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March 12, 2026 Get Citation Alerts Download PDF Add Note

Zarvona Energy LLC and Zarvona III-A, LP v. Black Stone Minerals Company, L.P. and Sugarberry Minerals LP

Texas Court of Appeals, 9th District (Beaumont)

• Citations: None known
• Docket Number: 09-25-00012-CV
• Nature of Suit: Permissive Appeal and or Petition for Permissive Appeal

• Disposition: Reversed judgment of trial court

• Opinion

• Authorities (9)

• Cited By (0)

• Summaries (0)

• Similar Cases (12.4K)

• PDF

Disposition

Reversed judgment of trial court

Lead Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

---

NO. 09-25-00012-CV

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ZARVONA ENERGY LLC AND ZARVONA III-A, LP, Appellants

V.

BLACK STONE MINERALS COMPANY, L.P. AND SUGARBERRY
MINERALS LP, Appellees

---

On Appeal from the 88th District Court
Tyler County, Texas
Trial Cause No. 27,147

---

MEMORANDUM OPINION

Zarvona Energy LLC and Zarvona III-A, LP (“Zarvona”) sued Blackstone

Minerals Company, L.P. (“Blackstone”) and Sugarberry Minerals L.P.

(“Sugarberry”) seeking breach-of-contract damages and a declaratory judgment that

two oil and gas leases held by Zarvona remained in full force and effect because

there had been continuous production in paying quantities following the expiration

of the primary term of each lease. After Zarvona’s motions for partial summary

judgment against Blackstone and Sugarberry were denied, the trial court granted

1
Zarvona permission to file an interlocutory appeal, finding there are controlling

questions of law as to which there is substantial ground for difference of opinion and

the immediate appeal of which will materially advance the ultimate termination of

the litigation. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014 (d); Tex. R. Civ. P.

1. We accepted the appeal. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014 (f);

Tex. R. App. P. 28.3. Because we conclude the trial court erred in denying Zarvona’s

motions, we reverse, render partial summary judgment, and remand for further

proceedings in the trial court.

Background

In April 2005, Sugarberry’s predecessor granted Blackstone’s affiliate,

Blackstone Energy Company, L.L.C., (“BSEC”), an oil and gas lease on 245 acres

in Tyler County. In August 2005, Blackstone granted BSEC an oil and gas lease on

7,141.92 acres in Tyler and Polk Counties. Each lease contains identical terms

relevant to this appeal. Each defines a “Primary Term” which ends on a date certain,

potentially followed by a secondary term the termination of which is the subject of

controversy in this case. The Blackstone Lease, for example, contains the following

provisions:

1.1 Subject to the other provisions of this Lease, this Lease shall be
for a term from the above Effective Date until August 29, 2007
(hereinafter called “Primary Term”) or any extension thereof provided
for herein and for so long thereafter as oil and/or gas continues to be
produced in paying quantities from the Leased Premises, or lands

2
pooled therewith as may be provided, herein under the terms of this
Lease.

[. . .]

11.0 . . .

(b) Unless maintained by other provisions hereof, cessation of
production in paying quantities after the Primary Term for a period of
ninety (90) days shall cause this Lease to terminate.

The same provisions of the Sugarberry Lease are identical except that the Primary

Term ended on April 1, 2008.

As contemplated by the terms of the leases, BSEC pooled acreage covered by

various leases to form the “Clarke Unit,” which includes acreage from both the

Blackstone and Sugarberry leases. BSEC pooled other acreage to form the

“Simmons,” “Delta,” and “Woods” units, each of which includes acreage from the

Blackstone Lease, but not the Sugarberry Lease. Before the primary term of either

lease expired, BSEC drilled a producing well on each of these four units. Each lease

contains a continuous development provision, as follows:

10.0 If, at the expiration of the Primary Term, oil or gas is being
produced and Lessee is then engaged in drilling or reworking
operations on unreleased acreage of such Leased Premises, then this
Lease shall remain in force and effect as to such acreage not developed
in accordance with Section 3.0, so long as after the date of the
expiration of the Primary Term (or the date drilling or reworking
operations cease if being conducted), Lessee does not permit more than
ninety (90) days to elapse before commencing the next well on said
Leased Premises and thereafter shall not allow more than ninety (90)
days to elapse between the completion or abandonment of one well and
commencement of another.
3
Each lease also contains the following provisions:

