Newsletter DAPL INSIDE THIS ISSUE: UPCOMING EVENTS. DAPL Sponsorship Form 3. Metroplex Energy Tennis Tournament 4. Top 10 Oil and Gas Cases Part III 5

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1 February DAPL Newsletter INSIDE THIS ISSUE: DAPL Sponsorship Form 3 Metroplex Energy Tennis Tournament 4 UPCOMING EVENTS DAPL UPCOMING EVENTS: February 13th 2018 February Educational Luncheon Dallas, TX Top 10 Oil and Gas Cases Part III 5 DAPL New Members 8 January 2018 DAPL Happy Hour at Public School ilandman Announcement 10 AAPL Education Calendar 13 DEAR MEMBERS: During the year we will continue to provide a variety of articles within our newsletter that we believe will benefit our membership. I invite any of you to contact the DAPL Publications Director if you have an article, paper, or topic you wish to submit for potential inclusion in future DAPL publications.

2 DAPL Board of Directors PRESIDENT DJ Cherry PetroVen, Inc. (972) ST VP (GOLF TOURNAMENT) Matt McCauley, CPL Comstock Resources, Inc. (972) ND VP (MEMBERSHIP) Kerri K. Sweet, CPL Northern Trust (972) RD VP (WEBSITE) Ben Boyer, RPL Millennial Energy Group (214) SERGEANT-AT-ARMS Andrew Swann, RPL Scout Energy Partners (972) TREASURER Alicia Surratt JP Morgan (214) SECRETARY Matt Rettke, CPL Merit Energy (972) PUBLICATIONS DIRECTOR Bennett Neale, CPL HERV Oil, LLC (214) EDUCATION DIRECTOR Pamela Sewak, CPL The Flying Landman, LLC (214) NGL & MEMBERSHIP CO-DIRECTOR Heath J. Burnett Northern Trust (972) ADVERTISING DIRECTOR Iris Bradey, CPL/ESA Northern Trust (972) AAPL DIRECTOR & IMMEDIATE PAST PRESIDENT Jerry D. Padilla, CPL Land Management Partners (806) MARK YOUR CALENDARS 2018 February Educational Luncheon Tuesday, February 13, :30 AM to 1:00 PM Maggiano s at North Park 205 N. Park Center Dallas, TX

3 DAPL EVENT SPONSHIP FORM (A) Website Title Sponsor Eblast Newsletter $ (B) Title Sponsor Eblast Newsletter $ (C) Eblast Newsletter $ SPONSOR/COMPANY NAME: CONTACT NAME PHONE NUMBER SPONSORSHIP OPTION PLEASE MAIL SPONSORSHIP FORM AND CHECK TO: P.O. BOX , DALLAS TEXAS Please Andrew Swann and Ben Boyer your company logo in JEPG or PNG format. 3

4 T E N N METROPLEX I S ENERGY T O U R N A M E N T Please join us for the 18th Annual Metroplex Energy Tennis Tournament March 22-March 24, 2018 Optional Thursday Evening Networking Scramble at: T-BarM Racquet Club 6060 Dilbeck Lane, Dallas Texas For all the details, check out the website at: METT is recognized by the IRS as a non-profit organization donation to be made to the Texas Scottish Rite Hospital for Children N. O Connor, Suite 200 Irving, TX Phone: Brittany.Liang@ pxd.com 4

