Texas Supreme Court Finds Express Anti-Drainage Covenant Ambiguous on Non-Adjoining Tract Offset Well Obligations

The Texas Supreme Court reversed summary judgment in favor of Rosetta Resources, holding that an express covenant to protect against drainage in a lease addendum was ambiguous as to whether the lessee's offset well drilling obligation applied only to drainage from specifically enumerated triggering wells or extended to all drainage affecting undrilled acreage. The Court remanded for trial on whether Rosetta breached its drainage protection duty when the Simmons Well—located on non-adjoining property—drained the Martin Lease, requiring interpretation of an express anti-drainage covenant that potentially extends beyond traditional common law limitations.