3.0 . . . Following the 90-day continuous development provision
provided in Section 10.0 hereof, this Lease shall terminate, except as to
all wells producing oil or gas in paying quantities or being drilled or
reworked, and as to the area of the Leased Premises comprising the
spacing units surrounding each well, or portion thereof included within
the boundaries of any pooled unit or units as hereinafter provided. This
Lease shall not terminate as to easements and rights-of-way necessary
for Lessee’s operations on the retained acreage provided that
production from such acreage shall be continuous and upon cessation
of production, this Lease shall terminate as to such acreage unless
production therefrom is restored within ninety (90) days from such
cessation by drilling or reworking operations thereon, or otherwise
maintained in force provided elsewhere in this Lease.

3.1 Subject to the continuous operations provisions of Sections 9.0
and 10.0, at the end of the Primary Term and at all times thereafter, as
to each spacing unit, Lessee shall promptly release this Lease as to all
depths below one hundred feet (100’) below the stratigraphic
equivalent of the base of the deepest productive reservoir from which
there is commercial production of oil and/or gas from the well located
in said spacing unit. 1

Contending that section 3.0 calls for a one-time termination of non-producing

units following the 90-day continuous development provision of section 10.0,

Zarvona concedes that the Blackstone Lease terminated except with respect to the

lands pooled into the Clarke, Delta, Simmons, and Woods units because no new

wells were commenced within ninety days after the primary term expired on August

29, 2007, and that the Sugarberry Lease (which did not include acreage in the Delta,

1
Section 9.0 applies only when oil or gas is not being produced at the
expiration of the primary term; no party asserts it applies in this case.
4
Simmons, or Woods units) terminated except with respect to 151.9 acres located in

the Clarke Unit because no new wells were commenced within ninety days after the

lease’s primary term expired on April 1, 2008.

In July 2018, BSEC assigned all right, title and interest in the oil and gas leases

associated with the Clarke and Simmons units to Zarvona. Zarvona then began

operating the Clarke and Simmons units and, in 2022, drilled two producing wells

on the Clarke Unit.

In September 2023, Blackstone sent Zarvona a letter asserting that on June 1,

2020, the Blackstone Lease had terminated with respect to 1,562.7 acres comprising

the Clarke Unit “for failure to produce in paying quantities as required by the Lease”

and demanding that Zarvona execute and file a release of the lease as to the acreage

included within that unit. When Zarvona refused, Blackstone filed a partial release

in the county deed records, after which Zarvona sued Blackstone seeking damages

and a declaratory judgment construing various terms of the lease.

Blackstone answered and counterclaimed, and Zarvona filed a motion for

partial summary judgment seeking declarations that “(a) the retained acreage clause

is a snapshot provision and does not provide for rolling lease terminations during the

secondary term on a unit-by-unit basis, and (b) Section 11.0(b) does not apply on a

unit-by-unit basis and does not define the measuring period for assessing production

in paying quantities when production has not ceased[.]” Based on an affidavit and

5
various exhibits including production records from wells in the Clarke, Delta,

Simmons, and Woods units, the motion argues there has always been continuous

production in paying quantities from those units as measured by the reasonably-

prudent-operator standard set forth in Clifton v. Koontz, 325 S.W.2d 684, 691 (Tex.

1959). Blackstone’s response, supported by an affidavit and various exhibits, argues

the Blackstone Lease terminated not only with respect to the Clarke Unit (which

Blackstone asserts failed to produce in paying quantities over several 90-day

periods) but in its entirety since the production records reveal that the Clarke, Delta,

Simmons, and Woods units, individually and collectively, lost money in April, May,

and June 2020.

