Link to Co-author Kamal Omar Co-author Kamal Omar
In Endeavor Natural Gas III, LLC v. Comanche Maverick Ranch Investments, L.P., a Texas court held that operator Endeavor could not conduct seismic operations on lessee/surface owner Commanche’s ranch because the parties’ surface-use agreement allowed such operations ” … only after first entering into a mutually agreed-upon seismic surface use permit with [Comanche]”. The trial court, affirmed by the appellate court, construed the provision as an enforceable condition precedent.
The documents
Alongside an 18-page oil and gas lease from Commanche to Endeavor the parties signed a 29-page surface use agreement governing operations on Comanche’s wildlife-focused South Texas ranch. Endeavor could conduct geophysical/seismic operations “only after” the parties entered into a “mutually agreed-upon” seismic surface use permit.
The impasse
Endeavor proposed to negotiate a seismic operations permit; Comanche responded that it had “no obligation” to agree to one and deemed the provision regarding a permit to be unenforceable. Endeavor then announced it would proceed anyway. As is frequently the case, litigation ensued.
On motions for smmary judgment, the trial court declared:
- Endeavor could not conduct seismic operations without a Comanche-granted permit;
- no permit existed;
- Comanche was not required to issue a permit; and
- Endeavor had no right to conduct seismic operations on Comanche’s surface estate.
Endeavor appealed, to no avail.
Was the seismic clause a condition precedent?
Endeavor argued the clause was merely an unenforceable “agreement to agree”; alternatively, compliance should be excused because Comanche refused to negotiate. The court deemed the clause unambiguous, applying standard contract-construction principles.
“Only after” signals a condition precedent
The clause was a condition precedent. Endeavor’s right to conduct seismic operations (and Comanche’s obligation to allow it) accrues “only after” the parties “mutually agreed” to a seismic permit. Drawing on authorities construing “only after,” the court reaffirmed the phrasing manifests conditional intent.
What does “mutually agree” mean?
The court adopted the ordinary meaning of the phrase: each party holds its own right to assent—or withhold assent. “Mutual” agreement requires both parties’ consent. The phrase requires unanimity.
No “rewrite” to cure bargaining leverage
Endeavor lamented that Comanche would never have an incentive to allow seismic operations and would always withhold consent if it wanted to. The court refused to “rewrite an agreement that Endeavor wishes it hadn’t made.”
No excuse for non-occurrence
Endeavor’s backup theory: Comanche’s refusal to negotiate excused the condition. That failed because excusing the condition would nullify the parties’ choice to require “mutual” agreement in the first place. With no seismic permit, Comanche had no obligation to allow seismic operations.
Words matter
If rights are established “only after” a “mutual” agreement, there is a condition precedent that either side can withhold. Courts are not likely to impose a duty to negotiate nullifying that unambiguous language. The court also reconciled other provisions of the agreement where Comanche’s consent could be withheld “in its sole discretion” by noting those were simple yes/no guardrails, whereas a seismic permit requires agreement on numerous operational and financial details. That makes bilateral assent a sensible prerequisite.
What the agreement could have said
Rather than relying on “mutual agreement” language alone, Endeavor would have benefited had it specified objective standards (scope, timing, restrictions) or default terms, or required that consent “not be unreasonably withheld.” The court’s contrast between “sole discretion” yes/no clauses and the multi-variable seismic operations permit shows how structure and wording drive outcomes.