Texas—Oil & Gas

WILLIAM B. BURFORD
— Reporter —

Temporary Injunction for Lessee Against Surface Owner’s Effort to Restrict Access Upheld
                Davenport v. EOG Resources, Inc., No. 04-23-00385-CV, 2023 WL 5068556 (Tex. App.—San Antonio Aug. 9, 2023, no pet.) (mem. op.), involved a 5,000-acre ranch in northern Webb County, Texas, owned by the Davenport family, subject to a 1967 oil and gas lease held by EOG Resources, Inc. (EOG), covering the Davenport ranch and other land.

                In early 2022 EOG and the Davenports negotiated a water purchase agreement under which EOG would purchase and store water for its operations on or off the ranch. In that agreement EOG agreed to enter and exit the ranch through a gate on Krueger Road on the ranch’s east side and to use existing roads over the ranch designated by the Davenports. When EOG notified the Davenports later that year that it intended to drill on the ranch and enter from the west through a new gate and access its planned facilities using a new road across the northern portion of the ranch, the Davenports objected. They sued to limit EOG’s entry point to Krueger Road and to force it to move any new road farther from their residence. EOG counterclaimed for a declaratory judgment against interference with its dominant estate rights, asserting that Krueger Road was currently incapable of accommodating EOG’s heavy equipment so that restricting access to entrance from that road would result in indefinite delay causing incalculable losses and that its planned new road would not interfere with any existing surface use. Both sides sought a temporary injunction, and the trial court, after an evidentiary hearing, granted that relief to EOG. The court of appeals affirmed.

                The court observed that a party applying for a temporary injunction must plead and prove that it has a cause of action, a probable right to the relief sought, and a probable, imminent, and irreparable injury in the interim. Id. at *4. The trial court’s discretionary determination of whether it has met that burden, it continued, will not be overruled on appeal unless the trial court acted unreasonably or in an arbitrary manner. Id. Here the trial court heard evidence that EOG held an oil and gas lease and that its being forced to use Krueger Road would delay development, causing loss of production and permanent reservoir damage, the value of which would be difficult or impossible to calculate. Id. at *6. Because some evidence supported each element EOG was required to prove, the trial court had not abused its discretion in granting the temporary injunction to EOG, the court held. Id. Likewise, having granted EOG’s temporary injunction, the trial court had necessarily found that the Davenports had not pleaded and proved their necessary elements for a temporary injunction, including the conclusion that the restrictions in the parties’ water purchase agreement applied only to water purchase activities and not to oil and gas operations. Id. at *7.

 

Royalty Reservation Held Not Invalidated by Duhig Rule
                The court in Echols Minerals, LLC v. Green, 675 S.W.3d 344 (Tex. App.—Eastland 2023, no pet. h.), construed a 1952 warranty deed from Floyd Haynes and his wife Lola Haynes, Robert Bruce Haynes and his wife Mary E. Haynes, and D’Lorz Inez Haynes to Lois Madison, conveying interests in the North 1/2 of Section 1, Block 35, T-2-N, T&P Ry. Co. Survey, Martin County, Texas.

                At the time of the deed the grantors owned an undivided 5/6 interest in the surface estate of the land and an undivided 1/3 interest in the minerals except in NW¼NE¼ of Section 1, where they owned no mineral interest. They had previously, in 1944, conveyed an undivided one-half interest in all of N½ of Section 1 except the NW¼NE¼ to K.M. Regan, reducing their mineral interest from 5/6 to 1/3. The 1952 deed purported to convey an “undivided 5/6 interest in and to” the half-section, then providing that the grantors did not own the minerals in the NW¼NE¼ and that the deed did not convey the minerals in that portion of the half-section. It then reserved to the grantors “an undivided 33.25/278.5 non-participating royalty interest” in the minerals in the portion of the land where they owned minerals. The deed did not mention the 1944 conveyance to Regan or otherwise reference any prior outstanding mineral conveyances or reservations.

                Echols Minerals, LLC (Echols Minerals), claiming to have succeeded to one-half of the royalty interest reserved to the Haynes grantors, sued Donald Green, the owner, as trustee of a family trust, of a portion of the interest conveyed to Lois Madison in the 1952 deed, to establish its title. Green filed a counterclaim asserting that the royalty reservation in the 1952 deed was ineffective under Duhig v. Peavy-Moore Lumber Co., 144 S.W.2d 878 (Tex. 1940), because the deed had failed to except the previously conveyed mineral interest. The trial court granted summary judgment to Green declaring the Haynes royalty reservation ineffective, but the court of appeals reversed, holding that the Duhig doctrine is limited in a manner that made it inapplicable to the 1952 deed.

