July 3, 2018
In a ruling that affects first-refusal rights in a number of oil and gas leases, a Texas appeals court favored MJR Oil & Gas 2001 LLC in an East Texas mineral rights dispute, affirming that rights of first refusal on the sale of oil and gas leases accompany the lease and are transferred to the parties’ successors.
The 6th Court of Appeals in Texarkana ruled that Dallas-based MJR had right of first refusal as a covenant accompanying the land it leased.
The ruling reversing a trial court summary judgment issued in Longview.
The appellate court sent the case back to trial.
“The ruling was important because the court clarified that a right of first refusal in an oil and gas lease can be a covenant running with the land, even if it is not described with those words,” said Texas-based Hicks Thomas LLP co-founder John B. Thomas, whose firm defended MJR.
The appeals court affirmed that a settlement agreement in 2002 as part of the assignment of royalty interests gave MJR a right of first refusal on any sale of those leases as a covenant accompanying the land — and was binding on the original parties’ successors.
MJR’s lawyers argued that some of the successors failed to comply with those first-refusal rights claimed by MJR, and that led to the lawsuit against AriesOne, GFP Texas Inc., Miken Oil Inc. and SND Energy Co.