Summary 2013 WY 32

Summary of Decision March 15, 2013

Justice Davis delivered the opinion for the Court. Affirmed in part. Reversed and remanded in part.

Case Name: EXXON MOBIL CORPORATION v. WYOMING OIL AND GAS CONSERVATION COMMISSION and DENBURY ONSHORE, LLC

Docket Number: S-12-0140

URL: http://www.courts.state.wy.us/Opinions.aspx

Appeal from the District Court of Natrona County, Honorable W. Thomas Sullins, Judge.

Representing Appellant: Walter F. Eggers, III, P.C., and Patrick R. Day, P.C., of Holland & Hart LLP, Cheyenne, Wyoming. Argument by Mr. Eggers, III.

Representing Appellee Wyoming Oil and Gas Conservation Commission: No appearance.

Representing Appellee Denbury Onshore, LLC: John A. Masterson and Alaina M. Stedillie of Rothgerber Johnson & Lyons LLP, Casper, Wyoming. Argument by Mr. Masterson.

Date of Decision: March 15, 2013

Facts: The Wyoming Oil and Gas Conservation Commission approved Cimarex Energy Company’s plan to reinject waste carbon dioxide and hydrogen sulfide into a producing natural gas formation in southwest Wyoming, over the objection of Appellant Exxon Mobil Corporation. Exxon unsuccessfully sought to overturn the Commission’s decision in the District Court for the Seventh Judicial District, and appealed the district court’s order affirming that decision to this Court.

Issues: 1. Did the Commission provide adequate findings of fact as to whether Cimarex’s plan to reinject carbon dioxide and hydrogen sulfide would result in waste of natural gas and improperly interfere with Exxon’s correlative rights?

2. Should the Commission have granted Exxon’s petition for a rehearing due to Denbury Onshore’s acquisition of Cimarex’s interests in the production unit where the proposed injection well would be located and its announcement of a plan to eventually sell carbon dioxide produced on that unit?

Holdings: Because the Commission’s decision would force this court to speculate as to its findings of both basic and ultimate facts, the Court reversed and remanded to the district court with directions that this case be remanded to the Commission for the purpose of making appropriate findings. However, the Court affirmed the Commission’s decision to deny Exxon’s petition for rehearing.

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court

[SPECIAL NOTE: This opinion uses the "Universal Citation." It was given an "official" citation when it was issued. You should use this citation whenever you cite the opinion, with a P.3d parallel citation. You will also note when you look at the opinion that all of the paragraphs are numbered. When you need to provide a pinpoint citation to a quote the universal portion of the citation will use that paragraph number. The pinpoint citation in the P.3d portion will need to have the reporter page number. If you need assistance in putting together a citation from this, or any future opinion using the Universal Citation form, please contact the Wyoming State Law Library and we will provide any needed assistance]

Summary 2012 WY 103

Summary of Decision July 31, 2012

Justice Golden delivered the opinion for the Court. Affirmed.

Case Name: BOWERS OIL AND GAS, INC., a Colorado corporation, v. DCP DOUGLAS, LLC, a Colorado limited liability company; and KINDER MORGAN OPERATING, L.P. “A”, a Delaware limited partnership

Docket Number: S-11-0233

URL: http://www.courts.state.wy.us/Opinions.aspx

Appeal from the District Court of Converse County, Honorable John C. Brooks, Judge.

Representing Appellant: Loyd E. Smith of Murane & Bostwick, LLC, Cheyenne, Wyoming

Representing Appellees: James R. Belcher & Boomgaarden, LLP, Cheyenne, Wyoming

Date of Decision: July 31, 2012

Facts: Bowers Oil and Gas, Inc. (BOG) entered into a Gas Purchase Contract with Kinder Morgan Operating, L.P. (Kinder Morgan), pursuant to which Kinder Morgan agreed to purchase coal bed methane gas from certain of BOG’s wells. Kinder Morgan transferred its interest in the Contract, and Kinder Morgan’s successor eventually terminated the Contract pursuant to a provision that allowed either party to terminate if in the terminating party’s sole opinion, the sale or purchase of the gas became unprofitable or uneconomical. BOG thereafter filed a complaint in district court asserting claims for breach of contract and breach of the covenant of good faith and fair dealing. Following a bench trial, the district court found no contract breach or covenant breach and ruled in favor of Kinder Morgan and its successor. The Court affirmed.