                After rejecting Echols Minerals’ argument that the 1952 deed should be construed to include the express exception of outstanding royalty and mineral conveyances contained in an approximately concurrent deed conveying the remaining 1/6 interest in the land by another family member because the two deeds were allegedly part of the same transaction and should be read as one, Echols Minerals, 675 S.W.3d at 350–51, the court detailed its analysis of Duhig and its application to the 1952 deed. Duhig involved a deed from grantors who owned the surface and an undivided one-half mineral interest in the land. Their deed purported to convey the land but to reserve an undivided one-half interest to themselves. As the court here explained it, quoting from its decision in Stewman Ranch, Inc. v. Double M. Ranch, Ltd., 192 S.W.3d 808, 811 (Tex. App.—Eastland 2006, pet. denied), the supreme court held that the grantors were estopped from claiming any mineral interest and that the grantees owned the disputed one-half. Echols Minerals, 675 S.W.3d at 351–52. Citing Trial v. Dragon, 593 S.W.3d 313, 318–19 (Tex. 2019), however, the court declared that Duhig is limited and now only applies if an over-conveying grantor owns “the exact interest to remedy the breach” at the time of execution of the deed. Echols Minerals, 675 S.W.3d at 353 (quoting Trial, 593 S.W.3d at 319). Here, said the court, the exact interest to remedy the Hayneses’ title failure would be a one-half mineral interest, but they neither reserved nor owned a one-half mineral interest. Id. at 354–55. Thus, according to the court, the Haynes grantors did not own the exact interest to remedy their failure of title. Moreover, the interest reserved to the Haynes grantors was a royalty interest, not the exact interest either in nature or in quantity, required to remedy the failure of the title they conveyed to Madison, so that Duhig did not estop them or the successors to their interest from asserting title to it. Id. at 355.

                The court’s opinion quotes Trial but devotes little discussion to the circumstances of that case or the supreme court’s extensive discussion of Duhig in that opinion. Ultimately, the decision in Trial that Duhig was inapplicable did not rest on incongruence between an interest owned by the grantor and the title the grantor purported to convey, as the court here seems to suggest it did. If an interest that a deed purports to convey cannot become fully vested in the grantee because of failure of the grantor’s title but can be at least partially fulfilled out of an interest the grantor does own, it is unclear why the grantor should not be estopped to claim that interest.

                The court’s opinion strongly suggests, though without much further explanation, that Duhig is, or is about to become, no longer good law. If a doctrine as fundamental as the Duhig rule has indeed become severely limited, as this court believes it has, or is due to be overruled entirely, as some commentators are said to assert, practitioners must hope that the courts will give them needed guidance on its parameters or on what will replace it and why.

                Editor’s Note: The reporter’s law firm has represented the appellees in this case.

 

Lessee’s Double Payment of Annual Shut-In Royalty Held Not to Have Extended Lease by Two Years
                The court in Taylor Properties v. Scout Energy Management, LLC, No. 07-22-00242-CV, 2023 WL 5486220 (Tex. App.—Amarillo Aug. 23, 2023, no pet. h.) (mem. op.), construed the shut-in royalty clause of two oil and gas leases covering a section of land in Moore County, Texas, from which gas had been produced for many years. The clause read, apparently in its entirety, as follows:

[W]here gas from a well producing gas only is not sold or used, Lessee may pay as royalty $50.00 per well per year, and upon such payment it will be considered that gas is being produced within the meaning of [the habendum clause].

Id. at *1 (alterations in original).

                The Gober 1R gas well on the land ceased to produce in September 2017, and it remained shut-in until November 2019. ConocoPhillips Company (ConocoPhillips), then the lessee, made a shut-in royalty payment to Taylor Properties (Taylor), the lessor, on September 6, 2017. ConocoPhillips paid shut-in royalty to Taylor again on October 10, 2017. Scout Energy Management, LLC, and affiliates (collectively, Scout), after acquiring the leases from ConocoPhillips, made the next shut-in payment to Taylor on December 21, 2018. Taylor sued Scout in trespass to try title, contending that the leases had expired when more than one year elapsed after ConocoPhillips’s second payment before the next one was made. Scout countered that the two payments together were sufficient to extend the leases’ term for two years so that the third payment was timely and extended the lease for another year. After a bench trial the trial court rendered a take-nothing judgment against Taylor, but the court of appeals reversed, agreeing with Taylor’s position.

