Supreme Court
ConocoPhillips Co. v. Hahn
- Case number: 23-0024
- Legal category: Oil and Gas
- Subtype: Leases
- Set for oral argument: September 12, 2024
Case Summary
At issue in this case is the proper calculation of Kenneth Hahn’s royalty interest in a tract of land in DeWitt County, Texas.
In 2002, Hahn conveyed the tract to William and Lucille Gips but reserved a 1/8 non-participating royalty interest. Eight years later, the Gipses leased the tract to a subsidiary of ConocoPhillips. The lease entitled the Gipses to a 1/4 royalty and gave Conoco the right to pool the acreage covered by the lease. After Hahn ratified the lease, Conoco pooled the tract into a larger unit. Hahn and the Gipses then signed a stipulation of interest, agreeing that Hahn reserved a 1/8 “of royalty” when he conveyed the tract to the Gipses.
In 2015, Hahn sued Conoco and the Gipses, alleging that he reserved a fixed 1/8 royalty in the tract, rather than a floating royalty. The trial court disagreed and granted summary judgment for the Gipses. But the court of appeals reversed, holding that Hahn reserved a fixed royalty and that the trial court erred by considering the stipulation of interest. Conoco and the Gipses petitioned the Supreme Court for review, but the Court denied their petitions.
On remand, Conoco argued that because Hahn ratified the Gipses’ lease, his royalty should be diminished by their 1/4 royalty. The trial court granted summary judgment for Conoco, but the court of appeals reversed, holding that Hahn was only bound to the lease’s pooling provision. The court of appeals also disagreed with Conoco that the intervening decision in Concho Resources, Inc. v. Ellison, 627 S.W.3d 226 (Tex. 2021), required it to consider the stipulation of interest.
Conoco petitioned the Supreme Court for review, arguing that the court of appeals erred by (1) concluding that Hahn ratified only the lease’s pooling provision, and (2) disregarding the stipulation of interest.
The Court granted Conoco’s petition for review.
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