Apache Corp. v. W&T Offshore, Inc., No. 09-31122
Oil and Gas Lease Dispute
In Apache Corp. v. W&T Offshore, Inc., No. 09-31122, an action seeking a declaratory judgment that defendant was required to bear some of the costs of decommissioning an oil platform under the parties' agreement, the court affirmed judgment for defendant where the parties' Farmout Agreement did not require defendant to bear a proportionate share of the costs of decommissioning an oil platform located on the federal offshore oil and gas lease at issue.
As the court wrote: "W&T's predecessor in interest, the Atlantic Richfield Company (ARCO),
and Apache's predecessor in interest, the Texoma Production Company (Texoma), executed the Farmout Agreement on October 31, 1979. Texoma then had thirty days to commence drilling a test well, which if successful, earned Texoma an assignment of ARCO's interest in the OCA-G 2950 Main Pass Block 148 (Block 148) lease subject to an overriding royalty interest. ARCO's relatively small overriding royalty interest was free of any obligation to contribute to the costs of production."