                Rejecting the trial court’s finding that the shut-in royalty clause was ambiguous, the court rested its decision on notations in receipts ConocoPhillips had prepared when it made its payments. The receipt for the second payment noted the date “10-09-2017” under the heading “Mth Begin.” Id. at *3. That meant, according to the court, that the payment was for an annual period beginning on October 9, 2017. Because no further payment was made before the end of that period, the lease had expired. Id. at *4.

 

Conveyance of 1/50 Mineral Interest Held to Be Conveyance of 1/50 Mineral Interest, Not 1/50 of Grantor’s Interest
                The court in Aaron v. Caddo Minerals, Inc., No. 11-22-00020-CV, 2023 WL 5622115 (Tex. App.—Eastland Aug. 31, 2023, pet. filed) (mem. op.), affirmed the trial court’s dismissal of plaintiff Glen Aaron’s petition seeking favorable construction of a mineral deed by his son, whose interest he had acquired, to Caddo Minerals, Inc. (Caddo). The deed conveyed the following:

an undivided One-Fiftieth (1/50)interest [sic] in and to all the oil, gas and other minerals in and under and that may be produced from . . . South 120 acres of the East-Half (E/2) of Section 38, Block 36, T-1-S, T&P Ry. Co. Survey, Glasscock and Midland Counties, Texas . . . .

Id. at *1 (alteration in original).

                The dismissal was proper, the court held, under Tex. R. Civ. P. 91a.1, allowing a party to move to dismiss a cause of action on the grounds that it has no basis in law or fact. Id. at *4. Aaron insisted that the core issue was the quantum of the interest conveyed to Caddo, arguing that the deed only conveyed 1/50 of the grantor’s 1/3 of 1/12 of the royalty. Unremarkably, the court of appeals instead agreed with Caddo that it was conveyed an undivided 1/50 interest in all the oil, gas, and other minerals in the property, observing that the deed reserved no interest and that Aaron pointed to no other language in the deed or case law directing a different result. Id. at *5.

 

Conveyance of 1/8 of Oil and Mineral Rights as a Royalty Held Fixed 1/8 Royalty Interest
                The court in Pacer Energy, Ltd. v. Endeavor Energy Resources, LP, 675 S.W.3d 390 (Tex. App.—Eastland 2023, no pet. h.), construed a 1923 deed from A.F. and Rose M. Becker to J.L. Henderson conveying a quarter-section of land in Martin County, Texas. The deed included the following provision:

It is expressly agreed and stipulated that Seven Eights [sic] of all Oil and Mineral rights on said [property] is retained by the grantors herein, A.F. Becker, and wife Rose M. Becker, and the other One-Eighth of the Oil and Mineral rights therein is hereby conveyed as a royalty to the said J. L. Henderson, his heirs and assigns.

Id. at 392 (second alteration in original).

                In 1960, after Henderson had conveyed parts of the land to each of H.G. and Martha Keaton and to Walter and Irene Nichols, the Beckers executed a “Declaration of Interest” with each of Henderson’s grantees that the interest reserved to the Beckers was “the full interest in the minerals in said land, subject only to an outstanding 1/8 of all of the oil, gas and other mineral rights owned by [the Keatons and the Nicholses] as a free royalty interest” and that the Keaton and Nichols royalty interest was a “non-participating royalty interest payable out of any production of oil, gas and other minerals, if, as and when produced from [the property].” Id. at 393 (alterations in original).

                Pacer Energy, Ltd. (Pacer), having succeeded to a portion of the interest reserved to the Beckers, sued for a declaration that the 1923 deed conveyed a floating 1/8 of the royalty on oil and gas production from the land. The trial court granted summary judgment to the successors to the grantees’ interest declaring that the Beckers conveyed a fixed 1/8 royalty interest in total production, and the court of appeals affirmed.

                Pacer’s argument, the court remarked, was essentially that the term “royalty interest” should be substituted for “Oil and Mineral rights” so that the 1923 deed conveyed only 1/8 “of” the royalty, and that it asserted that the 1960 declarations’ use of the “minerals” and “mineral rights” reflected that the parties intended those two terms to mean different things so that the 1923 deed’s use of “mineral rights” meant “royalty interest.” Id. at 395. The court disagreed.