Issues: BOG presented the following issues on appeal:

1. Whether the trial court erred in ruling that Appellees did not breach the Gas Purchase Contract?

A) Whether the trial court erred in ruling that Appellees were excused from performance of the Gas Purchase Contract on the basis that the Contract became uneconomical pursuant to paragraph 4 of the Contract?

2. Whether the trial court erred in ruling that the Appellees did not breach the covenant of good faith and fair dealing.

Holdings: The Court found no breach of contract in MEG’s removal of the pipelines connecting BOG to the gas gathering system and that DCP properly terminated the Gas Purchase Contract for economic cause. The Court further found no clear error in the district court’s rejection of BOG’s claim for breach of the implied covenant and fair dealing. Affirmed.

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court

[SPECIAL NOTE: This opinion uses the "Universal Citation." It was given an "official" citation when it was issued. You should use this citation whenever you cite the opinion, with a P.3d parallel citation. You will also note when you look at the opinion that all of the paragraphs are numbered. When you need to provide a pinpoint citation to a quote the universal portion of the citation will use that paragraph number. The pinpoint citation in the P.3d portion will need to have the reporter page number. If you need assistance in putting together a citation from this, or any future opinion using the Universal Citation form, please contact the Wyoming State Law Library and we will provide any needed assistance]

Summary 2011 Wy 161

Summary of Decision December 9, 2011

[SPECIAL NOTE:  This opinion uses the "Universal Citation."  It was given an "official" citation when it is issued.  You should use this citation whenever you cite the opinion, with a P.3d parallel citation.  You will also note when you look at the opinion that all of the paragraphs are numbered.  When you need to provide a pinpoint citation to a quote the universal portion of the citation will use that paragraph number.  The pinpoint citation in the P.3d portion will need to have the reporter page number. If you need assistance in putting together a citation from this, or any future opinion using the Universal Citation form, please contact the Wyoming State Law Library and we will provide any needed assistance] 

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court

Case Name:  Exxon Mobil Corp. v. Dep’t of Revenue; Dep’t of Revenue v. Exxon Mobil Corp.

Citation:  2011 WY 161

Docket Number: S-11-0047, S-11-0048

URL: http://wyomcases.courts.state.wy.us/applications/oscn/DeliverDocument.asp?CiteID=464901

Rule 12.09(b) Certification from the District Court of Sublette County, The Honorable Marvin L. Tyler, Judge

Representing Appellant/Appellee (Petitioner/Cross-Respondent):  Lawrence J. Wolfe, P.C. and Patrick R. Day, P.C., Holland & Hart LLP, Cheyenne, Wyoming; Brent R. Kunz, Hathaway & Kunz, P.C., Cheyenne, Wyoming.  Argument by Mr. Day.

Representing Appellee/Appellant (Respondent/Cross-Petitioner): Gregory A. Phillips, Wyoming Attorney General; Michael L. Hubbard, Deputy Attorney General; Martin L. Hardsocg, Senior Assistant Attorney General.  Argument by Mr. Hardsocg.

Before GOLDEN, HILL, VOIGT, and BURKE, JJ., and CRANFILL, D.J.

Date of Decision: December 9, 2011

Facts:  Appellant operates three federal natural gas units.  Appellant is the sole lessee in two units.  However, seven percent of the third unit is held by another lessee.  Appellant is the operator for all three units.

Following  litigation, a complex processing agreement regarding the third unit provides that possession, custody and control of the co-lessee’s gas is transferred to Appellant for processing immediately downstream of the wing valve on the wells, as measured by the meters located at each well.  Accordingly, Appellant takes custody of, but not title to, the raw gas at the wing valve and meters.  Appellant must perform an exact accounting for each well of the unit.  The meters at the wells are used to measure the production and to properly account for the working interest and royalty ownership of the gas. 