Zarvona subsequently amended its petition to add Sugarberry as a defendant

based on allegations that Sugarberry had sent Zarvona a letter in January 2024

asserting the Sugarberry Lease had terminated and that Sugarberry filed a release in

the county deed records to that effect in March 2024. Zarvona then moved for partial

summary judgment against Sugarberry on essentially the same grounds asserted in

its motion regarding the Blackstone Lease, and Sugarberry filed a response asserting

essentially the same grounds asserted by Blackstone in opposition. The trial court

denied Zarvona’s motions and then granted permission for Zarvona to file an

interlocutory appeal regarding three controlling questions of law for which it found

there is a substantial ground for difference of opinion and the immediate appeal of

6
which will materially advance the ultimate termination of the litigation. See Tex.

Civ. Prac. & Rem. Code Ann. § 51.014 (d). Zarvona’s brief restates the three issues

on appeal as follows:

1. Whether Section 11.0(b) of the Lease is triggered after production in
   paying quantities ceases under the paying-quantities test established in
   Clifton v. Koontz, 325 S.W.2d 684, 691 (Tex. 1959) or whether Section
   11.0(b) replaces Clifton and defines a 90-day measuring period for a
   paying-quantities analysis without regard to the reasonably prudent
   operator standard.

2. Whether Section 11.0(b) of the [Blackstone] Lease applies to all of
   the retained acreage under the [Blackstone] Lease collectively or
   whether it applies on a pooled-unit basis.

3. Whether the retained acreage clause in the [Blackstone] Lease is a
   snapshot clause that operates only once at the end of the continuous
   development period or whether the clause provides for a rolling, partial
   lease terminations on a pooled-unit basis.2

Analysis

Zarvona’s motions for partial summary judgment and Blackstone’s and

Sugarberry’s responses presented the trial court with conflicting interpretations of

the leases’ provisions. Blackstone and Sugarberry argue the operative language

means a cessation of production in paying quantities during any given 90-day

timeframe results in termination of the leases. Zarvona interprets the same

contractual provisions to require the evaluation of a variety of factors and data

The order regarding the Sugarberry Lease (which does not include the Delta,
2

Simmons, or Woods units) does not include the second and third issue.
7
gathered over a reasonable period of time that a reasonably prudent operator would

consider in deciding whether to continue to operate the wells, eschewing the

mechanical subtraction of 90-day operating expenses from 90-day revenues.

Zarvona’s briefing, both in the trial court and in this Court, allows for the possibility

that the operative language is ambiguous and must be construed in Zarvona’s favor,

whereas Blackstone and Sugarberry flatly reject any ambiguity.

The fact that parties disagree about the meaning of a contract does not render

the contract ambiguous; rather, a contract is ambiguous only when it is susceptible

to more than one reasonable interpretation. See Seagull Energy E & P, Inc. v. Eland

Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006) (citing Am. Mfrs. Mut. Ins. Co. v.

Schaefer, 124 S.W.3d 154, 157 (Tex. 2003)). Whether a mineral lease is ambiguous

is a question of law for the court, as is the construction of an unambiguous lease,

both of which questions we review de novo. See Rosetta Res. Operating, LP v.

Martin, 645 S.W.3d 212, 219 (Tex. 2022); Anadarko Petroleum Corp. v. Thompson,

94 S.W.3d 550, 554 (Tex. 2002).

The framework for conducting our analysis begins by acknowledging that

mineral leases are contracts and, as such, they are governed by the same general

principles which govern our construction of contracts, generally. Endeavor Energy

Res., L.P. v. Discovery Operating, Inc., 554 S.W.3d 586, 595 (Tex. 2018). These

general principles require us “to determine, objectively, what an ordinary person

8
using those words under the circumstances in which they are used would understand

them to mean.” URI, Inc. v. Kleberg Cnty., 543 S.W.3d 755, 764 (Tex. 2018). They

also require us to “examine the entire lease and attempt to harmonize all its parts,

even if different parts appear contradictory or inconsistent.” Thompson, 94 S.W.3d

at 554. “The most important consideration in interpreting a lease is the agreement’s

plain, grammatical language.” Endeavor Energy Res., L.P. v. Energen Res. Corp.,

615 S.W.3d 144, 148 (Tex. 2020). In addition to these general principles, special

rules apply to the construction of mineral leases:

Because oil and gas leases “transfer and affect title to real-property
interests, however, they are subject to special construction rules that
apply particularly to agreements governing property rights.” One such
rule is that contractual language will not be held to automatically
terminate the leasehold estate unless that “language . . . can be given no
other reasonable construction than one which works such result.” We
recently reaffirmed this principle: “Although whether a lease has
terminated is always a question of resolving the intention of the parties
from the entire instrument, we will not find a special limitation ‘unless
the language is so clear, precise, and unequivocal that we can
reasonably give it no other meaning.’”

