Background and Parties

CNH Enterprise Holdings, Ltd. succeeded to the lessor interest in the Hundley Lease, a 3,517-acre oil and gas lease in McMullen County originally executed in 2009 in favor of Mitchell Petroleum Land Services, Inc., which subsequently assigned its lessee interest to EOG Resources, Inc. CNH alleged the Hundley Lease allowed for a primary term of up to five years and would terminate thereafter, save and except for certain retained tracts. According to CNH, the Hundley Lease terminated in 2014, and EOG did not designate any retained tracts according to the process specified in the lease. Consequently, CNH alleged, the Hundley Lease terminated as to all but four areas of eighty acres surrounding four then-producing wells, which was the minimum retained acreage provided for under the lease. Nevertheless, EOG allegedly drilled additional wells outside of the retained acreage after the lease terminated.

Based on these allegations, CNH asserted three trespass claims and a conversion claim against EOG. CNH also pled, in the alternative, that if the Hundley Lease had not terminated as alleged, then Mitchell and/or EOG had failed to develop the Hundley Lease as a reasonable and prudent operator would have.

The Drainage Claim and TCPA Motion

CNH's seventh claim concerned the Gary Lease, which adjoins the Hundley Lease along a shared boundary. On March 15, 2014, EOG obtained a permit to drill the EOG Resources, Inc.-Gary 2H Well (API# 42-311-35909) at a location 148 feet from the boundary of the Hundley Lease. The Eagleville (Eagle Ford) Field Rules, which govern the well, require a minimum lease-line distance of 330 feet.

According to CNH's petition:

EOG, which operated the Gary and purported to operate the Hundley Lease, without notice or consent from the Hundley Lessors, waived any notice or hearing on the Rule 37 exception, and granted itself permission to drill the Gary 2H Well at a location closer than allowed by the general lease line rule in the Eagleville Field.

On April 20, 2014, EOG commenced drilling the Gary 2H Well and drilled a permitted lateral of 4,548.7 feet, at a distance of approximately 150 feet from the lease line of the Hundley Lease. EOG completed the well on April 28, 2014, as a producing horizontal oil well. CNH alleged that EOG fracked the well using water, chemicals and sand, causing fractures and injecting proppant over a distance greater than 150 feet from the Gary 2H Wellbore. According to Railroad Commission records, the Gary Lease produced 276,420 barrels of oil and 231,980 mcf of natural gas.

EOG filed a motion to dismiss under the Texas Citizens Participation Act, seeking dismissal of CNH's failure-to-protect claim. The trial court denied EOG's TCPA motion, and EOG appealed.

The Court's Ruling

The San Antonio Court of Appeals affirmed the trial court's order denying EOG's motion to dismiss. In a memorandum opinion delivered September 30, 2025, Chief Justice Rebeca C. Martinez wrote: "Because we conclude the TCPA does not apply, we affirm."