On December 20, 2019, the honorable Marvin Isgur, judge of the Southern District of Texas Bankruptcy Court, issued an opinion holding that Alta Mesa Holdings (“Alta Mesa”), an upstream oil and gas producer with operations based in the STACK formation, could not, under Oklahoma law, reject certain gathering agreements in its bankruptcy case.1 The holding in Alta Mesa follows a similar outcome issued less than three months earlier in In re Badlands Energy, Inc.,2 a case decided by a Colorado bankruptcy court applying Utah law. Judge Isgur’s detailed analysis in Alta Mesa suggests that the U.S. Court of Appeals for the Second Circuit’s holding in Sabine3 is unlikely to be generally followed as precedent in the Southern District of Texas — although Sabine remains good law in the Second Circuit absent a Texas state court holding otherwise or a legislative resolution.
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