5 TOP 10 TEXAS OIL AND GAS CASES 2017 PART 3 This is a continuation of the three-part series that began last month discussing significant oil and gas decisions from state courts in Texas during It is not intended to be a strict legal analysis, but rather a useful guide for landmen in their daily work. Therefore, a complete discussion of all legal analyses contained in the decisions are not always included. PART III By Chance K. Decker and Ryan Sears, Gray Reed & McGraw 1. Samson Exploration, LLC v. T.S. Reed Properties, Inc., et al, No (Tex. June 23, 2017). This case involved a dispute over a mistaken, overlapping pooling designation. In 2001, Samson created a gas unit covering certain depths in East Texas. Samson then drilled and obtained production from two wells in the unit. The first well was produced at approximately 12,300 feet (Well No. 1). The second well produced at approximately 13,000 feet (Well No. 2). Samson then unilaterally amended its unit designation to change the unit s depth to 12,400 feet and below. Thus, the amendment had the effect of removing Well No. 1 from the pooling unit. After amending the first pooling unit, Samson filed a second unit designation covering much of the same acreage as the first. This second unit covered production occur[ing] below a depth of 12,000 feet. Due to an error by Samson s lawyer, this second unit designation did not include a depth limitation (it should have included all depths below 12,000 feet, and above 12,400 feet). Thus, the second unit overlapped with the first unit at depths below 12,400 feet. And, because Well No. 2 was producing at approximately 13,000 feet, it was within the boundaries of both pooling units. Samson claimed its failure to include a depth limitation on the second pooling unit was an error, and refused to pay royalties from Well No. 2 to the owners in the second pooling unit at depths between 12,000 and 12,400 feet (the Overlapping Unit Owners ). Not surprisingly, the Overlapping Unit Owners filed suit. The Texas Supreme Court rejected all three of Samson s arguments. First, the Court rejected Samson s scrivenor s error argument, holding that such an error only excuses a party from the express terms of their contract if it evidences a mutual mistake in documenting the parties agreement. Though Samson presented evidence that Samson made a mistake by failing to include a depth limitation in the second pooling designation, it presented no evidence the Overlapping Unit Owners made a mistake. Next, the Court rejected Samson s argument that a pooling was a cross-conveyance and the Overlapping Unit Owners had nothing to convey in the second pooling. The Court explained that although pooling designations do affect a cross-conveyance of title, oil and gas leases and pooling designations are subject to basic contract law in addition to the law of real property. Thus, the fact that a cross-conveyance of title may fail does not excuse an operator from paying royalties in accordance with the express contractual terms of their mineral leases pooling clauses. Because the express terms of the Overlapping Unit Owners leases required Samson to pay them on Well No. 2, Samson was required to do so, cross-conveyance failures notwithstanding. Finally, the Court held Samson s claim for reimbursement from payments already made to other royalty owners was barred by the Voluntary Payment Rule. That rule provides [M]oney voluntarily paid on a claim of right, with full knowledge of all the facts, in the absence of fraud, deception, duress, or compulsion, cannot be recovered back merely because the party at the time of payment was ignorant of or mistook the law as to his liability. Accordingly, the unit owners at depths below 12,400 feet who had been paid a full royalty on Well No. 2 were allowed to keep the overpayments, and Samson was forced to pay 5

