PPROA Pipeline ~ May 2015
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CASENOTE
XH, LLC v. Cabot Oil & Gas Corp., No. 12-12-00338-CV, 2014 WL 2505541 (Tex. App.—Tyler May 30,
2014, no pet.)(mem. op.), held that the parties’ express provision governing priority of interpretation would be given
effect to resolve conflicting area of mutual interest (“AMI”) provisions in a Purchase Agreement (“PSA”) and its
attached joint operating agreement (“JOA”). Under the PSA, Seller conveyed to Purchaser 80% of Seller’s interest in
certain leases, reserving an overriding royalty interest (“ORI”) to Seller on the assigned leases. Seller subsequently
conveyed the ORI to Cabot. Purchaser contended Cabot was subject to the AMI agreement and obligated to offer to
Purchaser the opportunity to purchase Purchaser’s proportionate share of the ORI that Cabot acquired from Seller.
The PSA included an AMI provision (“PSA AMI”) and an attached JOA. The JOA also included an AMI
provision (“JOA AMI”). The PSA AMI provision provided that “[a]ll leases subsequently acquired by either party . . .
will be subject to the Area of Mutual Interest provision provided in the Joint Operating Agreement . . . .” The JOA
AMI provision, in Article XVI, provided that “[i]n the event that any party or parties acquire any oil and/or gas
interest (which shall be deemed to include royalties, mineral interests, and other payments out of production) or oil
and gas leases or other contrac Ёɥ