Northern District of Texas Allows Revival of Time-Barred Revenue Claims Based on Operator's 2022 Acknowledgment of Debt from First Sales
Five Oklahoma LLCs holding working interests and overriding royalties in Glasscock County wells survived Ovintiv's motion to dismiss claims for pre-September 2020 revenues, with the court finding plausible allegations that Ovintiv's 2022 communications—including division orders stating "Effective Date: Date of First Sales—07/31/2020" and alleged promises to pay revenues from first sales to present—constituted unequivocal acknowledgment reviving otherwise time-barred debts under Texas Natural Resources Code Chapter 91. The decision turns on whether the operator's written communications specifically referenced ascertainable obligations sufficient to toll the four-year statute of limitations, a question the court found survived the pleading stage.
Background and Parties
Five Oklahoma limited liability companies—IBEX Resources Company, Arapaho Land Company, Augusta Energy Company, Grizzly Holdings, and Kodiak Production Company—brought suit against Ovintiv USA, Inc. seeking recovery of allegedly past-due oil and gas revenues pursuant to Chapter 91 of the Texas Natural Resources Code. The plaintiffs hold varying ownership interests, including working interests and overriding royalties, in multiple producing wells located in two sections of land in Glasscock County, Texas, operated by Ovintiv. Three plaintiffs—IBEX, Arapaho, and Kodiak—have owned overriding royalty interests in at least a portion of the subject property since 1994, with all interests publicly recorded since 1996. The wells were drilled and began producing without the plaintiffs' knowledge.
The Statute of Limitations Dispute
Ovintiv moved to dismiss all claims that accrued before September 26, 2020, arguing they were time-barred under Texas's four-year statute of limitations and that plaintiffs failed to sufficiently plead that Ovintiv unequivocally acknowledged these time-barred debts in a manner permitting recovery. After the plaintiffs contacted Ovintiv in May 2021 requesting well proposals and payment of proceeds with interest, Ovintiv acknowledged their interests in July 2021. The parties communicated over the following months regarding the plaintiffs' entitlement to revenues.
The Alleged Acknowledgment of Debt
The critical factual allegations center on communications in early 2022. On February 17, 2022, three plaintiffs emailed Ovintiv and "set out in detail that all revenue payments were due from first sales to present." The following day, these plaintiffs sent executed division orders that "correctly set forth the periods of ownership for payment." On March 3, 2022, Ovintiv sent additional division orders for another portion of the wells containing the language "Effective Date: Date of First Sales—07/31/2020." IBEX and Arapaho executed and returned these division orders that same day. The plaintiffs' theory for reviving time-barred claims rests on allegations that Ovintiv acknowledged and promised to pay revenues from the date of first sales, with amounts that are readily ascertainable.
The Court's Ruling
Judge James Wesley Hendrix denied Ovintiv's partial motion to dismiss, finding that "[t]he plaintiffs have stated a plausible claim that they can recover otherwise time-barred debts because, in 2022, the defendant acknowledged and promised to pay revenues from the date of the first sale of the subject wells' production and that the amounts due are readily ascertainable." The court concluded that the question of whether Ovintiv's written communications constituted an unequivocal acknowledgment of debt that specifically referred to ascertainable obligations was sufficient to survive the pleading stage under Rule 12(b)(6).