6 the Overlapping Unit Owners out of its working interest revenues. 2. Apache Deepwater, LLC v. Double Eagle Development, LLC, No CV, 2017 WL (Tex. App. El Paso Aug. 23, 2017). This case analyzed whether a retained acreage clause provided for rolling terminations after the expiration of a lease s primary term or snapshot termination at the expiration of a lease s primary term. In 1975, Apache s predecessor (Apache) leased a 640-acre tract in Reagan County. The habendum clause provided a four year primary term and a secondary term for as long thereafter as oil, gas, or other minerals or leased substances or any of them are produced from the leased premises.... The lease defined the leased premises as the entire 640-acre tract. Apache divided the lease into four 160- acre proration units. Each unit had one producing well within its boundaries. At the end of the lease s primary term, all four wells were producing. However, in the ensuing years, three of the four wells ceased production. In 2012, the property owner leased the property within the three non-producing proration units to Double Eagle. Double Eagle then demanded Apache to execute releases for the property in the non-producing units. Apache refused, contending production from the well in the producing unit held the entire 640-acre tract. Double Eagle then sued for a declaration the lease expired within the non-producing units. The crux of the dispute was the interplay between the lease s habendum and retained acreage clauses. The lease s retained acreage clause provided 6 Notwithstanding anything to the contrary in the foregoing, Lessee covenants to release this lease after the primary term except as to each producing well on said lease, operations for which were commenced prior to or at the end of the primary term and the proration units as may be allocated to said wells under the rules and regulations of the Railroad Commission of Texas or 160 acres, whichever is greater... Apache contended this retained acreage clause provided for snapshot termination. That is, Apache contended this clause required a single snapshot-in-time evaluation as of the end of the lease s primary term, and because each of the four proration units had a producing well in it on that date, the termination obligation in the retained acreage clause did not apply. Conversely, Double Eagle contended the retained acreage clause provided for rolling terminations. That is, Double Eagle contended that following the primary term, the lease would expire as to any proration unit that did not have a producing well within it at any time (to the extent not saved by the continuous operations clause). The El Paso Court of Appeals sided with Apache. For the retained acreage clause to modify the habendum clause and provide for rolling proration unit terminations during the lease s secondary term, it had to contain clear, precise, and unequivocal language expressing a clear intent to do so. The court held the lease s retained acreage clause did not contain such language. Instead, the court held the retained acreage clause provided that after the end of the primary term, the lessor could insist that any part of the leasehold that was not within a proration unit which had either a producing well or a well under development that later came into production at the end of the lease s primary term, must be released. The language used limited the lessor s right to demand a release after the primary term to acreage not within a proration unit with a producing well or continuous operations leading to a producing well prior to or at the end of the primary term. Thus, the court held the lease did not contain clear, precise, and unequivocal language providing for rolling terminations, and that production from any well within the leased tract would hold the lease on the entire tract. 3. Enterprise Products Partners, L.P. and Enterprise Products Operating, L.L.C. v. Energy Transfer Partners, L.P. and Energy Transfer Fuel, L.P., No , 2017 WL (Tex. App. Dallas July 18, 2017). In this case, the Dallas Court of Appeals reversed one of the largest jury verdicts in Texas history. In 2011, Enterprise approached Energy Transfer Partners, L.P. and Energy Transfer Fuel, L.P. ( ETP ) to discuss a project to retrofit, and eventually to build a crude oil pipeline from Cushing, Oklahoma to Houston, Texas. ETP agreed to work with Enterprise to determine the viability of the project. The parties called the proposed pipeline the Double E Pipeline.

7 Enterprise and ETP then entered into a series of preliminary agreements, including a Letter Agreement and Term Sheet. The Letter Agreement stated: Neither this letter nor the JV Term Sheet create any binding or enforceable obligations between the Parties and... no binding or enforceable obligations shall exist between the Parties with respect to the Transaction unless and until the Parties have received their respective board approvals and definitive agreements memorializing the terms and conditions of the Transaction have been negotiated, executed and delivered by both of the Parties. Enterprise and ETP then attempted to secure enough shipping commitments to ensure the Double E Pipeline s viability. They agreed they needed commitments for at least 250,000 barrels per day for ten years to go forward with the project. At the same time, Enterprise contacted Enbridge (US) Inc. to discuss an alternative pipeline. Enbridge already operated a pipeline system from Alberta, Canada to Cushing, and was considering extending its pipelines from Cushing to Houston. Enterprise told Enbridge that if the Double E open season did not garner sufficient shipping commitments, Enterprise was interested in a Cushing-to-Houston pipeline with Enbridge. The Double E open season closed without sufficient shipping commitments, and Enterprise terminated its participation in the project. Enterprise and Enbridge then agreed to work together on the alternative Cushing-to-Houston pipeline. Enterprise and Enbridge received sufficient shipping commitments, and announced plans for their pipeline soon after. ETP sued Enterprise for breach of joint enterprise and breach of fiduciary duty, among other claims. ETP alleged it and Enterprise entered into a partnership to market and pursue a pipeline from Cushing, Oklahoma to the Texas Gulf Coast and that Enterprise usurped a business opportunity of that partnership by joining with Enbridge on the alternative pipeline. ETP claimed damages equal to the present value of the profits Enterprise would receive during the life of its pipeline with Enbridge. After a four-week trial, the jury found for ETP and the trial court awarded ETP over $500 million in damages. Om appeal, Enterprise argued ETP s claims were barred by the failure of conditions precedent. That is, Enterprise argued that before a partnership or joint venture could be formed: (1) both parties boards of directors had to approve the joint venture, and (2) the parties had to execute and deliver definitive joint venture agreements. Because these things never happened, Enterprise agued the conditions precedent to formation of a joint venture were never fulfilled, and ETP s claims should have been dismissed as a matter of law. ETP did not deny the conditions precedent did not occur, but argued that whether a partnership was formed is controlled by a five-factor test set out in the Texas Business Organizations Code, which includes, amongst other factors, an expression of an intent to be partners in [a] business. Thus, ETP argued the unfulfilled conditions precedent did not preclude the formation of the partnership because the Letter Agreement, other preliminary agreements, and the parties conduct were evidence of an expression of an intent to be partners in a business. The Dallas Court of Appeals disagreed. The court held the factors set forth in the Code are not exclusive and must be supplemented by the principles of law and equity. One of those principles of law is the law of conditions precedent. And, a condition precedent is an event that must happen or be performed before a right can accrue to enforce an obligation. Because the conditions precedent had not occurred, and absent a jury finding of waiver, ETP could not recover on its claims, and take-nothing judgment in favor of Enterprise. ABOUT THE AUTHORS Chance Decker, a litigation partner at Gray Reed & McGraw in Houston, focuses his practice on commercial, oil and gas and employment litigation. He can be reached at cdecker@grayreed.com. Ryan Sears, an energy partner at Gray Reed & McGraw in Dallas, focuses his practice on the representation of clients in the energy industry, primarily on upstream and midstream transactions. He can be reached at rsears@grayreed.com. 7

