Oral Agreement to Delay Oil and Gas Lease Closing Did Not Violate Statute of Frauds

04/09/2015

This article explains a recent Texarkana Court of Appeals decision that provides important guidance on how contractual changes should be analyzed in light of the statute of frauds and changed conditions after an initial agreement is reached.

The Texarkana Court of Appeals recently upheld a $12.4 million breach of contract judgment against Petrohawk, which arose out of Petrohawk’s agreement with the plaintiff landowners to schedule multiple closings to sign oil and gas leases, and its subsequent refusal to lease additional properties after the first closing. The case
provides important guidance on how contractual changes should be analyzed in light of the statute of frauds and changed conditions after an initial agreement is reached. Whether a change in an agreement is material or requires reduction to writing often depends on the agreement’s wording and the facts of the particular case. Parties are best served by carefully documenting any modification to their agreements to avoid expensive and protracted litigation over enforcement.

Excerpted from Pratt's Energy Law Report, April 2015, Vol. 15-4. To read the full article, click here.

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