# Cromwell v. Anadarko E&P Onshore, LLC

Supreme Court of Texas, No. 23-0927

**Cromwell v. Anadarko E&P Onshore, LLC, No. 23-0927 (Tex. May 23, 2025). Holding: A passive-voice habendum clause continuing a lease "as long thereafter as" minerals are produced from the land does not require the lessee to personally produce; because production in commercial paying quantities continuously occurred, Cromwell's leases did not terminate.**

Practice areas: oil and gas, real property, contract interpretation

## Key issues

- A passive-voice habendum clause continuing an oil-and-gas lease "as long thereafter as" minerals are produced from the land does not require the lessee to personally cause production, so a non-operating co-tenant's leases did not terminate where the operating co-tenant continuously produced in commercial paying quantities.
- The Court disapproved Mattison v. Trotti (5th Cir.), Hughes v. Cantwell and Cimarex Energy v. Anadarko to the extent they hold otherwise, construed an ambiguous paragraph in one lease against automatic termination under the rule disfavoring forfeiture, and noted the producing co-tenant's remedy is an accounting.

## Factual History
David W. Cromwell and Anadarko E&P Onshore, LLC are oil-and-gas co-tenants, each owning a share of the working interest in the same land in Loving County, where Anadarko, a major operator, had already drilled three wells before Cromwell obtained his interests and later drilled more; the parties agree that production in commercial paying quantities occurred on the land at all relevant times (Opinion, PDF pp. 2-3). Cromwell, as lessee, took two paid-up leases in 2009, one from Carmen Ferrer and one from the Tantalo Trust, whose habendum clauses continue each lease past its primary term "as long thereafter as oil, gas, or other minerals are produced from said land" (Ferrer) and "as long thereafter as oil, gas, liquid hydrocarbons . . . is produced in commercial paying quantities from the lands leased hereby" (Tantalo) (Opinion, PDF pp. 3-4). Cromwell asked Anadarko eight to ten times from 2009 to 2018 to enter a joint operating agreement, but it never provided one; from September 2009 it sent him monthly joint-interest invoices, paid him his share of proceeds in months when revenues exceeded costs, and called him a "working interest owner" (Opinion, PDF pp. 4-5). The primary terms ended in February 2012 and March 2014; in 2016 Anadarko "discovered" the leases had expired but kept billing him, and in 2017 it took top leases from his lessors and told him only more than a year later that his leases had "expired" (Opinion, PDF pp. 5-6).

## Procedural History
Cromwell sued Anadarko for declaratory relief and trespass to try title, among other claims, and both sides moved for summary judgment on whether his leases terminated; the trial court granted Anadarko's motion and rendered a take-nothing judgment (Opinion, PDF p. 6). The Eighth Court of Appeals in El Paso affirmed, holding under its *Cimarex* decision that Cromwell had to "take some action to cause production" despite the passive voice of the habendum clauses (Opinion, PDF pp. 6-7). Cromwell petitioned for review on December 13, 2023; the Court granted review on November 15, 2024, heard argument on February 18, 2025, and decided the case on May 23, 2025 (Docket; Opinion, PDF pp. 1, 7, 16).

## Issues Presented
Cromwell presents whether the court of appeals erred by affirming summary judgment on the ground that the leases expired, after implying a condition into standard lease language despite the rule that termination language must be "clear, precise, and unequivocal" (Brief on the Merits (Petitioner), PDF p. 9; Petition for Review (Petitioner), PDF p. 8). Anadarko frames the issues as whether the leases terminated automatically at the end of their primary terms because Cromwell never caused production, drilled, assigned, pooled, or entered a joint operating agreement; whether production by a co-tenant perpetuated them merely because of the passive voice; and whether Cromwell preserved the passive-voice issue (Brief on the Merits (Respondent), PDF p. 8). The Court decided whether Cromwell preserved the argument and whether the habendum clauses required him personally to cause production (Opinion, PDF pp. 2, 7-8).

## Standard(s) of Review
The Court reviews lease-construction questions de novo, applying general contract-interpretation principles to the parties' intent as expressed in the plain language of the written agreement (Opinion, PDF pp. 8-9). If ambiguity remains, the default rule disfavoring forfeiture of mineral interests applies (Opinion, PDF p. 12).

## Legal Arguments
**Whether the leases terminated at the end of their primary terms.**

**Petitioner (Cromwell):** The court of appeals' opinion is facially inconsistent with *Anadarko Petroleum Corp. v. Thompson*, which held that a lease will not be read to impose a special limitation unless the language is "clear, precise, and unequivocal"; the court implied a new condition into two leases without mentioning that test, and the leases require only production in paying quantities, which undisputedly occurred (Brief on the Merits (Petitioner), PDF p. 19; Petition for Review (Petitioner), PDF p. 16). He argues that standard habendum clauses mean what they say and that the same company cannot have different rules for lease termination depending on which side it is on (Brief on the Merits (Petitioner), PDF p. 19).

**Respondent (Anadarko):** Under *Cimarex*, *Hughes*, and *Mattison*, when a lease grants the lessee the exclusive right to drill and produce and continues "as long as" oil and gas "is produced," the lessee must itself drill a producing well or otherwise cause production, unless it assigns the lease, pools it, or enters a joint operating agreement; this follows from co-tenancy law, because neither co-tenant is the other's agent, and Cromwell's reading would let a stranger's production perpetuate a lease (Response to Petition (Respondent), PDF p. 11; Brief on the Merits (Respondent), PDF p. 10). It also argues that Cromwell did not preserve his passive-voice argument (Brief on the Merits (Respondent), PDF p. 8; Opinion, PDF pp. 7-8).

