The San Antonio Court of Appeals has affirmed a trial court’s denial of an oil and gas operator’s TCPA motion to dismiss an adjoining lease owner’s “failure-to-protect” claim.
EOG Resources, Inc. v. CNH Enterprise Holdings, Ltd. (No. 04-24-00160-CV; September 30, 2025) arose from a dispute over the termination of a mineral lease. In 2009 the Hundleys executed an oil and gas lease in favor of Mitchell Petroleum Land Services for about 3,517 acres in McMullen County. CNH succeeded to the Hundleys’ interest and Mitchell assigned its interest to EOG. CNH alleged that the lease terminated in 2014 after expiration of the primary term, that EOG didn’t designate any retained tracts pursuant to the lease, and that only four 80-acre areas around four producing wells were retained. They further alleged that EOG drilled additional wells outside the retained acreage after the lease terminated. They brought three trespass claims and a conversion claim against EOG, pleading in the alternative that if the Hundley lease had not terminated, then Mitchell or EOG had failed to develop the lease as a reasonable and produce operator would have. EOG filed a TCPA motion to dismiss one of CNH’s claims, which alleged that EOG illegally drilled on a neighboring lease (the “Gary Lease”) in violation of the Eagleford Field Rules and that EOG’s continued operation of the Hundley and Gary leases waived any notice or hearing on a Rule 37 objection. CNH further claimed that EOG’s drilling on the Gary Lease caused substantial drainage to the surrounding properties, and that EOG had fracked the well, causing further damage to Plaintiff.
In its TCPA motion on Plaintiff’s failure-to-protect claim, EOG argued that its application for a drilling permit and a Rule 37 exception from RRC amounted to an “exercise of its right to petition” and that Plaintiff’s failure to protect claim was “based on” and “in response” to the exercise of that right and within the TCPA. CNH responded by filing an amended petition which removed the failure-to-protect-claim. Nevertheless, the trial court held a hearing on the TCPA motion. CNH recognized that its live pleading failed to moot the TCPA motion because attorney’s fees would be awarded to EOG if it prevailed. Instead, CNH maintained that its failure-to-protect-claim was not “based on” or “in response to” EOG’s contact with the Railroad Commission, and therefore fell outside the scope of the TCPA. The trial court agreed and denied EOG’s motion. EOG appealed.
In an opinion by Chief Justice Martinez, the court of appeals affirmed. Observing that the 2019 TCPA amendments narrowed the required nexus between the action and the protected activity, the court considered the “gravaman” of Plaintiff’s claim as “that EOG breached its obligation to protect the Hundley lease by failing to drill an offset well to prevent the drainage allegedly caused by the Gary2H well.” EOG’s “conduct in failing to drill the well” was thus the focus of the claim, not EOG’s exercise of its right to petition by communicating with the RRC. EOG argued further that Plaintiff’s claim fell under the umbrella of a breach of implied covenant to protect the leasehold, but Plaintiff did not challenge the drilling of the Gary Well itself, only the right to relief based on EOG’s failure to drill an offset well. Finally, the court rejected EOG’s contention that Plaintiff’s claim was “in answer or reaction to” EOG’s communications with the RRC,” holding that “the indirect link from communication to conduct (drilling the Gary 2H Well) is too attenuated to satisfy the TCPA’s connective language where the conduct that actually forms the basis of CNH’s claim (the failure to drill an offset well) is yet another step removed from the communication.” The court thus affirmed the trial court order denying EOG’s motion to dismiss.
TCJL Intern Satchel Williams researched and prepared the first draft of this article.