Id. at 148-49 (citations omitted).

With the analytical framework established, we turn to the lease’s operative

language. 3 The provisions which most conspicuously address the question of

3
Aside from dates and identification of parties and “Leased Premises,” the
relevant language of each lease is identical; therefore, we will analyze the
Blackstone Lease with the understanding the same analysis applies to the Sugarberry
Lease unless otherwise noted.
9
whether the lease may have terminated are sections 1.1 (the “habendum clause”),

and 11.0(b) (the “cessation-of-production clause”), which provide as follows:

1.1 Subject to the other provisions of this Lease, this Lease shall be
for a term from the above Effective Date until August 29, 2007
(hereinafter called “Primary Term”) or any extension thereof provided
for herein and for so long thereafter as oil and/or gas continues to be
produced in paying quantities from the Leased Premises, or lands
pooled therewith as may be provided, herein under the terms of this
Lease.4

[. . .]

11.0 [. . .]

(b) Unless maintained by other provisions hereof, cessation of
production in paying quantities after the Primary Term for a period of
ninety (90) days shall cause this Lease to terminate.

As is typical, the lease’s habendum clause defines the duration of the lease by

dividing it into a primary term that ends on a date certain followed by a secondary

term that continues as long as oil or gas is being “produced in paying quantities from

the Leased Premises or lands pooled therewith[.]” See Discovery Operating, Inc.,

554 S.W.3d at 597 (discussing a habendum clause). The phrase “produced in paying

quantities” has received some attention from Texas courts. Although the lease in

Clifton did not include the phrase, the Texas Supreme Court held “the terms

4
The Blackstone Lease defines “Leased Premises” as the original 7,141.92
acres which were then pooled into the Clarke, Delta, Simmons, and Woods Units.
The Sugarberry Lease defines “Leased Premises” as the original 245 acres, 151.9
acres of which was pooled into the Clarke Unit, the other 93.1 acres having been
released by Zarvona at the end of the continuous development period.
10
‘produced’ and ‘produced in paying quantities’ mean substantially the same thing”

and then went on to explain how the phrase “produced in paying quantities” should

be construed with respect to wells which operate some months at a profit and other

months at a loss:

In the case of a marginal well, such as we have here, the standard by
which paying quantities is determined is whether or not under all the
relevant circumstances a reasonably prudent operator would, for the
purpose of making a profit and not merely for speculation, continue to
operate a well in the manner in which the well in question was operated.

In determining paying quantities, in accordance with the above
standard, the trial court necessarily must take into consideration all
matter which would influence a reasonable and prudent operator. Some
of the factors are: The depletion of the reservoir and the price for which
the lessee is able to sell his product, the relative profitableness of other
wells in the area, the operating and marketing costs of the lease, his net
profit, the lease provisions, a reasonable period of time under the
circumstances, and whether or not the lessee is holding the lease merely
for speculative purposes.

The term ‘paying quantities’ involves not only the amount of
production, but also the ability to market the product (gas) at a profit.
Whether there is a reasonable basis for the expectation of profitable
returns from the well is the test.

Clifton, 325 S.W.2d at 690-91 (citations omitted).

Were the habendum clause the only provision addressing termination of the

lease, the trial court would be required to apply the reasonably-prudent-operator

standard set out in Clifton to determine whether and when the lease terminated. But

the habendum clause begins with the introductory phrase, “Subject to the other

provisions of this Lease […]” and there are, in fact, other provisions which address
11
termination. Section 11.0(b) is such a provision. It states that after the primary term

has expired, the lease will terminate upon a 90-day cessation of production in paying

quantities.

