Baker, Ahles & Kaskovich

Bills seeks to expand rights of producers to drill in oil fields

A state senator is pushing a bill aimed at making it easier for energy producers to tap old oil wells.
A state senator is pushing a bill aimed at making it easier for energy producers to tap old oil wells. Courtesy of Approach Resources

Texas state Sen. Van Taylor believes in majority rule when it comes to the oilfields.

The Plano Republican has filed a bill that would make it easier for energy producers to tap established oil and gas reserves when it can convince a super-majority of the owners in a mineral rights pool to agree to the project.

Called the Majority Rights Protection Act, or Senate Bill No. 177, it would require 70 percent of those with a working or royalty interest in a play to approve drilling activity. Currently, state law requires everyone to agree.

“The Majority Rights Protection Act would unlock hundreds of billions of dollars of energy production by establishing a proven legal framework successfully used in 29 other states,” Taylor said in a statement. “Passing this bill has the potential to be the biggest job creation, investment expanding, and revenue generating legislation in a generation.”

The bill only applies to what are called secondary or tertiary recovery efforts, or those using new drilling techniques such as hydraulic fracturing, to tap oil and gas reserves.

Currently, a single owner, or group, can block the redevelopment of an oil reservoir, according to Taylor. Geologists predict that an additional 10 to 20 billion barrels of oil worth over $1 trillion will come out of the ground if the bill is passed, according to a release from Taylor’s office.

“New techniques in oil extraction continue to offer our state and nation immeasurable opportunities, however Texas law has failed to keep up with those advancements,” Taylor said. If adopted, Texas would have a standard of agreement equal to or greater than 26 of the 29 states that have similar legislation in place.

While you might think that this idea would sail through the Texas Legislature, known for its broad support of the energy industry, think again. The bill touches on the prickly property rights issue, which might explain why the Texas Independent Producers and Royalty Owners Association is taking a neutral stance.

“Unitization or forced pooling has been a contentious issue with operators, royalty owners and the legislature for several decades,” said TIPRO President Ed Longanecker, who said their membership has “historically been divided” on the issue.

And a story by the Texas Energy Report quoted a statement from the Committee of Texas Independents which said that the bill provides a “way for private oil and gas businesses to enhance their pocketbooks by imposing their will on other (usually smaller) oil and gas producers and royalty owners by a taking of their private property, using the brute force of government.”

ISS backs Farmer Bros. directors

Farmer Brothers says it has won the support of an influential proxy advisory service in its battle with dissident shareholders over three board seats.

The Fort Worth-based coffee company said Institutional Shareholder Services is recommending that stockholders vote for the company’s slate of three directors over three candidates nominated by the Save Farmer Bros. opposition group.

In making its recommendation, ISS said it’s difficult to dispute that the current board and CEO have been instrumental in the turnaround at Farmer Brothers, while the dissident group has “failed to present any future plan for the company that is clearly superior to the strategy developed by the current board.” ISS offers recommendations on proxy votes for institutional shareholders.

The Save Farmer Bros. group is led by Carol Farmer Waite, the granddaughter of the company’s founder, and has nominated three three directors for the company’s seven-member board. The group has criticized management for capital spending decisions, including the relocation of its headquarters to North Texas from Torrance, Calif., and claims the company’s stock is undervalued.

Farmer has responded by pointing out that its stock price has more than tripled since 2012, when Michael Keown was named CEO, and that moving to the new headquarters, now under construction in Northlake across from the Texas Motor Speedway, will save millions.

The war of words continues. In a release this week, Save Farmer Bros. accused the company of “distortions and misrepresnetations,” including the use of asset sales, inventory liquidation and one-time income tax benefits to mask bloated corporate expenses.

The showdown occurs on Dec. 8 at the company’s shareholders meeting at the Marriott Hotel at Champions Circle in far north Fort Worth.

Council considering policy change

Fort Worth’s city manager is seeking more latitude from the City Council when it comes to awarding contracts and purchases.

The City Council is being asked to change its policy to make the city’s contracting and purchasing process more efficient and improve accountability. The council is scheduled to vote on the request Dec. 6.

Currently, the city can’t award a contract that involves spending more than $50,000 without City Council approval. The city manager’s office wants that raised to $100,000.

In the past 12 months, the City Council approved 82 contracts that involved spending between $50,001 and $100,000. Typically, those contracts are approved on the consent agenda, or the part of the agenda that has items that don’t need discussion and are considered routine in nature.

City Manager David Cooke said increasing the amount will help speed up the timing of some purchases, in part by eliminating the time it takes to get on the council agenda.

The proposed policy is still in step with state law, but because Fort Worth is a home rule city, it does have the authority to move the spending threshold. The city will still be required to issue formal bids.

Denton and Garland have $100,000 thresholds, while Dallas is at $70,000, according to a city report. Austin, Houston and San Antonio are the same as Fort Worth, at $50,000.

Sandra Baker

Lexus dealer receives Baldrige award

Plano-based Park Place Lexus, which also has a Lexus dealership in Grapevine, has been recognized for a best practice in customer focus by the Baldrige Performance Excellence Program, part of the Malcolm Baldrige National Quality Award program.

Park Place Lexus is one of six U.S. companies recognized this year. In 2005, Park Place Lexus received the Malcolm Baldrige National Quality Award.

“Based on our continued improvement through a systematic approach to goal-setting, measures and reviews, we offer our clients the best automotive purchase and ownership experience,” Jordan Case, Park Place Lexus president, said in a statement. ”We continue to improve our processes of learning what we could do better and pushing ourselves to be the best in our industry.”

Since the first Baldrige Award recipients were recognized in 1988, 109 awards have been presented to 102 organizations. The Baldrige Award recognizes the nation’s top-level performers in manufacturing, service, small business, healthcare, education and nonprofit.

Ken Schnitzer founded Park Place Dealerships in 1987 with a Mercedes-Benz dealership on Oak Lawn. Today, it employs more than 2,000 people and operates 17 full-service dealerships representing luxury brands.

Sandra Baker

Andrea Ahles: 817-390-7631, @Sky_Talk

Max B. Baker: 817-390-7714, @MaxbakerBB

Steve Kaskovich: 817-390-7773, @stevekasko