                Because the interest conveyed to Henderson was carved from the same mineral estate reserved by the Beckers, the parties’ use of “minerals” and “mineral rights” in the 1960 declarations of interest did not indicate they were treating the terms differently, the court explained. Id. at 396. It found its interpretation was supported by Watkins v. Slaughter, 189 S.W.2d 699 (Tex. 1945), in which the court held the reservation of a 1/16 interest in the mineral estate, referred to by the parties as a royalty, to be a fixed 1/16 royalty interest rather than “only a mineral fee interest.” Pacer, 675 S.W.3d at 397 (quoting Watkins, 189 S.W.3d at 700). Watkins was recognized still to be good law, noted the court, in Temple-Inland Forest Products Corp. v. Henderson Family Partnership, Ltd., 958 S.W.2d 183 (Tex. 1997), in which the reservation of a 1/16 interest in the “oil, gas and other minerals,” with the further agreement that the interest “is and shall always be a royalty interest,” was construed to be a fixed 1/16 royalty. Pacer, 675 S.W.3d at 398. Those cases enabled the court to distinguish the Becker-Henderson deed from that construed in French v. Chevron U.S.A. Inc., 896 S.W.2d 795 (Tex. 1995), in which a deed first conveying a fractional interest in the minerals and then reserving any appurtenant executive, bonus, and rental rights and referring to the interest as “a royalty interest only,” was construed to have conveyed a floating interest of the stated fraction of the royalty. Pacer, 675 S.W.3d at 398.

                Editor’s Note: The reporter’s law firm has represented the appellees in this case.

 

Uncommitted Cotenant Lessee’s Leases Held Expired Notwithstanding Billing and Payment of Operating Costs
                The typical oil and gas lease provides that it extends for a fixed term and thereafter for as long as oil or gas is produced. That production, in order to extend the term of the lease, must be brought about through the lessee’s own efforts, actively or constructively such as through the activity of an operator under an operating agreement the lessee has joined, as held in Cimarex Energy Co. v. Anadarko Petroleum Corp., 574 S.W.3d 73 (Tex. App.—El Paso 2019, pet. denied), and Hughes v. Cantwell, 540 S.W.2d 742 (Tex. App.—El Paso 1976, writ ref’d n.r.e.). If a lessee is the cotenant of other owners of operating interests who develop and operate the land for oil and gas production but does not itself participate in the drilling and operation of the wells, the production does not perpetuate the nonjoining lessee’s lease. What acts by such a nonjoining cotenant lessee might rise to the level of participation in operations needed to extend its leases? That question was before the court in Cromwell v. Anadarko E&P Onshore, LLC, No. 08-22-00129-CV, 2023 WL 6296937 (Tex. App.—El Paso Sept. 27, 2023, no pet. h.).

                In 2007 David Cromwell acquired two oil and gas leases from minority mineral owners in six sections of land. The leases provided for a term of three years and as long thereafter as oil, gas, or other products were produced (expressly in paying quantities under one of the leases). Anadarko E&P Onshore, LLC (Anadarko), the owner of substantial working interests in the same land, had drilled three wells on the land. After he acquired his leases, Cromwell asked Anadarko multiple times for an operating agreement to enable him to participate in the wells, but Anadarko never responded. After one of the wells reached payout, Anadarko began sending Cromwell joint interest billings, which Cromwell paid. At one point Anadarko sent Cromwell an authorization for expenditure seeking his election whether to participate in the installation of a compressor, to which he responded with his election to participate and payment for his share of the cost. After the primary terms of Cromwell’s leases expired, Anadarko continued to send him invoices and revenue checks and communicated with him as if his leases were effective. When it drilled another well in 2016, Anadarko realized, it maintained, that Cromwell’s leases had expired, and in early 2017 it took new leases from Cromwell’s lessors. Cromwell sued Anadarko, contending his leases never expired because he had constructively participated sufficiently to perpetuate his leases into their secondary terms. The trial court granted summary judgment to Anadarko, and the court of appeals affirmed.