The Waco Court of Appeals has held that “if the lease defines the period for

which production-in-paying-quantities is to be measured, the court does not resort

to a ‘reasonable period of time’ over which to evaluate the profitability of

production.” Ridenour v. Herrington, 47 S.W.3d 117, 121-22 (Tex. App.—Waco

2001, pet. denied). Relying on this holding, Blackstone and Sugarberry argue, “The

Clifton decision cannot supplant the plain language of Section 11.0(b) because that

section makes clear that the time period for whether either Lease was producing in

‘paying quantities’ is (90) ninety days.” Blackstone and Sugarberry then point to the

“uncontroverted affidavit of an expert witness who utilized Zarvona’s own data to

prove that the Leases were unprofitable for multiple 90-day periods—evidence that

Zarvona neither controverted nor questions on appeal.” Indeed, one of the summary

judgment exhibits shows all four units, individually and collectively, operated at a

loss for three consecutive months from April 2020 to June 2020, a period of 91 days.

But the cessation-of-production clause in our case differs from that in

Ridenour, and it does so in a way we consider significant. There, the provision stated,

“Cessation of paying production after the primary term for a period of sixty days

shall cause this lease to terminate.” Id. at 119. Here, although section 11.0(b)

12
contains almost identical language, it begins with the introductory phrase, “Unless

maintained by other provisions hereof, . . . [.]” Section 1.0 is such a provision

because according to Clifton, section 1.0 maintains the lease so long as a reasonably

prudent operator, considering a variety of factors and data gathered over a reasonable

period of time, would continue to operate wells on the Leased Premises or lands

pooled therewith.

Sections 1.0 and 11.0(b) are in conflict because they provide different tests

for determining when the lease terminates. Sections 1.0 and 11.0(b) do not directly

reference each other, but each section contains introductory language appearing to

make each subordinate to the other. A similar problem was addressed in Cromwell

v. Anadarko E&P Onshore, LLC:

Anadarko argues that Paragraph 16 requires Cromwell himself to cause
production. While Paragraph 16 purports to impose some obligations
on the lessee, Paragraph 16 is by its own terms “[s]ubject to Paragraphs
6 and 11”—both of which contain still more passive-voice language
and fail to specify who must undertake the various actions. Further
obscuring things, while Paragraph 16 is “[s]ubject to Paragraph[ ] . . .
11,” Paragraph 11 is likewise “[s]ubject to Paragraph . . . 16.” Because
Paragraph 16 is ambiguous, the default rule against forfeiture controls.
See Energen, 615 S.W.3d at 149 (holding that if ambiguity remains
after an attempt to interpret a lease based on its plain language, courts
may rely on default rules of construction).

716 S.W.3d 515, 523 (Tex. 2025). While we acknowledge the leases at issue in

Cromwell contained ambiguities other than the mutual subordination of conflicting

provisions, we nevertheless conclude that the overarching principle applied in

13
Cromwell applies equally in this case, that principle being that “we will not hold the

lease’s language to impose a special limitation on the grant unless the language is so

clear, precise, and unequivocal that we can reasonably give it no other meaning.” Id.

at 523-24 (citing Thompson, 94 S.W.3d at 554). “A special limitation in an oil-and-

gas lease is a term that ‘provides that the lease will automatically terminate upon the

happening of a stipulated event.’” Id. at 524 (quoting Discovery Operating Inc., 554

S.W.3d at 606).

Because sections 1.0 and 11.0(b) contain language subjecting each section to

the other, we cannot harmonize their dissonant provisions regarding the duration or

termination of the lease. Together, these provisions are ambiguous as a matter of

law. “We disfavor forfeiture of mineral interests.” Id. at 523. “[W]hen all available

means of interpreting the lease are exhausted and the disputed provision remains

equally susceptible to multiple reasonable readings, the ambiguity will be resolved

against imposition of a special limitation.” Energen Res. Corp., 615 S.W.3d at 149.

