The stage is set for the Texas Supreme Court to decide Chesapeake’s Motion for Rehearing in Chesapeake Exploration, L.L.C., et al. v. Hyder, et al. To date, eight (8) Amicus Briefs have been filed in this case on both sides.
Over 20,900 Barnett Shale Royalty Owners have now voiced their support for the Court’s majority opinion, finding the concept of interpreting a contract so as to give effect to all provisions and terms “neither remarkable, nor grounds for rehearing, since consistent with over a century of Texas jurisprudence.” See Barnett Shale Royalty Owners Amicus Brief (“Amicus”) at p. 1. The nearly 21,000 royalty owners urge the Court to deny the rehearing requested by Chesapeake, but if the Court grants the rehearing, they ask the Court to “confirm the limited precedential value of Heritage, reinforce the basic principle of Texas contract law requiring all contractual provisions be given effect, and still interpret the lease language here as plainly written to properly honor the parties’ intent.” Amicusat p. 18.
Viewing the Court’s opinion as the first potential roadblock in their efforts to expand Heritage, several operators in the industry joined together to file an amicus brief urging the Court to grant Chesapeake’s Motion for Rehearing. Chesapeake and its amici urge an interpretation that would render the term “cost-free,” with regard to the ORRI in the Hyder lease, as meaningless. Such an interpretation is, of course, in direct conflict with Texas law. See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (Courts must “harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless”).
Chesapeake must persuade at least five (5) Justices to vote in favor of granting the Motion for Rehearing. The parties, Texas oil and gas operators and royalty owners across the state, now await the Court’s decision.