                The costs Cromwell paid and pointed to as his “constructive participation,” the court said, merely reflected his proportionate share of a producing well’s operating expenses ordinarily owed by a nonparticipating cotenant and were not indicative of the parties’ intent that Cromwell shoulder any risk or liabilities inherent in the well’s operation. Id. at *9. Just as the court did not equate a lessee’s payment for repair costs and equipment replacements with “constructive production” in Cimarex, it declined to do so here. Id. Despite Anadarko’s references to Cromwell as an “owner,” said the court, the parties did not engage in conduct that would otherwise suggest they had a joint operating relationship: Cromwell’s course-of-conduct argument could not overcome the absence of an agreement to share expenses of development and operation. Id. Nor did Anadarko’s treatment of Cromwell (mistaken, according to Anadarko) as though his leases had not expired change the terms of those leases. Id. Because Cromwell did not cause production of oil and gas on the land, his leases terminated at the end of their primary terms, the court held. Id.

                Cromwell also argued that he and Anadarko had formed a partnership and that Anadarko had breached its fiduciary duty to him as a partner, pointing out that Anadarko’s invoices were styled “Partner Account Statement” and included a “Partner Number.” Simply including the word “partner” on invoices or identifying Cromwell’s account with a “Partner” or “JV” number was not enough to constitute legally sufficient evidence of Anadarko’s expression of intent to be a business partner of Cromwell’s, in the court’s analysis, because including those terms on invoices was not a situation in which a recipient would expect them to be of legal significance. That was especially true when viewed in the larger context of the parties’ relationship, as Anadarko never assented to Cromwell’s multiple requests to participate in its wells. The sharing of expenses and profits, as Cromwell had, was equally consistent with Anadarko’s accounting to Cromwell as a cotenant as its regarding him as a partner, in the court’s view. Id. at *12.

 

Plaintiff’s Evidence of Saltwater Flooding of Reservoir Avoids Summary Judgment on Trespass Claim
                Iskandia Energy Operating, Inc. (Iskandia), the operator of oil wells producing from the relatively shallow Delaware Mountain Group in the South Dimmitt Field in Loving County, Texas, sued SWEPI LP (SWEPI), the operator of wells producing from the deeper Wolfcamp and Bone Spring intervals in the area, alleging that SWEPI’s injection of large volumes of waste saltwater that migrated into Iskandia’s producing zones constituted a trespass against Iskandia’s property rights by damaging its wells. SWEPI moved for summary judgment, urging that Iskandia had no evidence that (1) SWEPI had intentionally entered or caused any entry into Iskandia’s wells, or (2) any alleged trespass caused injury to Iskandia’s right of possession, also moving to exclude expert engineering testimony supporting Iskandia’s claims. The trial court granted summary judgment to SWEPI and ordered Iskandia’s experts excluded, but in Iskandia Energy Operating, Inc. v. SWEPI LP, No. 08-22-00103-CV, 2023 WL 7168241 (Tex. App.—El Paso Oct. 31, 2023, no pet. h.), the court of appeals reversed.

                The court did not disagree with SWEPI’s assertions that the Texas Supreme Court had never recognized a cause of action for trespass based on deep subsurface water migration and that to validate its claim Iskandia must plead and prove that (1) Iskandia owned or had lawful right to possess real property; (2) SWEPI entered the land and the entry was physical, intentional, voluntary, and unauthorized; and (3) SWEPI’s trespass caused injury to Iskandia’s right of possession. Id. at *12. The court observed that according to Lightning Oil Co. v. Anadarko E&P Onshore, LLC, 520 S.W.3d 39 (Tex. 2017), unauthorized interference with the mineral estate constitutes a trespass only if the interference infringes on the mineral lessee’s ability to exercise its rights. Iskandia, 2023 WL 7168241, at *13. In Lightning, it noted, the supreme court rejected a mineral lessee’s trespass claim against another operator’s use of the land, with the surface owner’s consent, for the drilling of vertical wellbores to develop adjoining land through horizontal laterals only because of the small size of the injury, i.e., the removal of the minerals within a relatively few cubic yards of dirt and rock in the course of the drilling. Id. Similarly, the court continued, in Regency Field Services, LLC v. Swift Energy Operating, LLC, 622 S.W.3d 807 (Tex. 2021), while the supreme court had noted it had not determined whether subsurface water migration can cause an actionable trespass to a surface owner’s interest in the subsurface space, the case confirmed that the mineral lessee in that case, complaining of an alleged trespass brought about by water injection, had brought forth the type of claim recognized in Lightning Oil. Iskandia, 2023 WL 7168241, at *14. Based principally on those cases, the court of appeals concluded that Texas law recognizes a trespass claim based on unauthorized interference with an oil and gas lessee’s development right as long as the injury is not outweighed by competing interests. Id.