8 MARK YOUR CALENDARS th Annual Metroplex Energy Tennis Tournament (METT) benefitting TSRH Thursday, March 22, :30 PM Thursday to 4:00 PM Saturday T Bar M Racquet Club 6060 Dilbeck Lane Dallas, TX DAPL WELCOMES NEW MEMBERS Julie Townsend Active Teal Natural Resources 8235 Douglas Ave. Dallas, TX Cell jetownsend87@gmail.com Luke Walker, RPL Active Aaron Resources 2807 Allen Street, Ste. 414 Dallas, TX luke.walker@aaron-resources.com Ben Zieman, RL Active Wilco Properties 4809 Cole Avenue, Ste. 107 Dallas, TX bzieman@wilco-inc.com Peta Maree Pogue, RPL Active Murchison Oil & Gas Inc Dallas Parkway Plano, TX pmpogue@jdmii.com Brian Tolson, RPL Active Norwood Land Services, LLC 115 W. 7th Street, #1312 Ft Worth, TX btolson@norwoodland.com 8

9 THANKS TO OUR GRACIOUS SPONSORS AND EVERYONE THAT ATTENDED THE JANUARY 2018 DAPL HAPPY HOUR AT PUBLIC SCHOOL 972!

10 FOR IMMEDIATE RELEASE ilandman Expands Sales Team With Wilson Lafayette, LA February 1, 2018 Lafayette-based oil and gas lease management software company ilandman welcomes Tom Wilson to the national sales team as Mid-Continent Regional Sales Executive based in Dallas, TX. A native of Camp Point, Illinois, Tom graduated from Tri-State State Baptist College in Walls, Mississippi before moving to Texas in Over the next seven years, Tom held operations and sales positions of increasing responsibility, from overseeing field technology services to in-house web application development and more. In 2014 Wilson made the switch from field software as a service (SaaS) to oil and gas document and records management SaaS solutions with Wisconsin-based TAB Products. Before joining ilandman, he specialized in accounts payable invoice automation software sales in the US and Canada for Yooz, Inc. Tom is married to wife Melissa and has three sons Layton, Landon, and Lance. He enjoys traveling, hunting, fishing, football, baseball, and science fiction. ilandman President, Tim Supple, explains, Tom brings an abundance of technology expertise and experience to the ilandman team. We are very pleased to add another solid sales professional to the company as we continue to grow and develop our offerings. About ilandman: ilandman is the only online, real-time, tract and formation-based lease management software for exploration and production companies. The company has offices in Lafayette, Houston, and Dallas. Contact: Adam Chapman Marketing Director, ilandman achapman@ilandman.com