The matters giving rise to the instant litigation commenced in 2006 when Appellant filed its annual gross products return with the Revenue Department reporting its 2005 natural gas production from the production field.  The Department declined to accept Appellant’s reported values.  Disputes concerning the taxation of the gas production were previously addressed by the Court.  In the most recent opinion, the Court remanded one issue to the Board, that is, they were to determine the correct point of valuation in the context of whether the meters at the wells were “custody transfer” or volume meters. Appellant argued that the meters at the wells were custody transfer meters, and hence the correct point of valuation for its share of gas.  Conversely, the Department argued the meters were not custody transfer meters and that the statutory point of valuation for tax purposes for all gas produced in the field was the downstream inlet.  The Board determined that the meters were not custody transfer meters for gas owned by Appellant because Appellant did not actually transfer control or charge its gas to another entity at the meters.  However, the Board determined that the same meters were custody transfer meters for gas owned by the second lessee because, pursuant to their processing agreement, responsibility for the working interest owners’ gas is transferred to Appellant at the meters.

Issues: 1) Whether the State Board of Equalization was correct in its application of the statutory term “custody transfer meter” to value Appellant’s natural gas production; and 2) Whether it was proper for the Board to determine the meters at the wells were “custody transfer meters” for the co-lessee’s share of gas.

Holdings:  The Court affirmed the Board’s determination that the meters were not custody transfer meters for Appellant’s gas.  The Court observed the Board’s determination harmonized with precedent and definitions established in Amoco.  The statutory requirement that the gas pass from “one entity to another” at the meter could not be satisfied where Appellant has custody of the gas both prior to and after passing through the meters at the wells. 

As to the second issue, the Court reversed the Board’s determination that the meters were custody transfer meters for the co-lessee’s gas on the basis that the issue was not properly before the Board and that the co-lessees were not aggrieved parties. The Court held the Board does not have the authority to determine the valuation point for “non-party” persons or entities that do not appeal their tax assessments. In reaching its conclusion, the Court did not make a determination on whether different interest owners in a common gas stream can in fact have different points of valuation for tax purposes.    

District Judge Cranfill delivered the opinion for the court.

Summary 2010 WY 37

Summary of Decision issued March 25, 2010

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court.

Case Name: Morris v. CMS Oil & Gas Co.

Citation: 2010 WY 37

Docket Number: S-09-0103; S-08-0104

Appeal from the District Court of Campbell County, the Honorable John R. Perry, Judge.

Representing Appellant Morris (Plaintiff): Patrick G. Davidson and Rebecca L. Winkler of Daly Law Associates, LLC, Gillette, Wyoming.

Representing Appellee CMS Oil & Gas Co. (Defendant): Thomas F. Reese, Drake D. Hill and Orintha E. Karns of Brown, Drew & Massey, LLP, Casper, Wyoming.

Facts/Discussion: Morris owns an overriding royalty interest in gas wells operated by CMS. Morris brought suit under the WRPA because she believed that CMS was not reporting production or paying her royalties properly.

