Apache Corporation v. Apollo Exploration, LLC; Cogent Exploration, Ltd., Co.; and SellmoCo, LLC

Summary

The Supreme Court of Texas addresses contractual time computation, the meaning of provisions in purchase-and-sale agreements for oil-and-gas interests, and the scope of obligations concerning affected leases. It holds that the Bivins Ranch lease's primary term expired on January 1, 2010, under the default rule excluding the measuring date when a period is stated to run "from" a date, resulting in the North Block's expiration on January 1, 2016. The court also addresses the former Gunn interest, the meaning of "200% of Project Payout," expert testimony, and summary judgment, reversing and remanding in part.

Holdings

1. When a contractual period is measured "from" or "after" a specified date, the specified measuring date is excluded by default, so a period measured in years ends on the anniversary of the measuring date rather than the day before. The Bivins Ranch lease did not clearly displace that default rule; therefore, its three-year primary term expired on January 1, 2010, and the North Block expired on January 1, 2016.
2. Apache's later release did not retroactively change the North Block's termination date; the North Block terminated on January 1, 2016.
3. Section 4.1 required Apache to offer each Seller the interest Apache acquired from that particular Seller, not interests Apache acquired from other sellers, including the former Gunn interest.
4. The section 2.5 back-in trigger is reached when the specified revenues equal 200% of the specified expenses, or when specified revenues are twice the specified expenses.
5. The trial court properly excluded Huddleston's testimony to the extent it was based on legal conclusions that the North Block expired on December 31, 2015 or that Apache was required to offer Sellers the former Gunn interest.

Questions Presented

1. Whether the North Block of the Bivins Ranch lease expired on December 31, 2015, or January 1, 2016.
2. Whether section 4.1 of the purchase-and-sale agreements required Apache to offer each Seller all of Apache's interest in an affected lease, including interests acquired from other sellers such as the former Gunn interest.
3. What the phrase "Two Hundred Percent (200%) of Project Payout" means under section 2.5 of the purchase-and-sale agreements.
4. Whether the trial court properly excluded Peter Huddleston's damages testimony.
5. Whether the court of appeals should determine in the first instance whether Sellers otherwise produced sufficient evidence of damages to support their remaining claims.

Disposition

reversed_and_remanded