Because section 11.0(b) purports to impose a special limitation but does not

“clear[ly], precise[ly], and unequivocal[ly]” state that the lease terminates upon a

90-day cessation of production in paying quantities, we will not regard such a

cessation to result in forfeiture of the lease unless there is a cessation that also fails

Clifton’s reasonably-prudent-operator test which is ingrafted into section 1.0. See

14
325 S.W.2d at 691; see also Cromwell, 716 S.W.3d at 524 (declining “to resolve the

ambiguity in a way that forfeits [Cromwell’s] interest.”).

Having answered Zarvona’s first issue by holding that the Clifton standard

applies, we turn to Zarvona’s second issue which asks, “Whether Section 11.0(b) of

the Blackstone Lease applies to all of the retained acreage under the Blackstone

Lease collectively or whether it applies on a pooled-unit basis.”

Because section 11.0(b) and section 1.0, both contain provisions regarding the

duration of “this Lease” and section 1.0 specifically references production in paying

quantities “from the Leased Premises, or any lands pooled therewith[,]” these

provisions may be read in harmony with respect to the geographic aspects of the

paying-quantities test. “As long as one portion of the leased tract—even a small

portion—is producing oil or gas, the lease will continue as to the entire tract, even if

the operator elects not to develop other areas within the leased tract.” Discovery

Operating Inc., 554 S.W.3d at 597. A cessation of paying production can occur in

two ways: (i) a total, physical cessation of production (which no one argues occurred

here); or (ii) a cessation of production in paying quantities. See BP Am. Prod. Co. v.

Red Deer Res., LLC, 526 S.W.3d 389, 395–96 (Tex. 2017) (explaining the two

theories of lease termination based on cessation of production). Accordingly, section

11.0(b), read in harmony with section 1.1, indicates that when there is either a

complete cessation of production on the entire Leased Premises and lands pooled

15
therewith, or a cessation of production in paying quantities, as determined under

Clifton, on the entire Leased Premises and lands pooled therewith, the entire

Blackstone Lease will terminate ninety days after such cessation began unless

production in paying quantities is restored on some portion of the Leased Premises

or lands pooled therewith during that ninety-day period. Nothing in either section

calls for the termination of a portion of the lease based on a ninety-day cessation in

production (either completely or in paying quantities) from that portion of the lease.

Therefore, we answer the second question by holding that to the extent that section

11.0(b) of the Blackstone Lease applies at all, it applies to all the retained acreage

under the Blackstone Lease, collectively, and not on a pooled-unit basis.

However, sections 1.0 and 11.0(b) are both subject to other provisions in the

lease, including sections 3.0 and 3.1, which provide in relevant part:

3.0 . . . Following the 90-day continuous development provision
provided in Section 10.0 hereof, this Lease shall terminate, except as to
all wells producing oil or gas in paying quantities or being drilled or
reworked, and as to the area of the Leased Premises comprising the
spacing units surrounding each well, or portion thereof included within
the boundaries of any pooled unit or units as hereinafter provided. This
Lease shall not terminate as to easements and rights-of-way necessary
for Lessee’s operations on the retained acreage provided that
production from such acreage shall be continuous and upon cessation
of production, this Lease shall terminate as to such acreage unless
production therefrom is restored within ninety (90) days from such
cessation by drilling or reworking operations thereon, or otherwise
maintained in force provided elsewhere in this Lease.

16
3.1 Subject to the continuous operations provisions of Sections 9.0
and 10.0, at the end of the Primary Term and at all times thereafter, as
to each spacing unit, Lessee shall promptly release this Lease as to all
depths below one hundred feet (100’) below the stratigraphic
equivalent of the base of the deepest productive reservoir from which
there is commercial production of oil and/or gas from the well located
in said spacing unit.

Neither party suggests section 9.0 (referenced in section 3.1) applies in this

case, but both parties seem to agree section 10.0 (referenced in both sections 3.0 and

3.1) is relevant, and it provides:

10.0 If, at the expiration of the Primary Term, oil or gas is being
produced and Lessee is then engaged in drilling or reworking
operations on unreleased acreage of such Leased Premises, then this
Lease shall remain in force and effect as to such acreage not developed
in accordance with Section 3.0, so long as after the date of the
expiration of the Primary Term (or the date drilling or reworking
operations cease if being conducted), Lessee does not permit more than
ninety (90) days to elapse before commencing the next well on said
Leased Premises and thereafter shall not allow more than ninety (90)
days to elapse between the completion or abandonment of one well and
commencement of another.