## Stated Reasons the Court Should Take the Case
Cromwell argued that the court of appeals followed its own precedents, under which leases may terminate on unstated conditions, in conflict with the Court's rule in *Anadarko v. Thompson* (Petition for Review (Petitioner), PDF pp. 8, 16). Anadarko responded that the petition presents no substantial issue because the court of appeals correctly applied settled law, and that Cromwell had reframed the issue he presented below (Response to Petition (Respondent), PDF p. 4).

## Oral Argument

- **Narrow or broad ruling.** Asked whether Cromwell wins without deciding the case of a co-tenant who paid nothing, his counsel agreed, but said the industry needs guidance on how such leases are sustained. (Oral Argument, 0:02:42)
- **What the lease needed to say.** Asked what the lease would need to say for Cromwell to win, Anadarko's counsel said it must expressly state that anyone's production sustains the lease. (Oral Argument, 0:25:17)
- **Ongoing production.** Asked whether production must come from new development, Cromwell's counsel said the leases require ongoing production, not additional wells, and that has undisputedly happened. (Oral Argument, 0:04:25)
- **Historical context.** Asked why not read the leases as plain English, Anadarko's counsel said Texas leases are construed in historical context, and the court of appeals followed cases back to 1959. (Oral Argument, 0:28:34)
- **Passive voice.** Asked who must produce, Cromwell's counsel said paragraph 11 is passive and does not require production by the lessee, while paragraph 16 does, showing the parties knew how. (Oral Argument, 0:16:09; 0:18:46)
- **Passive investors.** Closing, Anadarko's counsel said Cromwell's reading would let leases become passive investment tools, with speculators waiting on the sidelines while operators develop. (Oral Argument, 0:36:32)

## Practice Area Tags
oil-and-gas, real-property, contract-interpretation

## Procedural Posture/Vehicle
Petition for review from the Eighth Court of Appeals in a declaratory-judgment and trespass-to-try-title suit decided on cross-motions for summary judgment; argued February 18, 2025, and decided May 23, 2025 (Opinion, PDF pp. 1, 6-7, 16).

## Amicus Involvement
- [Professor Christopher Kulander of South Texas College of Law Houston](https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=d1a67f4f-08be-4f8b-afe2-3a799365a23e&coa=cossup&DT=BRIEFS&MediaID=088cdec6-b9a3-4c5c-a71a-5e158a35e61f) filed an amicus curiae brief on January 19, 2024, at the petition stage.
- [Chevron U.S.A., Inc.](https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=0f9ed6e4-574d-475c-8990-c97d1cb0dad8&coa=cossup&DT=BRIEFS&MediaID=3ae7f314-e1dc-42d2-a89e-8c02d082b295) filed an amicus curiae letter brief on October 11, 2024.
- [Fort Apache Energy, Inc.](https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=d9a1cf6e-c31b-4def-9957-436d997a7056&coa=cossup&DT=BRIEFS&MediaID=e8d0c8f9-2d65-4d9f-b970-cb598f80ab00) filed an amicus brief on February 14, 2025.

## Holding
A passive-voice habendum clause continuing a lease "as long thereafter as" minerals are produced from the land does not require the lessee to personally produce; because production in commercial paying quantities continuously occurred, Cromwell's leases did not terminate (Opinion, PDF pp. 2, 10-16).

## Court's Reasoning
**Preservation.** An issue statement covers every subsidiary question fairly included in it, and Cromwell sufficiently presented to the court of appeals that his leases should not terminate automatically on unwritten conditions, which is the opposite of *Cimarex*'s holding; Anadarko itself acknowledged he took a position "directly contrary to Cimarex" (Opinion, PDF p. 8).

**Plain language.** An oil-and-gas lease is a contract construed by its plain language, and a habendum clause defines the mineral estate's duration; here both leases terminate automatically if minerals are not produced from the land after the primary term, and Anadarko's undisputed production satisfied them (Opinion, PDF pp. 8-10). The clauses do not say who must produce, though such clauses often add "by the lessee," and the Court will not write that term in; the court of appeals erred by focusing on the leases' stated purpose of exploring and drilling instead of the habendum clauses (Opinion, PDF pp. 10-12).

**Paragraph 16 and forfeiture.** Paragraph 16 of the Tantalo Lease, which extends the lease beyond the primary term "if, and only if" the lessee obtained production or was drilling, is ambiguous because it is "subject to" Paragraphs 6 and 11, which are themselves passive and cross-referenced to Paragraph 16, so the default rule against forfeiture controls, and the Court construed it as a covenant whose breach might entitle the lessor to damages or a conditional decree of cancellation, not as automatic termination (Opinion, PDF pp. 12-13). Anadarko has a remedy as the producing co-tenant: a non-producing co-tenant must account for the reasonable and necessary costs of production, and Anadarko could sue for an accounting (Opinion, PDF pp. 13-14).

**Precedent.** The Fifth Circuit's *Mattison v. Trotti* wrongly premised its holding on drilling and production being a lease's "prime consideration," when the "vital consideration" is royalties on production; *Hughes v. Cantwell* and *Cimarex* followed it, and the Court disapproved all three to the extent they hold that a passive-voice habendum clause requires the lessee to produce (Opinion, PDF pp. 14-15). The Court did not decide what other actions a lessee could take to maintain a lease (Opinion, PDF p. 15).

## Disposition
The Court reversed the court of appeals' judgment and remanded to the trial court to address the parties' remaining arguments (Opinion, PDF p. 16).

## Vote Breakdown
Justice Sullivan delivered the opinion of the Court (Opinion, PDF p. 1).


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Source: The SCOTX Report, https://scotxreport.com/cases/23-0927. AI-generated summary of the Court's opinion, orders and the parties' briefs, with pin cites to the page of each document; verify against the Court's own documents at search.txcourts.gov.