Royalty payments: Morris failed to prove she was owed royalties or interest beyond what CMS had paid as of November 2002. She expressly testified she was unsure of the amount owed but that her expert would know. The expert testified that while there were some irregularities in the reports, they ultimately were resolved. Morris claimed she was unable to prove her damages because CMS refused to produce the necessary documentation during discovery. CMS’s expert testified he provided Morris’ expert with all the pertinent material he had in his possession and Morris’ expert acknowledged the same. Relying on an internal CMS memo, Morris asserted that the documentation provided was unreliable. The Court stated that while the memo disclosed that CMS had some initial problems with its reporting on some wells, it does not prove that the information ultimately provided was unreliable. Morris argued that CMS’s reported production numbers differed from those reported to the WOGCC as reflected on the website. The evidence suggested that the WOGCC numbers that Morris relied upon were not reliable. Morris’s expert testified he found thirty-three wells for which she had never received payment but he was never asked to calculate the royalty amount due on those wells. CMS’s expert testified only three such wells existed and testified the production numbers and volumes calculated by Morris’ expert were correct. No competent evidence on the sales price was presented. The Court upheld the district court’s conclusion that CMS ultimately paid Morris more than she was due.
Lack of reporting: The district court concluded that CMS failed to properly report for twenty-nine months. Neither party challenged the district court’s finding that CMS failed to report during the specified time period or argued that the finding was not supported by the record. The district court concluded that a producer who fails to submit a complete monthly report is liable to the interest owner in the amount of $100 per month. The clear intent of § 30-5-305(b) was that interest owners would receive all of the information identified in subparagraphs (i) through (xi) on a regular monthly basis. It authorizes the information to be provided by lease, property or well. Anyone who failed to do so would be liable to the interest owner for $100 for each month that a complete report was not provided. The district court correctly determined that CMS was liable to Morris in the amount of $100 for each month complete reporting did not occur. The evidence supported the district court’s determination that CMS failed to submit complete monthly reports from July 2000 through March 2002. The district court found CMS was required to report beginning December 1999. The Court noted the first sale was in December 1999 making the first payment and report due July 2000. On remand, the district court should consider the issue and determine the proper penalty.
Attorney’s fees and costs: The Court has defined whether a party is a prevailing party (for purposes of awarding costs of litigation) as one who improves his or her position by the litigation. Morris obtained payments she otherwise would not have, proved that CMS violated the WRPA and obtained a judgment requiring CMS to pay reporting penalties thereby improving her position. The Court upheld the district court’s determination that Morris was the prevailing party for the purposes of attorney’s fees. Morris claimed the district court erred in awarding fees to CMS. The district court’s award of attorney fees to CMS when Morris was the prevailing party cannot stand. The practical effect of the district court’s award of attorney’s fees to CMS was to punish Morris for not voluntarily dismissing her claim once CMS made some payment. This runs counter to the entire purpose of the WRPA as well as the express language of § 30-5-303(b) authorizing an attorney’s fee award to the prevailing party.
Application of the escrow provision: Morris asserted the district court erred when it held CMS was not in violation of the WRPA once it escrowed the funds in April 2002. She claimed the ruling failed to take into account that there were some wells for which she never received payment or reports so that CMS was continuing to violate the WRPA after it escrowed the funds. Therefore the calculation of the reporting penalty was incorrect. The testimony and evidence tended to show that upon paying Morris $38,657.41 as of November 2002, CMS had paid approximately $3,000 more than it owed. The ruling was supported by the evidence.

Conclusion: The district court’s conclusion that Morris received all the royalty payments she was due was supported by the evidence. The district court correctly concluded CMS failed to submit reports as required by WRPA. The district court’s conclusion that CMS violated the WRPA by failing to either pay Morris the royalties due or place them in escrow was supported by the evidence. Morris was the prevailing party and was properly awarded her attorney’s fees. The district court erred in awarding CMS attorney’s fees.

Affirmed in part, reversed and remanded in part.

J. Kite delivered the decision.

J. Golden, dissented: The Justice’s review of the record noted that attached to every payment made was a check detail containing the requisite statutory information. He would have reversed the district court’s ruling on reporting penalties. The Justice discussed the “catalyst theory” which the Court has never expressly commented upon. The theory runs directly contrary to the language and intent of § 30-5-303(b). The United States Supreme Court discussed the definition of “prevailing party” at length in Buckhannon. In order to be deemed a prevailing party, there must be a material modification in the legal relationship of the parties. The Justice would hold that a party can only be considered a “prevailing party” in a juridical action if the party receives some form of juridical relief such as judgment on the merits or a court ordered consent decree or court-approved settlement agreement. The Justice would follow the lead of the United State Supreme Court and adopt a bright-line rule defining a person who improves her position through litigation as a person who receives relief sought by means of some form of juridical action. Only juridical action can change the legal relationship between parties, the proper function of any legal action.

Link: http://tinyurl.com/yefmdqw .

