Because he wanted to move to his family’s ranch in Karnes County, Richard Butler left his San Antonio-based firm in 2010 with plans to ranch and practice law on the side.
“I no sooner opened an office than I got overwhelmed with work. I brought in my son, Clinton Butler, to practice with me, and the two of us couldn’t keep up, so we rejoined my old law firm, Langley & Banack,” in 2012, Butler says.
Butler postponed his dream of life as a full-time rancher because of one thing: drilling in the Eagle Ford Shale. The Eagle Ford Shale play has provided a monster economic boon to South Texas during 2012, and with that plenty of work for transactional lawyers and litigators in Texas.
The South Texas law practice is “booming” because of drilling activity in the Eagle Ford Shale, Butler says.
“It’s been a wakeup call for a lot of sleepy South Texas communities. . . ,” says Butler, now again a shareholder in Langley & Banack. “It’s been more than just that. It’s created a huge rush of activity in the oil and gas industry in an area that’s filled up every restaurant, every hotel, every other type of business.”
He says the work is “everything related to the oil and gas boom,” including oil and gas leases, pipeline easements, saltwater disposal contracts and well leases, and, for litigators, surface damage disputes, mineral interest disputes and royalty interest disputes. There’s also a lot of estate planning work due to the economic conditions, Butler says.
The increase in drilling in the Eagle Ford Shale, which runs from the Laredo area northeast to East Texas, began in 2008, but the buildup was slowed by the 2009-2010 recession, and activity hit highs this year. According to statistics from the Texas Railroad Commission, 26 drilling permits were issued in the Eagle Ford Shale in 2008, 94 in 2009, 1,010 in 2010, 2,826 in 2011, and the agency estimates about 4,300 for 2012.
The boom in drilling in the shale is due to new technology, including horizontal drilling, which is a method of getting oil and natural gas reserves out of mature fields, and a robust market with the price of a barrel of crude oil exceeding $100. The impact of the drilling boom has had a “profound” impact on employment, spending and income in the region, the Federal Reserve Bank of Dallas writes in its second quarter 2012 “Southwest Economy” report.
The Eagle Ford Shale play isn’t just providing work for transactional lawyers who might help a rancher negotiate a lease with an oil and gas company or help one of those energy companies secure the rights to drill on acreage.
Plaintiff’s lawyer Pat Maloney Jr. of San Antonio says his business in South Texas related to Eagle Ford Shale activity is “substantial” and has picked up over the last 12 months. Maloney says he is currently working on about a dozen suits, both personal injury suits involving oilfield workers, and trucking accident litigation stemming from congestion on the roadways.
“It’s certainly a growth area,” says Maloney, of the Law Offices of Pat Maloney.
Litigator Mikal Watts, a partner in Watts Guerra Craft in San Antonio, says the South Texas boom has helped his firm.
“We’re smothered with cases. We’ve got an entire section of our law firm doing nothing but Eagle Ford Shale-related litigation,” he says.
Specifically, Watts says five or six of the firm’s 24 lawyers work nearly fulltime on cases related to disputes arising at least tangentially from the oil and gas exploration taking place in South Texas, including claims related to misappropriation of corporate opportunity, misappropriation of trade secrets, pipeline easements and more recently, worker injuries.
The investment his firm has needed to make to handle such matters effectively has been steep, Watts says. “We are talking in the millions,” he says.
But the payoff also has proven rich. Watts says three cases in the past 12 months related to Eagle Ford claims have either settled or concluded with final judgment of almost $100 million each or more.
Other firms also jumped at the opportunity. For example, Burleson, a Houston-based oil and gas firm based in Houston that operates in markets with busy shale plays, opened an office in San Antonio in 2010 with one attorney. But today, the firm has about two dozen lawyers based in San Antonio because of Eagle Ford Shale play work.
In addition to oil and gas title work and other transactional matters related to drilling, the Burleson lawyers are also working on some Eagle Ford Shale-related litigation, says firm founder Richard Burleson of Houston.
That litigation work is growing, Burleson says, with many of the disputes stemming from leases signed more than three years ago at the beginning of the uptick in drilling in the Eagle Ford Shale.
“It’s been about three years now, so it’s starting to be a little more mature,” Burleson says.
— Miriam Rozen contributed to this article