Joint Operating Agreements:Exculpatory Clause;Operator Liability

摘要

Wendell Reeder is the operator of oil and gas leases in the Forest Hill Field located in Wood County, Texas per the terms of a 1989 form AAPL Model Form 610 Joint Operating Agreement (JOA). After execution of the JOA, Reeder faces claims by non-operators that he failed to maintain production in paying quantities, causing the leases—potentially worth millions of dollars—to expire and the Texas Railroad Commission to break apart a unit and suspend operations therein. Reeder claims that the exculpatory clause in Article V.A of the JOA absolves him of liability. At trial, a jury finds that Reeder breached his duty to the non-operators by failing to maintain production in paying quantities. The court of appeals affirms, and holds that the exculpatory clause in the JOA at issue should not apply to shield the operator from the claims of the non-operators as it did not apply to breach of contract claims like the ones at issue. Reeder v. Wood County Energy, LLC, 320 S.W3d 433, 173 0.&G.R.