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Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE FROM: CLERK OF SUPREME COURT OF LOUISIANA The Opinions handed down on the 19th day of March, 2013, are as follows: NEWS RELEASE #016

BY JOHNSON, C.J.: 2012-C -2055 CLOVELLY OIL CO., LLC v. MIDSTATES PETROLEUM CO., LLC, ET AL. (Parish of Evangeline) Judge Jefferson D. Hughes III was assigned as Justice pro tempore sitting for Kimball, C.J. for oral argument, and sits as an elected Justice at the time this opinion is being rendered. We hold that the JOA applies to leases and unleased mineral interests located within the geographic area described in Exhibit "A," which were owned by the parties at the time the JOA was executed. REVERSED. THE RULING OF THE TRIAL COURT IS HEREBY REINSTATED.

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SUPREME COURT OF LOUISIANA No. 2012-C-2055 CLOVELLY OIL CO., LLC VERSUS MIDSTATES PETROLEUM CO., LLC, ET AL. ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, THIRD CIRCUIT, PARISH OF EVANGELINE
JOHNSON, C.J.* By virtue of a series of assignments, Clovelly Oil Co., LLC ("Clovelly") and Midstates Petroleum Co., LLC ("Midstates") are now parties to a 1972 joint operating agreement ("JOA"). We granted this writ application to determine whether a lease acquired by Midstates in 2008 is subject to the provisions of the JOA.1 Answering that question in the negative, we reverse the ruling of the court of appeal and reinstate the ruling of the trial court. FACTS AND PROCEDURAL HISTORY A JOA is a contractual agreement between interested parties for the operation of a tract or leasehold for oil, gas and other minerals.2 This matter arises out of a JOA entered into in 1972 by Robin F. Scully, as Operator, and Fred Goodstein along with

Judge Jefferson D. Hughes III was assigned as Justice pro tempore sitting for Kimball, C.J. for oral argument, and sits as an elected Justice at the time this opinion is rendered. Because we reverse the ruling of the court of appeal and reinstate the ruling of the trial court, we pretermit discussion of Midstates' second assignment of error. 8 Patrick H. Martin & Bruce M. Kramer, Williams & Meyers: Manual of Oil and Gas Terms, 527-30 (2012). 1
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McLain J. Forman, as Non-Operators. Clovelly and Midstates became parties to the JOA through separate chains of assignments. Clovelly is the successor in interest to the operator designated in the JOA and the former operator's 56.25% working interest as provided in the JOA and subsequent acquisitions. Midstates is the successor in interest to a non-operating, undivided 43.75% working interest as provided in the JOA. Parties to a JOA typically use one of several "model" forms developed by the American Association of Professional Landmen ("AAPL").3 The JOA used in this case is "AAPL Form 610 - Model Form Operating Agreement" adopted by the AAPL in 1956. The relevant portions of the JOA provide as follows: OPERATING AGREEMENT DATED July 16, 1972 FOR UNIT AREA IN TOWNSHIPS 3&4 South, RANGE 1 West, Evangeline Parish, STATE OF Louisiana The Preamble to the JOA provides: WHEREAS, the parties to this agreement are owners of oil and gas leases covering and, if so indicated, unleased mineral interests in the tracts of land described in Exhibit "A", and all parties have reached an agreement to explore and develop these leases and interests for oil and gas to the extent and as hereinafter provided: Section 1 of the JOA contains the following relevant definitions: (4) The term "oil and gas interests" shall mean unleased fee and mineral interests in tracts of land lying within the Unit Area which are owned by the parties to this agreement. (5) The term "Unit Area" shall refer to and include all of the lands, oil
Established in 1956, the AAPL is a "professional organization that unites approximately 17,000 landmen and land-related persons through professional development and service. AAPL serves as the voice of the landman profession and continually seeks to foster industry cooperation through proactive legislative advocacy." AMERICA'S LANDMEN , http://www.landman.org/about-aapl (last visited Feb. 20, 2013). 2
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and gas leasehold interests and oil and gas interests intended to be developed and operated for oil and gas purposes under this agreement. Such lands, oil and gas leasehold interests and oil and gas interests are described in Exhibit "A." Exhibit "A" contains typewritten terms made by the original parties to the JOA. Section I of Exhibit A is titled "Lands subject to this agreement" and reads "The following described property situated in Evangeline Parish, Louisiana," and lists certain geographic parameters.4 Section 23 of the JOA addresses renewal or extension of leases, and provides in relevant part that "[a]ny renewal lease in which less than all the parties elect to participate shall not be subject to this agreement." On July 1, 2008, Midstates secured a new oil and gas lease from Crowell Land & Mineral Corporation that covers 242.28 acres situated in a geographic area described in Exhibit "A." In April of 2009, Midstates re-entered an abandoned Crowell Land & Mineral Corporation well and prepared the location for work on other abandoned wells situated on the Crowell leased lands. On April 22, 2009, Clovelly notified Midstates that Midstates' leasing activities and operations were covered and affected by the JOA. Clovelly claimed a 56.25% working interest in the new lease and the right to operate that lease. Clovelly

Township 3 South, Range 1 West Section 23--S

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