Background and Parties

Slant Operating, LLC and Slant WTX Holdings II, LLC brought a breach of contract action against competitor Octane Energy Operating, LLC in the Business Court of Texas. The dispute centered on a letter agreement between the parties governing drilling operations on adjacent leaseholds. Under the agreement, the parties committed to provide reciprocal waivers allowing each other to drill wells from off-lease penetration points located on the other's leasehold—a common arrangement in oil and gas operations where surface or subsurface constraints make drilling from on-lease locations impractical or impossible.

The Contractual Dispute

Slant alleged that it had performed its obligations under the letter agreement by providing Octane with a waiver to drill wells from an off-lease penetration point on Slant's adjacent leasehold. When Slant subsequently requested a reciprocal waiver from Octane to drill from an off-lease penetration point on Octane's property, Octane refused to provide it. Slant moved for partial summary judgment on its breach of contract claim, while Octane filed a competing motion for summary judgment, arguing that the letter agreement's future waiver provision was too indefinite to be enforceable and that Slant was required to exhaust administrative remedies before the Texas Railroad Commission before pursuing litigation.

The Court's Holdings

Judge Jerry D. Bullard systematically addressed each element of Slant's breach of contract claim and Octane's defenses. The court held that the letter agreement constituted a valid, enforceable contract, that Slant had performed its contractual obligations by providing the initial waiver to Octane, and that Octane breached the agreement by refusing to provide the reciprocal waiver.

Critically, the court rejected Octane's indefiniteness defense, holding that the terms of the future waiver provision in the letter agreement were sufficiently definite and thus enforceable. The court further held that Slant's performance of its obligations under the letter agreement rendered the future waiver provision enforceable. The court also rejected Octane's argument regarding contract interpretation, holding that Slant's construction of the letter agreement was not unreasonable, oppressive, or absurd.

On the exhaustion of remedies issue, the court held that Slant was not required to exhaust administrative remedies before suing Octane for breach of contract, distinguishing between regulatory proceedings before the Railroad Commission and private contractual disputes between operators.

Outcome

The Business Court granted Slant's motion for partial summary judgment and denied Octane's motion for summary judgment. The case was decided on December 22, 2025, and has been distinguished by a subsequent decision, Thompson v. Anchor Capital GP LLC, issued by the Business Court in May 2026.