs’ earlier effort to dissolve the Chalybeat Unit constituted notice. View "Lewis v. Enerquest Oil & Gas, LLC" on Justia Law