[SPECIAL NOTE: This opinion uses the "Universal Citation." It was given an "official" citation when it was issued. You should use this citation whenever you cite the opinion, with a P.3d parallel citation. Please note when you look at the opinion that all of the paragraphs are numbered. When you pinpoint cite to a quote, you should cite to this paragraph number rather than to any page number. If you need assistance using the Universal Citation format, please contact the Wyoming State Law Library.]

Summary 2010 WY 36

Summary of Decision issued March 23, 2010

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court

Case Name: Ultra Resources, Inc. v. Hartman

Citation: 2010 WY 36

Docket Numbers: S-08-0258, S-08-0259, S-08-0260, S-08-0261, S-08-0262, S-08-0263, & S-08-0264

Appeal from the District Court of Sublette County, the Honorable Norman E. Young, Judge.

Representing Appellant Ultra Resources, Inc. and Williams Production Rocky Mountain Co. (Defendant): Douglas J. Mason of Mason & Mason, Pinedale, Wyoming; George W. Mueller of Burns, Wall, Smith and Mueller, P.C., Denver, Colorado.

Representing Appellant Arrowhead Resources (U.S.A.) LTD (Defendant): Nancy D. Freudenthal of Davis & Cannon, Cheyenne, Wyoming; Rebecca Hitchcock Noecker of Beatty & Wozniak, Denver, Colorado.

Representing Appellant Lance Oil & Gas Company, Inc. (Defendant): Paul J. Hickey of Hickey & Evans, Cheyenne, Wyoming; David W. Stark and Ezekiel J. Williams of Faegre & Benson, Denver, Colorado.

Representing Appellants Shell Rocky Mountain Production, LLC and SWEPI, LP (Defendants): David B. Hooper of Hooper Law Offices, Riverton, Wyoming; Phillip D. Barber of Phillip D. Barber, P.C., Denver, Colorado.

Representing Appellees Doyle and Margaret M. Hartman, John H. Hendrix Corporation, Michael L. Klein and Jeanne Klein, Ronnie H. Westbrook and Karen Westbrook (Plaintiffs): Michael J. Sullivan and John A. Masterson of Rothgerber, Johnson & Lyons, Casper, Wyoming; James M. Lyons and D. Elizabeth Wills of Rothgerber, Johnson & Lyons, Denver, Colorado; J.E. Gallegos and Michael J. Condon of Gallegos Law Firm, Santa Fe, New Mexico.

Facts: This case encompasses seven appeals and cross-appeals and involves seven plaintiffs and six defendants. The contest is over a net profits interest (NPI) granted by Malco Refineries, Inc., El Paso Natural Gas Company, and Continental Oil Company (referred to in the documents as “First Parties”) to Novi Oil Company (Novi) in the 1950s. The NPI was consideration for Novi’s assignment of certain oil and gas leases to First Parties. Generally, the district court concluded that the NPI continues to exist and is owned by the plaintiffs, who are successors to Novi, and the defendants, as successors to First Parties, are obligated to pay net profits to them. The district court also awarded statutory penalties, interest and attorney fees to the plaintiffs.

Issues: Whether the plaintiffs were entitled to summary judgment on the question of whether the NPI survived termination of the Pinedale Unit. Whether the plaintiffs were entitled to summary judgment on the question of whether they own the NPI and whether the defendants have standing to contest plaintiffs’ claim of ownership. Whether the district court erred by granting the defendants’ Rule 52(c) motion regarding the plaintiffs’ duty to provide proof of their ownership of the NPI under Section 5 of the Pinedale Unit Area Net Profits Contract (Unit NPI Contract) or by determining that the plaintiffs gave sufficient notice of their ownership. Whether the district court erred in granting the defendants’ Rule 52(c) motion on the plaintiffs’ claim for breach of the implied covenant of good faith and fair dealing. Whether the district court erred in granting the non-operator defendants’ Rule 52(c) motion on the plaintiffs’ Wyoming Royalty Payment Act, Wyo. Stat. §§ 30-5-301 through 305 (2009) (WRPA) claims. Whether the district court correctly determined that the non-operating defendants breached the Unit NPI Contract by failing to pay the NPI. Whether the district court erred by ruling that plaintiffs were entitled to be awarded WRPA interest and penalties against the operating defendants Shell and Ultra when the Unit NPI Contract provided that they could withhold payment of net profits, without interest, during the pendency of any dispute regarding ownership of the NPI. Whether the district court properly determined that State Lease 79-0645 was a “replacement lease” under the Unit NPI Contract. Whether the district court erred by ruling that plaintiffs’ claims were not time barred under either the statute of limitations or the equitable doctrine of laches. Whether the district court erred by refusing to exclude certain expenses from the net profits calculation. Whether the district court erred by holding all defendants jointly and severally liable for the entire judgment. Whether the district court properly granted credit to the defendants for plaintiffs’ settlement with Questar/Wexpro. Whether the non-operators were the prevailing parties and, therefore, entitled to an award of attorney fees under the WRPA. Whether the district court abused its discretion by awarding plaintiffs over $3.9 million in attorney fees.


