In an opinion by Judge Bullard, the Business Court has granted a defendant operator’s plea to the jurisdiction on the basis that Plaintiff leaseholder was not a third-party beneficiary of an agreement between operators to waive objections to each other’s off-lease penetration point permit applications.
Slant Operating LLC and Slant WTX Holdings, II, LLC v. Octane Energy Operating, LLC (No. 24-BC08A-0002; 2025 Tex. Bus. 52; December 22, 2025) arose from a multi-party dispute in the oil patch. Slant Operating and Octane operated oil and gas wells on adjacenct leaseholds. They executed an agreement to reciprocally waive future objections to the other’s “off-lease penetration point” permit applications to the RRC. 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. Slant Operating sued Octane, and in its second amended petition added two additional plaintiffs, leaseholder Slant Holdings and parent company Slant Energy II, claiming that those entities were third-party beneficiaries of the waiver agreement. Slant Energy subsequently nonsuited its claims against Octane, leaving Slant Operating and Slant Holdings as plaintiffs.
Plaintiffs’ filed a motion to establish jurisdiction, asking the court to determine that it has subject-matter jurisdiction over their claims and “urge any dispute about whether they are entitled to recover damages is an issue of capacity, not jurisdiction.” Octane countered that Plaintiffs were barred from recovery because they can’t recover the value of mineral they never owned and Slant Holdings is neither a named party or a third-party beneficiary to the waiver agreement. Octane further maintained that the amount in controversy fell well short of the $5 million threshold. The court had previously concluded that Slant pleaded sufficient facts to support its contention that the waiver agreement constituted a qualified transaction and that the court had subject-matter jurisdiction over the action. Slant Operating, LLC v. Octane Energy Operating, LLC, 2025 Tex. Bus. ¶ 1, 717 S.W.3d 409, 413 (8th Div.). Rather than rehashing the earlier decision, the court granted Plaintiffs’ motion to establish jurisdiction.
Octane filed a plea to the jurisdiction contending that Slant Holdings lacks standing because it is not a third-party beneficiary of the waiver agreement. By the same token, Slant Operating lacks standing to sue on Slant Holdings’ behalf. The court sided with Octane. The court observed that “[a] third party may recover on a contract made between other parties if the contracting parties intended to attach a benefit to the third party and if the contracting parties entered into the contract directly for the third party’s benefit” and that “there is a presumption against conferring third-party beneficiary status on noncontracting parties, and ‘[a]ll doubts must be resolved against conferring third-party beneficiary status’” (citations omitted). Looking to Plaintiffs’ pleadings, the court concluded that Plaintiffs produced no evidence that Octane entered into the agreement to benefit Slant Operating’s leasholder. To rule otherwise would amount to “find[ing] that all operators contract to benefit all leaseholders, [thereby] impos[ing] an underlying default-intention on all oil and gas operators whereby all leaseholders would be presumed third-party beneficiaries to industry contracts.”
Additionally, Slant Holdings could not obtain standing by relying on RRC Statewide Rule 86, which requires an operating seeking “to develop a new or existing well with horizontal drain holes to provide written notice to all mineral owners of any offsite tract through which the proposed wellbore path traverses from the point of penetration.” Slant Holdings argued that has the mineral owner, it was entitled to notice and was a necessary party to “provide waivers to allow their leasehold interest holders to benefit.” The court didn’t buy it, holding that any nexus between Rule 86 and Texas contract law was murky at best. Plaintiffs’ tried to argue that Slant Holdings was a third-party creditor of the waiver agreement, but that argument failed because the waiver agreement indicated no evidence of Slant Operating’s indebtedness, contractual obligation, or other legally enforceable commitment to Slant Holdings. In short, if you want to confer third-party beneficiary or creditor status, you better say so in the contract.
Consequently, the court granted Octane’s plea to the jurisdiction and dismissed Slant Holdings claims.
