Production by Any Operator Satisfies Passive-Voice Habendum Clauses:
A Comprehensive Commentary on David W. Cromwell v. Anadarko E&P Onshore, LLC

I. Introduction

The Supreme Court of Texas’s decision in David W. Cromwell v. Anadarko E&P Onshore, LLC, No. 23‑0927 (Tex. May 23, 2025), is a major clarification of Texas oil-and-gas lease law, especially on the effect of passive-voice habendum clauses. The Court holds that where a lease provides that it continues “as long as oil or gas is produced from the land,” without specifying by whom, production by any party—here, a co-tenant operator—is sufficient to keep the lease alive. The lessee is not required to personally drill or operate wells unless the lease clearly says so.

In doing so, the Court:

• Rejects the El Paso Court of Appeals’ line of authority (notably Hughes v. Cantwell and Cimarex v. Anadarko) that read a lessee-production requirement into passive-voice habendum clauses.
• Disapproves the Fifth Circuit’s influential Erie guess in Mattison v. Trotti.
• Reaffirms strict textualism in contract interpretation and the strong Texas preference against forfeiture of mineral interests.
• Clarifies that ambiguous extension clauses like Paragraph 16 of the Tantalo lease are to be treated as covenants, not special limitations causing automatic termination.

The decision has concrete implications for:

• Non-operating working interest owners and co-tenants.
• Top-leasing strategies based on alleged lease termination.
• Drafting of habendum clauses and “purpose” language in Texas oil-and-gas leases.
• Appellate preservation of legal theories, especially when asking a court to reject or overrule existing intermediate precedent.

II. Factual and Procedural Background

A. The Parties and the Interests at Stake

Both petitioner David W. Cromwell and respondent Anadarko E&P Onshore, LLC are working interest co-tenants in the same land in Loving County, Texas. Anadarko is a major operator in the area and had already drilled three wells (Hughes & Talbot 75‑23‑1, 75‑25‑1, and 75‑26‑1) before Cromwell acquired his interests.

Cromwell obtained his interests via two “paid-up” oil-and-gas leases:

• Ferrer Lease – executed February 2009; 3-year primary term.
• Tantalo Lease – executed March 2009; 5-year primary term.

“Paid-up” means Cromwell had no obligation during the primary term to either commence drilling or pay delay rentals.

Both leases expressly granted Cromwell broad rights to explore, drill, and produce, but the dispute centers on their habendum clauses (the duration clauses).

B. The Habendum Clauses

The leases’ habendum clauses provided (emphasis added):

• Ferrer Lease:
  “This lease . . . shall be in force for a term of three (3) years from this date (called ‘primary term’) and as long thereafter as oil, gas or other minerals are produced from said land, or land with which said land is pooled hereunder, or as long as this lease is continued in effect as otherwise herein provided.”
• Tantalo Lease:
  “Subject to other provisions contained herein, this lease shall be for a term of five (5) years . . . (the ‘primary term’) and as long thereafter as oil, gas, liquid hydrocarbons or their constituent products, or any of them, is produced in commercial paying quantities from the lands leased hereby.”

Critically, both clauses use the passive voice (“is/are produced”) and do not say “by the lessee.” The question is whether that silence implies a requirement that Cromwell personally cause production to continue the leases into and through the secondary term.

C. Cromwell’s Dealings with Anadarko

After acquiring the leases, Cromwell repeatedly asked Anadarko—8 to 10 times between 2009 and 2018—to enter a joint operating agreement and let him participate in existing and future wells. Anadarko never provided a signed operating agreement.

Still, when the 75‑26‑1 well reached payout in August 2009, Anadarko:

• Confirmed Cromwell’s working interest.
• Sent him monthly joint interest billings (JIBs) for his share of costs and revenues.
• Sometimes paid him proceeds when revenues exceeded costs; Cromwell paid when costs exceeded revenues.
• Sent an authorization for expenditure (AFE) for a new compressor “pursuant to the terms of the governing Operating Agreement,” which Cromwell signed and paid.
• Referred to Cromwell in correspondence as a “working interest owner.”