Holdings: The district court properly granted summary judgment on the plaintiffs’ claim that the NPI continued to encumber the relevant leases after termination of the Pinedale Unit. To the extent that the district court’s second summary judgment order stated that the plaintiffs had provided a sufficient showing of their ownership of the NPI to entitle them to payment from the defendants, the decision is affirmed. However, to the extent that it was intended to quiet title in the plaintiffs against any claims by others who are not parties to this action, there was no justiciable controversy and the decision is reversed.

The district court properly granted the defendants’ Rule 52(c) motion regarding the plaintiffs’ obligation to give notice under Section 5 of the Unit Net Profits Contract and correctly ruled that plaintiffs’ letter was sufficient notice under the contract to obligate the defendants to start paying the NPI in March 2006. The district court also properly granted the defendants’ Rule 52(c) motion on the plaintiffs’ claim for breach of the implied covenant of good faith and fair dealing and the non-operator defendants’ Rule 52(c) motion on the plaintiffs’ WRPA claims.

After the bench trial, the district court correctly concluded that the non-operating defendants breached the Unit NPI Contract, although they did not violate the WRPA. Operating defendants Shell and Ultra were rightly found liable under the WRPA for interest and penalties for failing to pay or escrow the NPI payments after the plaintiffs’ gave notice of their ownership of the NPI. The district court also properly determined that State Lease 79-0645 is a “replacement lease” under the Unit NPI Contract and, therefore, burdened by the plaintiffs’ NPI and the plaintiffs’ claims were not time barred under either the statute of limitations or laches.

The district court, however, made some errors in its damages award. Although it properly interpreted the overhead expense provisions of the First Parties’ and Novi’s agreement, it incorrectly concluded that produced gas used on the lease was to be included as revenue for the net profits calculation. This aspect of the judgment is reversed and remanded for recalculation of the damages. The district court also erred by making the non-operators jointly and severally liable for the entire judgment, and the district court’s ruling is reversed in that regard. The district court properly granted credit to the defendants for plaintiffs’ settlements with Questar/Wexpro.

Finally, we conclude the district court properly determined that plaintiffs were the prevailing parties in this litigation and did not abuse it discretion in making its attorney fees award.

Affirmed in part; reversed and remanded in part.

J. Kite delivered the opinion for the court.

Link: http://tinyurl.com/ykawvn6 .

C.J. Voigt dissented: The state of the record is not such that the plaintiffs have given the defendants sufficient notice of their ownership of the NPI, if it exists at all, to require the plaintiffs to pay them millions of dollars to satisfy the NPI. Summary judgment should not have been granted to the plaintiffs on the ownership issue.

[SPECIAL NOTE: This opinion uses the "Universal Citation." It was given an "official" citation when it was issued. You should use this citation whenever you cite the opinion, with a P.3d parallel citation. Please note when you look at the opinion that all of the paragraphs are numbered. When you pinpoint cite to a quote, you should cite to this paragraph number rather than to any page number. If you need assistance in putting together a citation using the Universal Citation form, please contact the Wyoming State Law Library.]

