The 5th U.S. Circuit Court of Appeals has made it more difficult for oil and gas companies to get out of lease purchase and sale agreements they don’t like, especially when they try to use the Texas Statute of Frauds to undo them, says Roger Townsend, a partner in the Houston office of Alexander DuBose & Townsend who represents the plaintiff-appellants.
According to the 5th Circuit’s Feb. 1 decision in Preston Exploration Co., et al. v. GSF LLC and Chesapeake Energy Corp., the background in the case is as follows: In June 2008, the three appellants (collectively Preston) and the two appellees (collectively Chesapeake) began discussions regarding the sale of Preston-owned oil and gas leases. Chesapeake Energy Corp. is the second largest producer of natural gas in the United States.