Anadarko later claimed these dealings were “mistakes” because, in its view, Cromwell never properly “committed” to the operating agreement.

D. Anadarko’s “Expiration” Theory and Top Leases

The primary terms expired:

• Ferrer Lease – February 2012.
• Tantalo Lease – March 2014.

Anadarko argued that at those points, the leases automatically terminated because Cromwell had not personally caused production on the land, notwithstanding the undisputed fact that Anadarko’s wells were producing in paying quantities at all relevant times.

Even while secretly taking the position that Cromwell’s leases had expired, Anadarko:

• Continued to send Cromwell JIBs and treat him internally as a working interest owner whose interest was “held by production.”

In 2017, believing the original leases had lapsed, Anadarko acquired top leases from Cromwell’s lessors covering the same interests—without notifying Cromwell. Only in response to a 2018 inquiry about a different well did Anadarko inform Cromwell it considered his leases “expired” and that the interests had been leased to “third parties thereafter,” namely to Anadarko.

E. Litigation and Lower Court Decisions

Cromwell sued for:

• Declaratory judgment that his leases had not terminated.
• Trespass to try title.
• Other claims (including partnership-based theories, which dropped out on appeal).

Both parties moved for summary judgment on the lease-termination issue. The trial court granted Anadarko’s motion, denied Cromwell’s, and rendered a take-nothing judgment.

The El Paso Court of Appeals affirmed, holding that Cromwell’s leases automatically terminated at the end of the primary terms. Relying on its earlier decision in Cimarex Energy Co. v. Anadarko Petroleum Corp., 574 S.W.3d 73 (Tex. App.—El Paso 2019, pet. denied), the court held Cromwell was required to “take some action to cause production” to keep his leases alive, despite the passive language. 676 S.W.3d 860, 872 (Tex. App.—El Paso 2023).

The Texas Supreme Court granted review and reversed.

III. Summary of the Supreme Court’s Opinion

1. Preservation of Argument: Cromwell did not forfeit his “passive-voice” argument. Raising the termination issue in general terms in the court of appeals was enough; he was not required to explicitly ask that Cimarex be overruled.
2. Textual Interpretation of Habendum Clauses: The habendum clauses, read by their plain text, do not require Cromwell to personally produce. They simply require that oil or gas “is produced” from the leased land. Production by Anadarko, a co-tenant, satisfies that requirement.
3. Paragraph 16 of the Tantalo Lease: Although Paragraph 16 appears to speak in terms of “Lessee has obtained production,” cross-references (“subject to” clauses) and further passive constructions render the provision ambiguous. Under the strong Texas anti-forfeiture canon, the Court construes Paragraph 16 as a covenant, not a special limitation; breach would not result in automatic termination.
4. Rejection of Prior Case Law: The Court disapproves the reasoning of:
   • Mattison v. Trotti, 262 F.2d 339 (5th Cir. 1959),
   • Hughes v. Cantwell, 540 S.W.2d 742 (Tex. Civ. App.—El Paso 1976, writ ref’d n.r.e.), and
   • Cimarex Energy Co. v. Anadarko Petroleum Corp., 574 S.W.3d 73 (Tex. App.—El Paso 2019, pet. denied),
   to the extent they hold that passive-voice habendum clauses inherently require the lessee to produce.
5. Anti-Forfeiture Principle: Because habendum clauses impose a special limitation, courts will not find additional termination conditions unless the language is “so clear, precise, and unequivocal” that no other meaning is reasonable. That standard is not met here.
6. Co-Tenancy Remedy: Operators like Anadarko are not left remediless: as a producing co-tenant they may recover from non-operating co-tenants their share of reasonable and necessary costs through an accounting, rather than via lease termination.
7. Disposition: The Court reverses the court of appeals’ judgment and remands to the trial court for consideration of remaining issues (other than partnership-based claims, which were not before the Court).

