Background: Reciprocal Waivers in Oil-and-Gas Operations

Slant Operating, LLC and Octane Energy Operating, LLC—both oil-and-gas exploration and production entities—entered into a February 22, 2023 letter agreement establishing reciprocal waivers for off-lease penetration point permit applications before the Texas Railroad Commission. Under the agreement, Slant Operating waived its right to protest Octane's permit applications to drill five Green Gables Wells from a penetration point on Slant Operating's adjacent leasehold. In exchange, 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 for the wells.

Slant Operating fully performed by waiving objections to Octane's Green Gables Wells. Less than 18 months later, when Slant Operating sought to drill its Gardendale Wells from an off-lease penetration point on Octane's adjacent leasehold and requested the reciprocal waiver, Octane refused. On September 16, 2024, Octane filed a formal objection with the RRC. Slant Operating filed suit in the Business Court on October 1, 2024, asserting breach of contract.

Competing Summary-Judgment Motions

The parties filed competing motions for summary judgment, presenting the court with a pure contract-formation dispute. Slant Operating moved for partial summary judgment on liability, arguing the Letter Agreement was a valid, enforceable contract; that it had fully performed; that Octane breached by refusing the Gardendale waiver; and that damages resulted. Octane countered with its own motion, asserting two defenses: first, that "certain parts of the Letter Agreement are too indefinite to enforce," and second, that "Slant Operating failed to exhaust administrative remedies before initiating suit."

The Court's Analysis: No Genuine Fact Issues on Definiteness or Mutual Assent

Judge Bullard's analysis focused on whether genuine issues of material fact existed "concerning the definiteness of the agreement's essential terms and the parties' mutual assent to those terms." Applying traditional summary-judgment standards under Texas Rule of Civil Procedure 166a, the court noted that a movant "bears the burden to show that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law," and must "conclusively establish all essential elements of its claim by presenting evidence." The court emphasized it must "take all evidence favorable to the nonmovant as true and 'indulge every reasonable inference and resolve any doubts in the nonmovant's favor.'"

The opinion does not detail the court's substantive contract analysis, but the holding is unequivocal:

The Court concludes no such fact issues exist to preclude summary judgment for Plaintiff. Accordingly, the Court grants Plaintiff's motion and denies Defendant's motion.

By granting Slant Operating's motion for partial summary judgment on liability while denying Octane's competing motion, Judge Bullard necessarily rejected both the indefiniteness defense and the exhaustion-of-remedies argument. The court found the Letter Agreement's essential terms sufficiently definite and the parties' mutual assent established as a matter of law.

Evidentiary Rulings: Attorney Argument Is Not Evidence

The opinion includes significant evidentiary rulings that provide practice guidance. Octane objected to Slant Operating's Exhibit B—a partial transcript of Octane's counsel's statements at a prior jurisdictional hearing—arguing that "attorney argument is not evidence." Judge Bullard sustained the objection, holding that while unsworn attorney statements at a hearing may constitute evidence "when the circumstances clearly indicate that the attorney is tendering evidence on the record based on personal knowledge and the opposing party fails to object," counsel's "unsworn statements were not based on personal knowledge of the underlying case facts." The court struck Exhibit B, reinforcing that parties cannot bootstrap oral argument into summary-judgment evidence absent proper foundation.

Significance for Texas Commercial Practice

This decision provides important guidance for oil-and-gas practitioners and commercial litigators on several fronts. First, it demonstrates the Business Court's willingness to enforce industry-specific reciprocal agreements where the terms are sufficiently definite, even when one party seeks to escape performance after receiving the benefit of the other's performance. Second, the rejection of the exhaustion-of-remedies defense (though not detailed in the opinion) suggests that contractual disputes over RRC permit waivers may proceed directly in court without first exhausting administrative processes. Third, the evidentiary rulings underscore the importance of proper summary-judgment practice: counsel statements, even when seemingly favorable, cannot substitute for admissible evidence based on personal knowledge. Finally, by granting partial summary judgment on liability while reserving damages, the court efficiently bifurcated the proceedings—a procedural approach that may become more common in the Business Court for streamlining complex commercial disputes.