FEDERAL - REGULATORY: Federal Reserve Oil and Gas Industry Lending – Washington, DC. On April 30, the Federal Reserve announced changes to a lending program that paves the way for the oil and gas industry to qualify for government financing amidst the COVID-19 pandemic. The expanded criteria to qualify for the Main Street Lending Program follows requests from Sen. Ted Cruz (R-TX) and a push by small and mid-sized oil producers who said financing was needed to save the industry from bankruptcy. (See the news release from Sen. Cruz here) The new guidelines ease restrictions on borrowing for heavily indebted companies and also allows them to use the loans to refinance existing debts — a departure from the first set of criteria released by the board. “Because of these restrictions, small- and medium-sized oil and gas companies, who desperately need liquidity because of massive demand disruption caused by COVID-19 and foreign oil aggressive overproduction and price discounts, are unable to access the short-term liquidity they need to avoid bankruptcy,” Cruz wrote in a letter to the Treasury Department and the Federal Resource Board last week. According to Cruz, this change to the lending program will alleviate those concerns. Read more.
STATE - REGULATORY: Industry Task Force – North Dakota. Last week, the state Department of Mineral Resources announced the formation of the Bakken Restart Task Force “to facilitate rapid recovery of the oil and gas industry and supporting sectors impacted by COVID-related demand shock.” The task force pulls together representatives from the state’s department of “Mineral Resources, Public Service Commission, Environmental Quality, Trust Lands, Pipeline Authority, Office of Management and Budget, Tax Department, Commerce, Bank of North Dakota and input requested from various industry subject matter experts.” The task force will be focused on three key areas: regulatory relief, economic stimulus and long-term oil and gas industry recovery. Read more.
STATE - JUDICIAL: Assignments; Overriding Royalties – Texas. On February 21, in Piranha Partners v. Neuhoff (Case No. 18-0581), the Texas Supreme Court addressed a dispute involving a written assignment of an overriding royalty interest in minerals produced from land in Wheeler County. The Supreme Court reversed the judgment of the court of appeals reversing the trial court's judgment declaring that the assignment conveyed an overriding royalty interest in all production under the lease, holding that the assignment unambiguously conveyed the assignor's overriding royalty interest in all production under the lease. The assignment in this case identified the single well that was producing at the time of the assignment, the land on which the well was located, and the lease under which the overriding royalty interest existed. At issue was whether the assignment conveyed the assignor's interest in all production under the identified lease or only in production from the identified well or from any well drilled on the identified land. The court of appeals held that the assignment conveyed only the 3.75 percent overriding royalty interest in production from the tract of land on which the well was located. The Supreme Court reversed, holding that the assignment unambiguously conveyed all of the interest that the assignor owned at the time of the conveyance. Read more.