IV. Detailed Analysis

A. Preservation and the Forfeiture/Waiver Distinction

Anadarko argued Cromwell had “waived” his passive-voice theory by not specifically asking the El Paso court to overrule Cimarex. The Supreme Court:

• Clarifies terminology: what Anadarko calls “waiver” is more accurately forfeiture—failure to timely assert a right (citing United States v. Olano and Bertucci v. Watkins).
• Invokes Texas Rule of Appellate Procedure 38.1(f): stating an issue on appeal covers all “subsidiary questions that are fairly included.”
• Relies on Li v. Pemberton Park Community Association, 631 S.W.3d 701 (Tex. 2021): parties may construct new arguments on appeal in support of issues preserved below.

Cromwell clearly contested lease termination and argued the leases could not be ended on unwritten conditions; this was “directly contrary to Cimarex,” as Anadarko itself recognized. His alternative argument (that he should win even if Cimarex applied) did not forfeit his primary challenge.

Practical effect: Appellants in Texas need not cite every adverse intermediate authority by name or expressly seek its overruling. Framing the issue at a sufficiently general level preserves the ability to present more refined legal theories—including textual and grammatical arguments—on further appeal.

B. Core Holding: Passive-Voice Habendum Clauses Do Not Require Lessee-Operated Production

1. Textualism and the Plain-Language Approach

The Court reiterates that an oil-and-gas lease is “just another type of contract,” governed by standard contract-interpretation principles:

• Review is de novo (Anadarko Petroleum Corp. v. Thompson, 94 S.W.3d 550 (Tex. 2002)).
• The goal is to ascertain the parties’ intent as expressed in the lease’s text (Endeavor Energy Resources v. Energen Resources Corp., 615 S.W.3d 144 (Tex. 2020)).
• The Court asks what an ordinary person would understand the words to mean in context (URI, Inc. v. Kleberg County, 543 S.W.3d 755 (Tex. 2018)).
• Evidence of surrounding circumstances cannot make the contract say what it “unambiguously does not say” (First Bank v. Brumitt, 519 S.W.3d 95 (Tex. 2017)).

A typical habendum clause splits the lease duration into:

• Primary term – fixed term (e.g., 3 or 5 years).
• Secondary term – indefinite, provided specified conditions (such as production in paying quantities) continue (Endeavor Energy Res. v. Discovery Operating, 554 S.W.3d 586 (Tex. 2018)).

Here, the habendum clauses say the lease continues “as long as” oil or gas is or are produced—with no actor specified. The Court expressly contrasts that with more common leases that say “produced by the lessee” and cites several such examples (Ridge Oil, Fleming, W.T. Waggoner, Willson).

Because the parties did not write “by the lessee,” the Court refuses to “blue-pencil” those words into the agreement, citing:

• American Midstream (Alabama Intrastate), LLC v. Rainbow Energy Marketing Corp. (Tex. 2025): courts must not insert words the parties did not agree to.
• Tenneco Inc. v. Enterprise Products Co., 925 S.W.2d 640 (Tex. 1996): courts may not rewrite contracts to add provisions parties could have included.

Thus, any production in paying quantities from the land—including production by a co-tenant like Anadarko—satisfies these habendum clauses. Because production never ceased, Cromwell’s leases never terminated.

2. Habendum Clauses as Special Limitations

The Court classifies the habendum clause as a special limitation: a lease term that causes automatic termination upon occurrence of a specified event (Discovery Operating, 554 S.W.3d at 606). Here, the stipulated event is “cessation of production.”

But the Court emphasizes a critical constraint: it will not expand the scope of a special limitation unless the termination language is:

“so clear, precise, and unequivocal that we can reasonably give it no other meaning.” Anadarko v. Thompson, 94 S.W.3d at 554 (citing Fox v. Thoreson)

The habendum clauses clearly impose an automatic termination if production ceases. They do not clearly impose a requirement that the lessee be the party producing. The Court therefore refuses to add that condition.

3. Rejection of Purpose Clauses as Controlling

The court of appeals had leaned heavily on the leases’ statements of “purpose”—i.e., that the leases were given “for the purpose” of exploration, drilling, and producing oil and gas by Cromwell. From this, it inferred an intent that only Cromwell’s own operations would hold the leases.