                The court further determined that in order to survive summary judgment, Iskandia had the burden to demonstrate exposure of its wells to water originating from SWEPI at levels sufficient to cause the loss it claimed. Id. at *15. Iskandia had presented deposition testimony of SWEPI’s erection of several saltwater disposal wells in the immediate vicinity and its injection of large volumes of saltwater, as well as damage to the wells. Regarding causation, Iskandia’s expert opinion testimony that SWEPI’s injected water migrated into Iskandia’s producing zones and damaged its wells, found by the court to have met minimum industry standards for reliability and in particular to have accounted for plausible alternative causes of Iskandia’s damage, constituted more than a scintilla of evidence creating a material fact issue. Id. at *16–17.

 

Sale of Company Held Not Prohibited Assignment of Lease
                Nortex Minerals, L.P. v. Blackbeard Operating, LLC, No. 02-23-00027-CV, 2023 WL 7401052 (Tex. App.—Fort Worth Nov. 9, 2023, no pet. h.) (mem. op.), involved a series of oil and gas leases, called the “Alliance Leases,” by Nortex Minerals, L.P. (Nortex), or Petrus Investment, LP (Petrus), as lessor, covering tracts of land in Tarrant and Denton Counties, Texas. As amended, the Alliance Leases included the following provision:

Except as provided herein, Lessee may not assign or otherwise transfer an interest in this Lease without prior written consent of Lessor, which consent may be granted or denied in the sole and absolute discretion[,] and without such consent, any instrument purporting to assign or otherwise transfer of this lease shall be void. Lessee shall have the right to transfer this Lease in its entirety without obtaining consent from lessor if such transfer of the Lease is (i) part of a merger, sale of membership interests or combination of Lessee or another entity[,] or a sale of all or substantially all of Lessee’s assets or (ii) as part of a transaction in which the transferee is a publicly traded energy company with a market capitalization in excess of $1 billion.[ ] Items (i) and (ii) are referred to herein as “Permitted Transfers[.”]

Id. at *1 (alterations in original).

                BlueStone Natural Resources II, LLC (BlueStone), acquired an undivided interest in the Alliance Leases and then became a wholly owned subsidiary of Blackbeard Operating, LLC (Blackbeard). In 2021 Blackbeard solicited bids and entered into an agreement for Diversified Production, LLC (Diversified), to purchase BlueStone, which would survive as an entity. Blackbeard then offered to sell the Alliance Leases to Nortex and Petrus (which had previously made a much lower offer) on the same terms. Nortex and Petrus responded by expressly withholding their consent to Blackbeard’s sale and then suing Blackbeard and BlueStone for breaching the Alliance Leases’ prohibition against assignment. The trial court granted Blackbeard’s and BlueStone’s motion for summary judgment, and the court of appeals affirmed.

                The court began by setting out the framework for its analysis, that it would determine (1) if a transfer occurred; (2) if so, whether it was a permitted transfer; and (3) if it was not a permitted transfer and consent was required, whether the consent requirement was an unenforceable restraint on alienation. Id. at *5. The court’s analysis ceased after the first step in the framework because it concluded that Blackbeard’s sale of the equity in BlueStone was not a transfer by the lessee. Id. at *6.

                Just as the sale of all of the stock of one of the joint owners of a natural gas plant in Tenneco Inc. v. Enterprise Products Co., 925 S.W.2d 640 (Tex. 1996), was not a sale of an interest in the plant itself triggering a preferential right to purchase under the plant owners’ operating agreement, the sale considered here was not a sale or transfer of an interest in the Alliance Leases, the court held. Nortex, 2023 WL 7401052, at *6. The parties could have included a provision in the Alliance Leases that change of control would require consent as a transfer, but they had not and the court, it said, would not add one. Id. The carve-out provisions in the Alliance Leases, under which Nortex and Petrus argued Blackbeard’s proposed sale was not a “Permitted Transfer,” were immaterial because there simply was no transfer at all. Id. at *7. No transfer of the lease occurred, the court declared, because BlueStone continued to own the same interest in the Alliance Leases as before, notwithstanding that Diversified, Blackbeard’s buyer, might derive some profit from the leases as BlueStone’s equity owner. Id.