11 YOUR INDUSTRY IS OUR INDUSTRY Gray Reed & McGraw is equipped to provide legal counsel to a broad range of clients in the ever-evolving energy industry. In addition to acquisitions, divestitures, mergers, energy finance, litigation, restructuring and more, Gray Reed & McGraw s title examination practice covers onshore properties in 10 states: Colorado Louisiana Montana New Mexico North Dakota Ohio Oklahoma Texas Utah Wyoming When you think about it, our proven experience in every facet of your industry makes it our industry too. CONTACT HOUSTON DALLAS Paul Yale Philip Jordan pyale@grayreed.com pjordan@grayreed.com grayreed.com 11

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13 2018 AAPL Education Calendar 2/5/2018 2/9/ NAPE SUMMIT Global Business Conference Houston, TX 7.00 CEU 2/6/2018 Comparative Law Review Houston, TX 7.00 CEU 2/13/2018 Due Diligence Seminar Oklahoma City, OK 5.00 CEU 2/22/2018 Held by Production and Royalty Issues (webinar available) Moon Township, PA 6.00 CEU 2/27/2018 Joint Operating Agreements Seminar Denver, CO 7.00 CEU 3/6/2018 3/9/2018 Oil and Gas Land Review, CPL/RPL Exam Oklahoma City, OK CEU / 1.00 ETHICS 3/10/2018 Field Landman Seminar LA Jolla, CA 2.00 CEU 3/14/2018 Joint Operating Agreements Seminar Grand Rapids, MI 7.00 CEU 3/15/2018 3/16/2018 Mining and Land Resources Institute (webinar available) Reno, NV CEU / 1.00 ETHICS 3/21/2018 Held by Production and Royalty Issues (webinar available) Midland, TX 6.00 CEU 4/5/2018 4/6/2018 Working Interest/ Net Revenue Interest Seminar Denver, CO 6.00 CEU 4/10/2018 4/12/2018 RMMLF Federal Offshore Oil and Gas Leasing Development New Orleans, LA 4/17/2018 Joint Operating Agreements Seminar Moon Township, PA 7.00 CEU 4/27/2018 Held by Production and Royalty Issues (webinar available) Denver, CO 6.00 CEU 5/3/2018 RMMLF Drafting and Negotiating the Modern Oil and Gas Lease Denver, CO 5/9/2018 5/10/2018 Joint Operating Agreements Seminar (two day) Houston, TX TBD CEU / 1.00 ETHICS CEU / 1.00 ETHICS 5/15/2018 5/18/2018 Oil and Gas Land Review, CPL/RPL Exam Pittsburgh, PA CEU / 1.00 ETHICS 6/20/2018 6/23/ Annual Meeting Denver, CO CEU 7/10/2018 7/13/2018 Oil and Gas Land Review, CPL/RPL Exam Denver, CO CEU / 1.00 ETHICS 9/11/2018 9/14/2018 Oil and Gas Land Review, CPL/RPL Exam Fort Worth, TX CEU / 1.00 ETHICS 11/6/ /9/2018 Oil and Gas Land Review, CPL/RPL Exam Houston, TX CEU / 1.00 ETHICS Note: Dates are subject to change, please check the AAPL Website at for event details. 13

14 Newsletter and Website Advertisement Guidelines DAPL News is the Monthly newsletter of the Dallas Association of Petroleum Landmen. s are circulated from September through June to more than 500 members throughout the Dallas / Fort Worth area. Website ads run continuously throughout the year. Advertisements must be submitted in static gif, jpg, png or pdf format (no animations, video or audio). Advertisements must conform to the dimensions specified on the chart below. Alternative text for website advertisements must not exceed 255 characters. Website advertisements will follow a URL of your choice in a new browser window. Color: CMYK color mode only Resolution: 300dpi 600dpi Send to for information about how to get started. Deadline for artwork changes and new advertisements is two weeks prior to newsletter distribution date which is typically around the 1 st of each month the newsletter is published. Advertisers are limited to one art work change per plan year. All ads and advertisers are subject to DAPL Board approval. Newsletters are distributed to its membership via each month from September through June, and Website ads run throughout the year. Advertising Plan years run from September 1st through June 30 th for Newsletters and September 1 st through August 30 th for Website ads. Artwork and payments are due by each year to ensure publication in the September newsletter. Website Advertisers will pay pro-rated amounts if renewed or commenced other than these times. For questions about advertising with DAPL, please contact (Advertising Director) at. Full Page 7.5 x 10.5 inches 3 MB $2,645 $1,465 $375 1/2 Page 7.5 x 5.25 inches 2MB $1,325 $775 $170 1/4 Page 3.75 x 5.25 inches 1MB $720 $400 $145 1/8 Page 3.75 x inches 1MB $400 $260 $115 Skyscraper 120 x 640 pixels 20k $610

