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Seagull Energy E & P, Inc. v. Eland Energy, Inc.

Supreme Court of Texas
207 S.W.3d 342 (2006)


Seagull Energy E & P, Inc. (plaintiff) was one of many lessees of two offshore oil and gas rigs. The other lessees had all agreed that Seagull would operate the rigs, Seagull would share the profits with the other lessees, and the other lessees would pay Seagull for a portion of the operating expenses. Eland Energy, Inc. (defendant) bought an interest in two leases from other lessees and expressly assumed these obligations. The leases included provisions that allowed Eland to assign its interests to a third party, but the lease contracts were silent about whether an assignment would release Eland from liability for its obligations. Eland then sold its interests to Nor-Tex Gas Corporation, assigning its rights and obligations under the leases to Nor-Tex. Nor-Tex did not pay Seagull for its portion of the operating expenses. Seagull asked Eland to pay them, but Eland claimed that its assignment of the lease interests to Nor-Tex meant that Eland no longer had any contractual obligation to pay Seagull. Seagull sued both Eland and Nor-Tex. The trial court found that Eland must pay Seagull. The appellate court reversed this decision, finding that Eland was not obligated to pay Seagull. Seagull appealed.

Rule of Law


Holding and Reasoning (Medina, J.)

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