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Hilcorp Energy I, L.P. v. Merritt Operating, Inc.

Court of Appeals of Louisiana, Third Circuit

November 5, 2014

HILCORP ENERGY I, L.P.
v.
MERRITT OPERATING, INC

APPEAL FROM THE SIXTEENTH JUDICIAL DISTRICT COURT, PARISH OF ST. MARTIN, NO. 75441. HONORABLE CHARLES L. PORTER, DISTRICT JUDGE.

George H. Robinson, Jr., Brian W. Capell, Lafayette, LA, COUNSEL FOR PLAINTIFF-APPELLANT: Hilcorp Energy I, L.P.

Guy E. Wall, Paul E. Bullington, Jonathan R. Cook, Harahan, LA, COUNSEL FOR DEFENDANT-APPELLEE: Merritt Operating, Inc.

Court composed of J. David Painter, James T. Genovese, and Phyllis M. Keaty, Judges.

OPINION

Page 1001

[14-475 La.App. 3 Cir. 1] PAINTER, Judge.

Plaintiff, Hilcorp I, L.P. (Hilcorp), appeals the trial court's grant of a motion for summary judgment filed by Defendant, Merritt Operating, Inc. (Merritt), based on a finding that Hilcorp's statement of privilege did not adequately set out the amount due, and therefore, did not fairly apprise Merritt of the debt secured by the privilege. We disagree.

FACTS AND PROCEDURAL HISTORY

In 2001, Merritt became the operator of the CAM I RA SUB; Shinn No. 1-D Alt. Well (the well), which is located in the Simon Pass Field in Section 23, Township 15 South, Range 13 East, St. Martin Parish, Louisiana. Merritt pays all of the costs associated with the well and sells the oil production to Plains Marketing, L.P. (Plains). In 2006, Hilcorp began leasing property in the unit and acquired 49.8552 percent of the leasehold interest in the unit. Through September 2009, the purchase price for the sale of oil to Plains was paid to Merritt monthly except for about 24 percent which was paid to royalty owners. Hilcorp claims that it owns 49.8552 percent of the mineral leases for the unit from which the well produces and that it is entitled to this percentage of the revenues from the sale of production from the well. After Merritt refused to pay Hilcorp and the Louisiana Commissioner of Conservation rejected Hilcorp's attempt to become the well operator, Hilcorp filed this suit. Hilcorp filed a statement of privilege in the mortgage records. Plains stopped paying Merritt the purchase price for the sale of production from the well. Hilcorp's statement of privilege describes the amount as " equal to 49.8552% of the production obtained from the unit well identified below for the period May 2006[,] to the present (which will continue to accrue until payment)." Merritt is currently producing the well but is not receiving any of the revenue.

Page 1002

[14-475 La.App. 3 Cir. 2] Merritt filed a Motion for Summary Judgment or Alternatively to Release Production Revenues. In its memorandum in support of the motion, Merritt asserted that it was entitled to summary judgment because Hilcorp's statement of privilege did not fairly apprise it of the privilege claimed. Alternatively, Merritt asked the court to set a bond and rule that it was entitled to use the funds held in suspense to satisfy the bond and, in the further alternative, that it should be paid for operating and workover expenses.

The trial court found that the statement of privilege did not fairly apprise Merritt of the privilege claimed in that it did not include the amount due and granted Merritt's motion for summary judgment. This appeal followed.

DISCUSSION

Summary Judgment


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