The Supreme Court rejects that method, invoking U.S. Polyco, Inc. v. Texas Central Business Lines Corp., 681 S.W.3d 383 (Tex. 2023). Polyco cautions that courts are not empowered to ensure “every provision” in a contract accords with some larger “purpose,” particularly if the contract does not itself make that purpose controlling.

Here, the operative language governing duration is the habendum clause, not the recited purpose. To elevate the purpose above the specific duration terms would be to ignore the carefully drawn structure of the lease.

C. The Tantalo Lease’s Paragraph 16: Ambiguity, Covenants, and the Anti-Forfeiture Canon

1. Paragraph 16’s Text and Its Problems

Paragraph 16 of the Tantalo Lease appears, on first reading, to impose lessee-focused conditions for extending the lease beyond the primary term. It states that rights will be extended if, and only if, the Lessee has obtained production, is engaged in exploration operations, or has recently completed a well as a producer or dry hole—each “by the Lessee.”

But Paragraph 16 does not stand alone. It is expressly:

• “Subject to Paragraphs 6 and 11,” and
• Paragraph 11 is itself “subject to Paragraph 16.”

Those cross-references create a circular structure. Moreover, Paragraphs 6 and 11 themselves use more passive-voice language, further muddying who must do what. The Court finds this web of provisions ambiguous.

2. Applying the Default Rule Against Forfeiture

When ambiguity persists after textual analysis, the Court turns to default rules of construction, as allowed under Energen, 615 S.W.3d at 149. One of the strongest such rules in Texas oil-and-gas law is the anti‑forfeiture canon:

• Courts “disfavor forfeiture of mineral interests.”
• “Doubts should be resolved” against interpreting language as a condition causing automatic termination (Rogers v. Ricane Enterprises, Inc., 772 S.W.2d 76, 79 (Tex. 1989)).

Because Paragraph 16 is ambiguous about whether it states a condition (special limitation) or a lessee covenant, and because treating it as a special limitation would forfeit Cromwell’s significant property interest, the Court construes it as a covenant:

• It may support damages or a conditional decree of cancellation if breached.
• It does not cause the lease to “automatically terminate.”

This distinction reinforces that only clear termination language in the habendum clause itself (or equally clear language elsewhere) will support automatic termination.

D. Co-Tenancy and the Proper Remedy for a Non-Operating Lessee

The Court addresses a practical concern: if a non-operating lessee like Cromwell is allowed to “ride” on another co-tenant’s production without personally drilling, is the operator left without recourse?

The answer is no. Co-tenancy principles supply the remedy:

• Each working interest owner has the right to produce from the common property.
• A producing co-tenant must account to non-producing co-tenants, but is entitled to recover their share of reasonable and necessary production and marketing costs before sharing net profits (Cox v. Davison, 397 S.W.2d 200 (Tex. 1965)).

Thus, if Cromwell had refused to pay his share of costs, Anadarko could sue for an accounting and recovery of expenses. Termination of the lease is not required—and, given the lease language here, is not legally available.

Key point: The existence of adequate co-tenancy remedies further undermines the need to stretch lease language to manufacture an implied lessee-production requirement.

E. Disapproving the Mattison–Hughes–Cimarex Line

1. What Those Cases Held

The El Paso Court of Appeals and the Fifth Circuit had established a line of authority holding that, even when a habendum clause uses the passive voice (“as long as oil or gas is produced from the land”), the lessee must nonetheless personally perform or “cause” production to keep the lease alive. The key cases:

• Mattison v. Trotti, 262 F.2d 339 (5th Cir. 1959) – An Erie guess about Texas law, holding that because the “prime consideration” of the lease was drilling and production by the lessee, a passive-voice habendum clause implicitly required lessee drilling.
• Hughes v. Cantwell, 540 S.W.2d 742 (Tex. Civ. App.—El Paso 1976, writ ref’d n.r.e.) – Relied on Mattison to hold that a non-operating co-tenant whose lease used passive voice could not rely on another co-tenant’s production after refusing to join that operation.
• Cimarex Energy Co. v. Anadarko Petroleum Corp., 574 S.W.3d 73 (Tex. App.—El Paso 2019, pet. denied) – Extended Hughes further: even where the operator prevented the non-operating co-tenant from participating, the passive-voice lease still required the non-operator to personally cause production; paying operating expenses and seeking a JOA were not enough.

