Glassell Non-Operated Interests Ltd. v. Enerquest Oil & Gas, LLC

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After a group of oil companies agreed to cooperatively develop oil prospects, EnerQuest acquired an interest in the specified area after the agreement took effect, but then refused to offer a share of those interests to the other parties. Other parties to the agreement filed suit against EnerQuest, alleging that it breached the contract by refusing to offer a pro-rata share of the newly acquired interests. The Fifth Circuit reversed the district court's judgment and rendered judgment for EnerQuest, holding that EnerQuest did not breach the agreement. The court held that, although the contract requires that the parties share interests acquired within the area of mutual interest (AMI), the contract excludes interests already owned by parties from the AMI. Therefore, what was excluded from the AMI at the outset may never be included without a new agreement. View "Glassell Non-Operated Interests Ltd. v. Enerquest Oil & Gas, LLC" on Justia Law