In a year dominated by the landmark cases Devon v. Sheppard and Van Dyke v. Navigator, the Texas Supreme Court’s 2023 decision in Freeport-McMoRan Oil & Gas v. 1776 Energy Partners may tend to be overlooked. (Freeport-McMoRan Oil & Gas v. 1776 Energy Partners, 672 S.W.3d 391 (Tex. 2023).)

Freeport is, however, a substantially important decision concerning two of the safe harbor provisions in chapter 91.402 of the Texas Natural Resources Code. Those allow the payment of proceeds to be withheld, i.e., placed in suspense, without interest when there is:

  1. A dispute concerning title that would affect distribution of payments.
  2. A reasonable doubt that the payee … has clear title to the interest in the proceeds of production.