Texas Supreme Court Clarifies Third-Party Beneficiary Status and Privity of Estate in Joint Operating Agreements

The Texas Supreme Court held that an oil and gas lessor could not enforce a Joint Operating Agreement (JOA) to recover unpaid royalties from a non-operating working interest owner who consented to drilling operations, finding the lessor was neither a third-party beneficiary of the JOA's royalty provisions nor in privity of estate with the consenting party. The decision clarifies the strict requirements for third-party beneficiary status under Texas law and confirms that JOA royalty allocation provisions among working interest owners do not create enforceable rights for lessors outside the parties to those agreements.