Jones Energy, Inc. and Jones Energy Holdings, LLC v. Pima Oil and Gas, L.L.C.
The case involves a dispute over an Overriding Royalty Interest (ORRI) in oil and gas production from the Gracie 117-1H well in Hemphill County, Texas. Pima Oil and Gas, L.L.C. (assignee) sued Jones Energy, Inc. and Jones Energy Holdings, LLC (operator, assignor's successor) for failing to pay ORRI on production from the horizontal well. The core issue was the interpretation of an "Assignment of Overriding Royalty Interest" and a related "Retainer Agreement," specifically whether an exception clause excluded production from a particular formation interval (Granite Wash A interval) or only from existing vertical wellbores. The trial court granted summary judgment to Pima. The Court of Appeals for the Seventh District of Texas reversed this decision, ruling that the ORRI did not burden production from the A interval of the Granite Wash formation. The appellate court rendered judgment that the ORRI does not apply to the A interval production and a "take nothing" judgment for Pima's monetary claims, while remanding for a determination of production from other intervals.