Background: Reciprocal Waivers and Off-Lease Drilling Rights

Slant Operating, LLC and Octane Energy Operating, LLC—both oil and gas operators—entered into a February 22, 2023 letter agreement containing reciprocal waivers of objections to each other's off-lease penetration point permit applications before the Texas Railroad Commission. Under the agreement, Slant waived objections to Octane's Green Gables Wells, while Octane agreed to "waive its right to protest future Slant drilling permit applications insofar . . . as they concern Off Lease Penetration Points where Octane is the offset operator of record." The agreement also required the parties to exchange daily drilling, completion, flowback reports, and production data. Critically, the Letter Agreement contained no express monetary consideration, payment obligations, or valuation terms.

When Slant sought to drill its Gardendale Wells from an off-lease penetration point on Octane's leasehold in mid-2024, Octane refused to provide the waiver and formally objected to Slant's RRC permit application. Slant filed suit in Tarrant County district court, then nonsuited and refiled in the Business Court on October 1, 2024, alleging breach of contract and claiming over $11.8 million in lost expected revenue. After the Court ordered jurisdictional briefing and allowed Slant to amend its petition, Octane filed a formal plea to the jurisdiction on April 4, 2025.

The Jurisdictional Challenge: Pleading Sufficiency and Existence of Facts

Octane's plea attacked jurisdiction on two grounds. First, it challenged pleading sufficiency, arguing that the Letter Agreement lacked material terms—particularly any monetary consideration or valuation—necessary to demonstrate it was a "qualified transaction" under Section 25A.004(d)(1). Second, Octane challenged the existence of jurisdictional facts, contending that even considering the evidence, the agreement could not satisfy the statutory threshold. The Court applied the framework established in Texas Department of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004), which distinguishes between facial pleading challenges and evidentiary attacks on jurisdictional facts.

The Court's Analysis: Sufficient Pleading and Failed Factual Challenge

Judge Bullard concluded that Slant's amended petition sufficiently pleaded jurisdictional facts. The Court noted that when a plea attacks pleadings, courts must "construe the pleadings liberally in favor of the plaintiff and consider the plaintiff's intent," and that plaintiffs should be afforded an opportunity to amend unless the pleadings "affirmatively negate . . . jurisdiction." Here, Slant had alleged the agreement was a qualified transaction worth over $10 million, and the pleadings did not affirmatively demonstrate incurable jurisdictional defects.

Turning to Octane's factual challenge, the Court applied the burden-shifting framework that "generally mirrors that of a summary judgment." The opinion explained:

If the plea challenges a plaintiff's factual allegations with supporting evidence that refutes jurisdiction, the burden then shifts to the plaintiff to raise a genuine issue of material fact to defeat the jurisdictional challenge.

The Court determined that Octane failed to successfully refute Slant's jurisdictional allegations with evidence, and therefore Slant was not required to produce additional evidence to create a fact issue. Because "the Plaintiff has pleaded sufficient jurisdictional allegations and the Defendant failed to successfully refute these allegations," the Court denied the plea.

Significance for Texas Commercial Practice

This opinion provides important guidance on the mechanics of jurisdictional pleading and proof in the Business Court. It confirms that plaintiffs must affirmatively plead facts establishing jurisdiction under Section 25A.004(d)(1), but that liberal construction applies at the pleading stage. More significantly, it clarifies that defendants challenging jurisdiction bear a burden similar to summary judgment movants when attacking the existence of jurisdictional facts—they must produce evidence that actually refutes the plaintiff's allegations, not merely point to gaps in the plaintiff's pleadings.

For oil and gas practitioners, the decision suggests that reciprocal waiver agreements and similar operational arrangements may qualify as "qualified transactions" even without express monetary consideration, provided the plaintiff can plead (and ultimately prove) the requisite amount in controversy through lost revenue or other damages. The opinion leaves open whether Slant will ultimately prevail on the merits or whether the agreement actually satisfies the qualified transaction definition, but establishes that jurisdictional dismissal at the pleading stage requires more than identifying missing contract terms. Practitioners defending Business Court cases should note that a successful plea to the jurisdiction requires affirmative evidence negating jurisdictional facts, not merely highlighting pleading deficiencies that could be cured by amendment.