Summary 2008 WY 49

Summary of Decision issued April 22, 2008

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court.

Case Name: Stone v. Devon Energy Production Co., LP

Citation: 2008 WY 49

Docket Number: S-07-0166

Appeal from the District Court of Johnson County, the Honorable John G. Fenn, Judge.

Representing Appellant (Plaintiffs): Steven R. Winship of Winship & Winship, PC, Casper, Wyoming.

Representing Appellee (Defendants): Scott P. Klosterman of Williams, Porter, Day & Neville, PC, Casper, Wyoming.

Facts/Discussion: Stone and Loundagin owned operating rights under a state oil and gas lease which they assigned to Devon Energy Production Co. and Carpenter & Sons, Inc. After Devon and Carpenter failed to offer to reassign the operating rights to them six months before the lease expiration date, Stone and Loundagin filed a complaint asserting that Devon and Carpenter breached the assignment contract and should be ejected from the leasehold. In addition they pleaded trespass and conversion and sought an accounting and injunctive relief. The district court granted partial summary judgment for Devon and Carpenter on the breach of contract claim concluding that the lease had not expired and the reassignment obligation was never triggered.
Neither the parties nor the Court found cases involving a reassignment clause like the one at issue. The clauses are almost exclusively found in the oil and gas arena and many require a reassignment offer only in the event that the assignee intends to let the lease expire. Many also require the assignor to respond to an offer of reassignment within a specified time period or lose the right to reassignment. In the instant case, all parties agreed that the intent of the reassignment clause was to avoid the loss of the lease. The Court held that the reassignment clause required Devon and Carpenter to make an offer to reassign the operating rights to Stone and Loundagin before October 2, 2001. Considering the language of the clause in the context in which it was written and looking to the surrounding circumstances, the subject matter, and the purpose of the agreement, it was clear the parties intended the term “expiration” to mean the expiration date of the lease that was contained within the lease itself. The interpretation was consistent with the underlying purpose of reassignment clauses generally which is to protect assignors against the loss of their overriding royalty interest prior to the end of the primary term. The Court found it significant that the clause these parties drafted and agreed to, did not contain language to the effect that a reassignment offer was required if the assignee desired to surrender the lease. The omission of language that appeared to be standard in oil and gas reassignment clauses suggested that rather than being dependent on the assignee’s intent, the parties intended the reassignment offer to be made on a date certain – prior to six months before the expiration of the lease or October 2, 2001.
In the instant case, the lease never terminated and thus, Stone and Loundigan incurred no damages. They continued to receive the timely payment of all overriding royalties due under the lease.

Holding: The Court held that the reassignment clause required Devon and Carpenter to make an offer to reassign the operating rights to Stone and Loundagin on or before October 2, 2001. The Court affirmed the partial summary judgment order because under the particular circumstances, no contract damages could be proven.

The partial summary judgment on breach of contract was affirmed and the matter was remanded for consideration of the remaining claims.

J. Kite delivered the decision.

J. Golden dissented stating that the supplemental agreement at issue required Devon and Carpenter to offer reassignment of all pertinent acquired rights under the lease to SEI not later than 6 months prior to the expiration of each such lease. J. Golden agreed that the intent of the parties in including the reassignment clause was to prevent the lease from expiring without giving SEI the opportunity to save it. Devon and Carpenter must allow SEI an opportunity to save the lease when they know their actions will not be enough to do so. By focusing on the practical, as versus the theoretical “expiration” of the lease, J. Golden believed the reassignment provision imposed such a requirement. He would have upheld the grant of summary judgment to Devon and Carpenter.

Link: http://tinyurl.com/6cj2jm .

[SPECIAL NOTE: This opinion uses the "Universal Citation." It was given an "official" citation when it was issued. You should use this citation whenever you cite the opinion, with a P.3d parallel citation. Please note when you look at the opinion that all of the paragraphs are numbered. When you pinpoint cite to a quote, you should cite to this paragraph number rather than to any page number. If you need assistance in putting together a citation using the Universal Citation form, please contact the Wyoming State Law Library.]