15 DALLAS ASSOCIATION OF PETROLEUM LANDMEN P. O. Box , 2017 Membership Year Dallas, Texas January-December Please accept my application for membership in the Dallas Association of Petroleum Landmen under the classification of membership I have checked below. I agree to be governed by the Constitution and Bylaws of the Association, including the Code of Ethics. Check one of the following: ACTIVE Member ($150.00) Active membership in the association shall be available to professional Landmen whose responsibilities primarily involve the negotiation for the acquisition and/or divestiture of mineral rights, negotiation of business agreements that provide for the exploration, trading and management of oil, gas and all other mineral estates in land in a non-administrative or clerical manner. An applicant for active membership must have the sponsorship of two (2) Active Members of the Association who know the applicant. ASSOCIATE Member ($150.00) Associate membership in the Association shall be available to all persons who are directly, primarily and regularly engaged in performing services in the oil, gas and mineral industry. Associate Members shall have all the rights and privileges of Active Members except they may not hold office in the Association, vote in Association affairs or sponsor membership applications. An applicant for associate membership must have the sponsorship of two (2) Active Members of the Association who know the applicant. NON-RESIDENT Member ($40.00) Non-Resident membership in the Association shall be available at the discretion of the Board to individuals residing at least seventy-five (75) miles from downtown Dallas. Non-Resident Members will pay reduced annual dues as set by the Board. Non-Resident Members will have all the rights of Active Members except they may not hold office in the Association, vote in Association affairs or sponsor membership applications, and they will pay their share of any and all activities attended. An applicant for Non-Resident membership must be sponsored by two (2) Active Members of the Association or two (2) non-member CPL s. If the applicant is a CPL no sponsors are required. SENIOR Member ($40.00) Senior membership shall be optional to those members who have reached the age of sixty (60) years, and have actively engaged as a Petroleum Landman for at least twenty (20) years, and an Active member of the Association (DAPL) for a period of at least five (5) years. A senior member shall be relieved of his obligation of paying full annual dues, without prejudicing his/her fair rights as an Active member of the organization; provided however, a Senior member shall pay his/her share of ANY and ALL activities attended, plus reduced annual dues which shall be fixed from time to time by the Board of Directors. PLEASE PRINT C L E A R L Y Full Name (please print) Preferred First Name Company Name Nature of Business (i.e., Production, Exploration, Brokerage, etc.) Position Title Does this position, primarily involve Landman responsibilities (yes or no) Length of Experience as a Landman Length of total energy industry experience Office Address / / Street Zip Office Phone Cell Phone (optional) City All DAPL news/information is sent via . Address Are you a member of the AAPL? (yes/no) Please print legibly Birth date / / (for AAPL purposes) Are you a CPL? RPL? ESA? Universities Attended Other industry associations/societies of which you are a current member Date Signature of Applicant The following two (2) ACTIVE Members in good standing have signed below as sponsors of this applicant. Associate Members may not sponsor. Sponsor s Signature Print Name Legibly: Address: Phone Sponsor s Signature Print Name Legibly: Address: Phone MEMBERSHIP APPROVED: DATE THE BOARD OF DIRECTORS President THIS APPLICATION MUST BE SUBMITTED TO THE ABOVE ADDRESS WITH A CHECK MADE OUT TO DAPL FOR ANNUAL DUES IN THE AMOUNT OF $ IF ACTIVE OR ASSOCIATE, OR $40 IF NON-RESIDENT. 50% AFTER JUNE 1. RETURN TO ABOVE ADDRESS. NTAC:4UC-11 Your dues cover the costs associated with all DAPL publications, regular meetings and social functions. AMBASSADORS OF THE OIL INDUSTRY! LAND IS THE BASIS OF ALL WEALTH