Appellate Court Reverses & Renders in Farmout-Related Lease-Termination Dispute
In Clayton Williams Energy, Inc. v. BMT O&G TX, L.P., a group of lessors sued lessee Chesapeake Exploration L.L.C. and farmee Clayton Williams Energy, Inc., asserting that Chesapeake's lease expired because it was developed under a farmout agreement rather than by Chesapeake itself. The trial court entered a multi-million dollar judgment and declared the lease terminated. On appeal, Chesapeake argued that Clayton Williams's timely development under the farmout agreement perpetuated the lease under its plain terms and that no evidence supported the trial court's damages award. The El Paso Court of Appeals agreed with Chesapeake, reversed the trial court's judgment in its entirety, and rendered judgment that the lessors take nothing on their claims. Clayton Williams Energy, Inc. v. BMT O&G TX, L.P., 473 S.W.3d 341 (Tex. App.--El Paso 2015, pet. denied).