On October 28, 2020, PMBG partner Baldemar Garcia Jr. presented oral argument before the Texas Supreme Court. The case is BPX Operating Co., et al. v. Margaret Ann Strickhausen, and the issue is whether the acceptance of royalty checks from a wrongfully pooled unit will nonetheless effect a ratification that authorizes the pooling as a matter of law. The royalty owner objected in writing to the wrongful pooling in violation of her written lease terms for a well drilled on her property, and the operator then insisted on a written ratification before paying any royalties. When the royalty owner refused to sign a written ratification, the operator sent the royalty checks anyways. The royalty owner accepted the royalty checks and sued for breach of contract. Finding that the wrongful pooling was ratified as a matter of law, the La Salle County District Court granted summary judgment in favor of the operator, but the Fourth Court of Appeals reversed and remanded finding a genuine issue of material fact.
The operator filed a petition for review with the Texas Supreme Court, and upon its granting, Law 360 obtained comment from Baldemar Garcia Jr.: “I hope the Texas Supreme Court takes this opportunity to protect innocent landowners like Ms. Strickhausen from having their rightly owned royalties ransomed until they agree to the pooling of their property that was otherwise prohibited.” Law 360 then quoted Mr. Garcia’s oral argument to the Texas Supreme Court, “It was fair to assume that perhaps they [operators] had abandoned their insistence” on a written ratification, and that the royalty owner’s acceptance of royalty checks “was not inconsistent with her challenging the pooling.”
An opinion from the Texas Supreme Court is forthcoming.