In a opinion by Judge Bullard arising from the same dispute, the Business Court has granted an operator’s motion for summary judgment on its breach-of-contract claim against another operator who allegedly breached a mutual waiver agreement.
Slant Operating LLC and Slant WTX Holdings, II, LLC v. Octane Energy Operating, LLC (No. 24-BC08A-0002; 2025 Tex. Bus. 53; December 22, 2025) arose from a multi-party dispute in the oil patch. Slant Operating and Octane operated oil and gas wells on adjancent leaseholds. They executed an agreement to reciprocally waive future objections to the other’s “off-lease penetration point” permit applications to the RRC. They also agreed to keep each other advised of daily drilling, completion, and flowback reports for each well, as well as daily production data. So when Octane planned to drill five wells from a penetration point neighboring Slant’s leasehold, Slant waived its objection. But when Slant proposed to drill its own wells from a penetration point on neighboring Octane’s leaseholds, Octane refused to waive objection and filed a permit objection with the RRC. Slant Operating sued Octane for breach of contract and moved for partial summmary judgment on liability. Octane filed a competing MSJ based on ambiguity in the agreement and failure to exhaust administrative remedies.
Octane also objected to some of Slant’s summary judgment evidence, including statements in open court by Octane’s attorney, Slant’s request to Octane for a waiver, an email from an Octane representative and the RRC objecting to Slant’s drilling application, and a statement by Slant’s attorney objecting to Octane’s assertions about the agreement. The court agreed that the arguments of Octane’s attorney were not evidence because they were not based on personal knowledge and excluded them. It made the same ruling on Octane’s objection to the statements of Slant’s attorney. However, it rejected Octane’s claim that Slant’s request for the waiver constituted hearsay because Slant introduced it to show that the waiver request was made, not to show the truth of any matter in the request itself. As to the incompleteness of that evidence, the court ruled that the remedy for an incomplete exhibit is not to strike it, but to allow the opposing party to contro vert it by introducing any other part of the statement that should be considered as well. The same went for Octane’s objection to the completeness of Slant’s evidence of Octane’s communication with the RRC.
Moving on to the motions for summary judgment, the court determined that the waiver agreement was a valid contract (offer/acceptance/consideration in the form of data sharing), a meeting of the minds, and mutual execution. The court further determined that Slant conclusively proved that it complied with the waiver agreement by not objecting to Octane’s permit application and that Octane breached the agreement by doing the opposite with respect to Slant’s application. The court rejected Octane’s assertion that the agreement didn’t exist and that it never promised to provide Slant with future waivers in return for Slant’s waiver. Looking to the plain language of the agreement, however, the court found otherwise. Octane tried again, arguing that the agreement was merely an “agreement to agree” and too indefinite to be enforced. The same interpretation of the contract language applied here. Octane promised to waive its objection to future Slant permit applications for wells with penetration points on Octane’s neighboring lease. Slant agreed to provide production and other data in exchange. Had the contract intended for the parties to negotiate future waivers, it should have said so. Finally, the fact that the contract contained no duration term didn’t make it indefinite and unenforceable, particularly in light of Slant’s performance and Octane’s subsequent non-performance.
Octane asserted further that Slant’s interpretation of the agreement was unreasonable, oppresive, and led to an absurd result. Octane based this longshot claim on the contention that the contract required Octane to waive objections to any number of future wells and that Slant sought over $10 million in damages when it offered only $2.8 million for the drilling site itself. The court didn’t go for this, either, observing that the agreement conferred two benefits to Octane, future waivers and production data from all of Slant’s wells for which it requests waivers. There was also no question of absurdity, finding that Octane could not show that it was “quite impossible that a rational person could have intended the result that follows from enforcing unambiguous contract language.” Simply put, Octane, an experienced oil and gas operator, knew better than to agree to grossly inequitable terms and had plenty of opportunities during negotiations (between sophisticated parties) to change the terms of the deal. The court also rejected Octane’s exhaustion argument, fnding that Octane failed to present any statutory law, case law, or administrative rules or decisions indicating that the RRC had exclusive jurisdiction over a breach-of-contract claim. Likewise, Octane’s waiver, estoppel or quasi-estoppel, and excuse claims had no merit. The court granted Slant’s motion for partial summary judgment and denied Octane’s MSJ.
