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Permalink Reply by O&G man in TX on June 25, 2010 at 11:30

This is HUGE, and I would imagine that it will open the floodgates to other lawsuits.

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Permalink Reply by M. Mcwilliams on June 25, 2010 at 12:18

It's huge just until they file a bond and a notice of a suspensive appeal.

But it is a great ruling, and I hope it stands on appeal.

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Permalink Reply by jffree1 on June 25, 2010 at 12:32

You sound like you have a legal background so, my question is, on what grounds could they appeal? Do you think Judge Adams failed to address some aspect of the case that could have changed his decision? I haven't read the trial transcript but I did read the judgement and it seems really well thought out but, then, IANAL.

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Permalink Reply by Tommyboy on June 25, 2010 at 12:32

This isn't quite as huge as you might think. If you read it carefully, the part that was most damning to Questar was the fact that they did nothing to defend themselves. Had they provided ANY evidence that they were planning on drilling, this would have likely not be the outcome.

If Questar had been smart they would have simply shown that there was not sufficient gathering and processing in that area yet and that drilling would have to wait until such time as the gas was economically recoverable. That would have won it for them. Instead they basically pissed off the judge by doing and saying nothing and that pretty much sealed it for them.

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Permalink Reply by Skip Peel - Mineral Consultant on June 25, 2010 at 11:34

DeSoto landowner prevails in demand for release from lease

By Vickie Welborn • vwelborn@gannett.com • June 25, 2010


MANSFIELD – A DeSoto district judge has ruled in favor of a DeSoto Parish landowner who sought release from a land mineral lease because of an oil and gas company’s failure to develop the Haynesville Shale.

Judge Charles B. Adams filed his judgment around 4 p.m., finding in favor of the plaintiff, Santa Ferrara, against Questar Exploration and Production Company.

In a two-day trial in May, Ferrara argued his minerals lease with Questar should be canceled below the current producing levels because of Questar’s failure to develop the Haynesville Shale formation. Questar maintained Ferrara failed to prove his case, because at the time the lawsuit was filed, the shale had not yet been proven and it was unreasonable to expect the company to proceed with development.

Ferrara owns 47 acres in DeSoto Parish. He made a demand on Questar in August 2008 to further develop the rights under lease the company acquired in 1999. Since that time, Questar has drilled one well on the land unitized with in 2001 with the already-producing Hosston unit.

Ferrara filed suit in October 2008 seeking dissolution of the lease.

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Permalink Reply by Martin on June 25, 2010 at 12:24

Nice decision. Anyone giving odds that Questar will appeal?

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Permalink Reply by Parkdota on June 25, 2010 at 12:34

Questar provided no defense? It's almost as if they slept on their rights. I bet the other operators are furious with Questar and this outcome. I don't see how Questar could win an appeal seeing as how they didn't even provide a defense the 1st go around. Talk about dropping the ball.

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Permalink Reply by Skip Peel - Mineral Consultant on June 25, 2010 at 12:41

It should be noted that on appeal neither the plaintiff nor the defense can introduce any new evidence. Appeals courts may only rule on what was presented in the original trial.

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Permalink Reply by Tommyboy on June 25, 2010 at 14:08

You are spot on. They have little chance of winning any appeal, it was as if they just ignored the lawsuit. Absolute idiots.

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Permalink Reply by mary mac on June 25, 2010 at 12:42

They will appeal, and maybe that might call Arthur Berman as any expert witness,

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Permalink Reply by Skip Peel - Mineral Consultant on June 25, 2010 at 13:24

Thousands of land/mineral owners within the established boundaries of the Haynesville Shale development do not have wells owing to an energy company's ability to maintain their drilling rights through the production, under old leases, of shallower formations completely unrelated to the Haynesville Shale. The industry term is "Held By Production" and it denies land/mineral owners the fair market lease bonuses and royalty interest for their Haynesville Shale minerals. Judge Adam's ruling has the potential to remedy that situation and require energy companies to either drill Haynesville Shale wells or give up their rights to do so. The end result of this ruling could very well be a Billion Dollar new wave of leasing and drilling benefiting individual mineral owners, local municipalities and the state.

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Permalink Reply by Skip Peel - Mineral Consultant on June 25, 2010 at 14:11

UPDATE: DeSoto landowner prevails in demand for release from lease

By Vickie Welborn • vwelborn@gannett.com • June 25, 2010

MANSFIELD – A DeSoto district judge has ruled in favor of a DeSoto Parish landowner who sought release from a land mineral lease because of an oil and gas company’s failure to develop lower producing levels, including the Haynesville Shale.

The judgment filed late Friday afternoon by Judge Charles B. Adams in favor of the plaintiff, Santo Ferrara, against Questar Exploration and Production Company, could have far-reaching implications for other landowners with old leases in shallow zones. Adams’ judgment cancels Ferrara’s lease with Questar to all depths and formations below the Hosston formation.

"I think this case will have some significant impact in favor of landowners whose land is burdened by an older lease to the extent they are not being included in the Haynesville development,” said Shreveport attorney Randall Davidson, who represents Ferrara.

“It is difficult to assess the impact on any other landowner because the facts of each landowner’s lease may be different. In general, this is one of the first cases to deal with the legal obligation to fully develop a lease applied to the Haynesville Shale. For that reason I feel it is probably going to be significant,” Davidson said.

He anticipates the case will be appealed to the 2nd Circuit Court of Appeal in Shreveport. “But we are confident. We think it will be upheld on appeal. We feel Judge Adams is right down the line.”

In a two-day trial in May, Ferrara argued his minerals lease with Questar should be canceled because of Questar’s failure to develop the Haynesville Shale formation. Questar maintained Ferrara failed to prove his case, because at the time the lawsuit was filed, the shale had not yet been proven and it was unreasonable to expect the company to proceed with development.

Ferrara owns 47 acres in DeSoto Parish. His first lease was in 1988 with a company that was acquired in the mid 1990s by Questar. In 2001, Questar drilled one well that was an alternate well for the already-producing Hosston unit.

He made a demand on Questar in August 2008 to further develop the rights under the prior lease. Ferrara filed suit in October 2008 seeking dissolution of the lease based on Questar’s failure to develop the Haynesville Shale formation, which drew the public’s attention in March 2008.

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