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Texas Supreme Court will hear oil royalties case

The Texas Supreme Court has agreed to hear a long-running oil royalties dispute. The case in question concerns a landowner’s claim of fraud — and how that claim might affect the statute of limitations for bringing claims against a driller.

Charles Hooks III’s land lease required Samson Lone Star LP to pay him if it drilled a well within one quarter-mile of his property. He sued the company when he discovered that a well that began 1,500 feet away actually bottomed out within the buffer zone. Hooks claimed that Samson lied about the nature of the well and altered plans to cover it up.

In 2008, a trial court awarded Hooks’ family (he was, by then, deceased) over $21 million in royalties. But in 2011, an appellate court overturned the award and ruled that if Hooks had exercised due diligence, he would have discovered the well’s true location more than five years before he filed suit. 

The statute of limitations for such fraud claims is four years.

In response, the Hooks family argued that because Samson allegedly misrepresented the oil well’s location, they should be permitted more time to bring their claims. Their case has moved to the state Supreme Court in part to consider that claim.

The Hooks family has stated that the issue at stake is one of the most important in Texas oil and gas law – balancing the right of defendants to be protected from very old claims while preserving the ability of fraud victims to seek legal remedies.

If you have any doubts about your oil and gas lease, speak with an attorney sooner rather than later.

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