969 F.2d 146 (5th Cir. 1992), 91-5068, Amoco Production Co. v. Horwell Energy, Inc.

Docket Nº:91-5068.
Citation:969 F.2d 146
Party Name:AMOCO PRODUCTION COMPANY, Plaintiff-Appellee, v. HORWELL ENERGY, INC., et al., Defendants, Gardes Directional Drilling, Defendant-Appellant.
Case Date:August 21, 1992
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
FREE EXCERPT

Page 146

969 F.2d 146 (5th Cir. 1992)

AMOCO PRODUCTION COMPANY, Plaintiff-Appellee,

v.

HORWELL ENERGY, INC., et al., Defendants,

Gardes Directional Drilling, Defendant-Appellant.

No. 91-5068.

United States Court of Appeals, Fifth Circuit

August 21, 1992

Page 147

Thomas J. Wyatt, Hargrove, Guyton, Ramey & Barlow, Shreveport, La., S.W. Plauche, III, Plauche, Hartley & Tompkins, Lafayette, La., for defendant-appellant.

W. Michael Adams, Blanchard, Walker, O'Quin & Roberts, Shreveport, La., for plaintiff-appellee.

Appeal from the United States District Court for the Western District of Louisiana.

Before VAN GRAAFEILAND [*], KING and EMILIO M. GARZA, Circuit Judges.

PER CURIAM:

This case requires us to determine whether, under Louisiana law, a drilling contractor who drills to earn an interest in the well has a privilege on the lease and well. Because we conclude that no amount is due within the meaning of the statute, we hold that the Appellant has no valid privilege and therefore affirm the judgment of the district court.

I.

The facts are largely undisputed. Amoco Production Company owned a mineral lease in Caddo Parish, Louisiana. It contracted with Horwell Energy, Inc., to operate the lease and drill a test well. Horwell was to receive an eighty percent interest in the well if Horwell satisfactorily performed the contract with Amoco. Amoco reserved the right to terminate the contract, however, if Horwell breached the agreement.

Horwell contracted with Gardes Directional Drilling to provide directional drilling services. Gardes provided these services, valued at $246,375, plus a cash payment of $140,000, and in return Grades was to receive "an interest equivalent to .3888266 in all rights, interests and obligations in and to the initial test well." Gardes was fully aware of the Amoco-Horwell agreement, which was attached to and incorporated by reference in the Horwell-Gardes agreement. Gardes therefore knew that its rights were conditional because they were fully dependent on the continued efficacy of Horwell's agreement with Amoco and Horwell's satisfactory performance of its obligations under that agreement.

Horwell breached its agreement with Amoco, and Amoco exercised its right to terminate the contract. Thus, Horwell did not earn its eighty percent interest in the well and could not convey the promised interest to Gardes...

To continue reading

FREE SIGN UP