This brings us to Zarvona’s third issue which asks, “Whether the retained

acreage clause [section 3.0] in the [Blackstone Lease] is a snapshot clause that

operates only once at the end of the continuous development period or whether the

clause provides for a rolling, partial lease terminations on a pooled-unit basis.”

Zarvona concedes that since no well was commenced within 90 days after the

expiration of the primary term, the application of sections 10.0 and 3.0 resulted in a

one-time termination of the Blackstone Lease as to any acreage outside the Clarke,

17
Delta, Simmons, and Woods units where wells were producing as of that date.

However, Zarvona contends section 3.0 does not call for additional terminations of

geographic units on a continual basis.

Blackstone asserts section 3.1 which applies “at the end of the Primary Term

and at all times thereafter” (emphasis added) should inform our analysis of whether

section 3.0 applies once as a “snapshot” provision or on a continual or “rolling”

basis, arguing, “It would make no sense at all to have inconsistent and contradictory

provisions for the release of acreage, where the one (units in general) is a snapshot

provision and the other (depths within a unit) is rolling.” We disagree. It may be that

the parties intended in section 3.0 to provide for a one-time termination of all depths

below non-producing units “following” section 10.0’s 90-day period and that they

also intended in section 3.1 to provide for recurring releases of certain depths below

the deepest producing reservoir of the producing units “at all times” after the end of

the primary term. We cannot conclude they intended otherwise when they used

different terms to express the temporal applicability of each section.

“To determine a term’s common, ordinary meaning, we typically look first to

dictionary definitions and then consider the term’s usage in other authorities.”

Anadarko Petroleum Corp. v. Hous. Cas. Co., 573 S.W.3d 187, 192 (Tex. 2019). As

used in section 3.0, “Following” means “subsequent to[.]” Following, Merriam-

Webster.com https://www.merriam-webster.com/dictionary/following (last visited

18
Feb. 19, 2026). The word indicates when section 3.0 applies—after the end of the

90-day period provided by section 10.0—but it does not indicate how often it applies.

As a result, section 3.0 is ambiguous because it could be reasonably understood

either as a “snapshot” or as a “rolling” provision. Section 3.0 is a special limitation

provision because it provides that the lease will automatically terminate as to certain

geographical areas upon the happening of a stipulated event. See Discovery

Operating Inc., 554 S.W.3d at 606. We conclude that while section 3.0 clearly,

precisely and unequivocally indicates that it applies to non-producing geographical

units after the end of the 90-day period provided by section 10.0, it does not clearly,

precisely and unequivocally indicate that it applies on a recurring basis, and we will

not construe the provision to result in forfeiture of additional non-producing

geographical units on a recurring basis. See Cromwell, 716 S.W.3d at 524 (declining

“to resolve the ambiguity in a way that forfeits [Cromwell’s] interest[]”). Therefore,

we answer the third question by holding that the retained acreage clause in the

Blackstone Lease is a snapshot clause that operates only once at the end of the

continuous development period.

Because we conclude that the trial court erred in failing to grant Zarvona’s

motion for partial summary judgment, we reverse and render judgment declaring,

“the retained acreage clause is a snapshot provision and does not provide for rolling

lease terminations during the secondary term on a unit-by-unit basis, and (b) Section

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11.0(b) does not apply on a unit-by-unit basis and does not define the measuring

period for assessing production in paying quantities when production has not

ceased.” Because issues not subject to this permissive interlocutory appeal remain,

we remand this case to the trial court for further proceedings consistent with this

opinion.

REVERSED AND RENDERED; CASE REMANDED.

KENT CHAMBERS
Justice

Submitted on October 23, 2025
Opinion Delivered March 12, 2026

Before Golemon, C.J., Johnson and Chambers, JJ.

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