These cases heavily relied on:

• Boilerplate “purpose” language in the leases.
• The idea that drilling and production are the “prime consideration” of the lease.
• Implied obligations based on what courts thought the parties must have intended, rather than the words they actually used.

2. Why the Texas Supreme Court Disapproved Them

The Court expressly disapproves these decisions “to the extent they hold otherwise” than the rule announced in Cromwell. The reasons are twofold:

1. Departure from plain text: These cases “make the language say what it unambiguously does not say” (Brumitt), by effectively reading “by the lessee” into a passive-voice clause that does not include it.
2. Misunderstanding the consideration of an oil-and-gas lease: They rested on the idea that drilling and production by the lessee is the “prime consideration.” But the Texas Supreme Court corrects this, citing Texas Co. v. Davis, 254 S.W. 304, 306 (Tex. 1923), which held that the “vital consideration” is royalties on mineral production, not drilling for its own sake.

This is a notable correction of the doctrinal record. It anchors the economic foundation of an oil-and-gas lease in royalty streams—i.e., successful production by someone, not necessarily the named lessee.

Resulting rule: In Texas, a passive-voice habendum clause—“as long as oil or gas is produced from the land”—does not legally require the lessee to personally drill or operate wells. Production by any operator on the tract suffices, unless the lease clearly says otherwise.

F. Contract Interpretation Themes: Textualism, Anti-Forfeiture, and Bright Lines

The Court closes by emphasizing two overarching themes:

• Textualism: Courts must “remain faithful to the text” of oil-and-gas leases to provide “legal certainty and predictability,” citing Cosgrove v. Cade, 468 S.W.3d 32 (Tex. 2015).
• Property Law’s Need for Bright Lines: In matters of property ownership, the law “requires bright lines and sharp corners.” Parties and markets rely heavily on recorded instruments; judicial rewriting or implication of conditions undermines that stability.

Cromwell therefore fits cleanly within a line of Texas Supreme Court cases that:

• Distinguish clearly between conditions/special limitations (automatic termination) and covenants (enforceable by damages or conditional cancellation).
• Resist reading termination conditions into ambiguous or general language.
• Reject using generalized “purpose” clauses to override specific operative provisions.

V. Complex Concepts Simplified

1. Habendum Clause

The habendum clause in an oil-and-gas lease is the “to have and to hold” clause; it sets how long the lease lasts:

• Primary term: A fixed time period (e.g., 3–5 years) during which the lessee can explore and decide whether to develop, typically without being required to produce.
• Secondary term: An indefinite period that continues “as long as” a certain condition is met—most commonly, that oil or gas is produced in paying quantities.

In Cromwell, the key question was: Does the habendum clause require production merely to occur, or must it be production by this lessee?

2. Passive Voice vs. “By the Lessee”

• Passive voice: “Oil or gas is produced from the land.” – The sentence doesn’t say who is doing the producing.
• Active specification: “Oil or gas is produced by the lessee.” – Here, the identity of the actor is expressly made a condition.

The Supreme Court holds: If the lease uses the passive voice and does not specify “by the lessee,” courts must assume any production from the land (by any operator) satisfies the habendum clause.

3. Special Limitation vs. Covenant

• Special limitation (condition limiting the estate):
  • If the condition is breached, the lease ends automatically.
  • Example: “This lease shall remain in force only so long as oil or gas is produced from the land.” Once production ceases, the lease terminates.
• Covenant (promise or obligation):
  • Breach does not automatically terminate the lease.
  • The lessor may seek damages or, in some cases, a court-ordered cancellation, but not automatic forfeiture.

The Court treats the habendum clause as a special limitation (but only as to cessation of production) and Paragraph 16 as a covenant due to ambiguity, preserving the lessee’s estate.

