Summary
The Fifth Circuit reviews a dispute concerning Louisiana's forced pooling statutes and whether an operator may deduct post-production costs from an unleased mineral interest owner's share of production. Applying Louisiana law via an Erie guess, the court holds that the statute applies to interests unleased specifically by the operator, and that post-production costs fall within the statutory forfeiture provision for failure to report drilling expenses. However, relying on recent Louisiana Supreme Court precedent, the court vacates the lower court's reliance on negotiorum gestio and reverses its determination regarding the applicable prescriptive period.
Topics
Practice areas
Questions Presented
- Whether La. Rev. Stat. § 30:10(A)(3) applies to any mineral interest owner in a forced pool unit who has no lease with the operator.
- Whether the Louisiana doctrine of negotiorum gestio permits operators to recover post‑production costs incurred in marketing a lessee’s share.
- Whether post‑production costs are included within the forfeiture provision of La. Rev. Stat. § 30:103.2.
- Whether the prescriptive period for claims under § 30:103.2 is one year (delictual) or ten years (contractual).
Holdings
- § 30:10(A)(3) applies to mineral interest owners who are unleased as to the operator.
- The doctrine of negotiorum gestio does not apply; operators cannot recover post‑production costs on that basis.
- Post‑production costs are included within the forfeiture provision of § 30:103.2.
- The one‑year delictual prescriptive period applies.
Key quotations
“The phrase “unleased interest” is used twice in § 30:10. First, § 30:10(A)(2)(e)(i) provides that “[t]he provisions … shall not apply to any unleased interest not subject to an oil, gas, and mineral lease.” Second, § 30:10(A)(3) provides: “If there is included in any unit … one or more unleased interests … the unit operator shall pay …””
“A unit operator who sells an owner’s production under the statutory authority of La. R.S. 30:10(A)(3) cannot therefore be a gestor under La. Civ. Code art. 2292 as a gestor is one who acts “without” authority.”
Factual background
Under Louisiana forced‑pooling law, the Commissioner of Conservation created a drilling unit that included a tract leased by Dow. BPX, as the appointed operator, deducted post‑production costs from Dow’s share of proceeds. Dow sued for the deducted amounts; BPX moved to dismiss and for summary judgment, asserting various statutory and doctrinal defenses.
Procedural history
The district court held Dow had standing, applied the Louisiana doctrine of negotiorum gestio to allow operators to recover post‑production costs, held that § 30:103.2’s forfeiture provision includes post‑production costs, and applied a ten‑year prescriptive period. The district court granted BPX partial summary judgment and denied other motions. Dow appealed.
Remand instructions
Remand for further proceedings consistent with this opinion, particularly applying the one‑year prescriptive period and rejecting the doctrine of negotiorum gestio as a basis for recovery of post‑production costs.