4. Anti-Forfeiture Principle in Oil-and-Gas Leases

Texas courts are strongly reluctant to declare that a mineral interest—often valuable and long-lived—has been forfeited unless the lease language leaves no reasonable alternative interpretation. When in doubt:

• The Court prefers to treat unclear provisions as covenants, not as conditions that automatically terminate the lease.

Cromwell is a textbook application of that principle.

5. Co-Tenancy and Accounting

When two or more parties co-own a working interest in the same land:

• Any co-tenant may develop and produce without consent of others.
• The producing co-tenant must share net profits with non-operating co-tenants, but can first recoup their share of reasonable and necessary costs.
• If a non-operating co-tenant refuses to pay, the remedy is a lawsuit for an accounting—not unilateral divestiture of their mineral interest.

VI. Impact and Future Implications

A. Immediate Doctrinal Impact

The decision firmly establishes in Texas law that:

• Rule: A standard passive-voice habendum clause (“as long as oil or gas is produced from the land”) is satisfied by production in paying quantities from the land by any party, including a co-tenant, unless the lease unambiguously provides otherwise.
• Consequence: Non-operating lessees’ interests are far less vulnerable to automatic termination merely because they are not themselves drilling or operating wells, so long as the tract is being produced by someone.
• Related rule: Ambiguous “subject to” extension clauses will be construed as covenants, not special limitations, under the anti‑forfeiture canon.

It clears away a conflicting line of intermediate authority and a federal Erie guess that had persisted for decades, replacing it with a clean, text-based rule.

B. Effects on Lease Drafting and Negotiation

For practitioners and landmen, Cromwell sends clear drafting signals:

• If lessors or operators want a lessee’s interest to continue only if the lessee (or its assigns) operates or drills, they must:
  • Say so expressly in the habendum clause (e.g., “produced from said land by Lessee, its successors or assigns”), and
  • Use unambiguous language if they also want that condition to function as a special limitation (automatic termination).
• Reliance on generic “purpose” clauses or vague extension paragraphs will not suffice to cut off a lessee’s estate.
• “Subject to” cross-references and circular drafting (as in Paragraph 16) create ambiguity that will be resolved against automatic termination.

In short, if the lessee’s active operations are intended as a condition of survival into the secondary term, that requirement must be spelled out, not inferred.

C. Implications for Non-Operating Working Interest Owners

Non-operating working interest owners—especially those reliant on larger operators—gain substantial security:

• They can rely on a co-tenant’s production to keep their leases alive where the habendum clause is passive-voice and silent about who must produce.
• They are not required, as a matter of property law, to drill their own well or litigate over joint operating agreements simply to avoid forfeiture.
• However, they remain liable for their share of reasonable and necessary costs; failure to pay can still be remedied through an accounting action.

D. Impact on Top Leasing and Title Strategies

Cromwell also affects top leasing—the practice of obtaining a later-in-time lease on a tract already covered by an earlier lease, based on the belief or hope that the prior lease will terminate.

• Top lessees may no longer rely on a non-operating lessee’s inactivity as a basis for asserting termination where the habendum clause is passive and production by someone continues.
• Title examiners and landmen will need to adjust their assumptions when reviewing leases with passive-voice habendum clauses; ongoing production by any operator will generally “hold” those leases.
• Operators contemplating top leases must be much more confident that they can point to a clear cessation of production or an unambiguous active-voice limitation (“by lessee”) before banking on termination.

E. Future Litigation Questions

While Cromwell resolves the central question about passive-voice habendum clauses, related issues will likely arise:

• What specific actions short of drilling (e.g., signing JOAs, paying AFEs, farmouts, pooling) may suffice to show “production by lessee” where that phrase is present in a lease?
• How far will courts extend the covenant/special limitation line drawn here to other clauses (e.g., continuous drilling obligations, shut-in royalty clauses, cessation-of-production clauses)?
• Where a lease does say “by Lessee,” what counts as “production by Lessee”? Production by an operator to whom the lessee has assigned its interest? Production under a farmout?

Although the Court explicitly declines to catalogue every action that might maintain a lease, its strong emphasis on text suggests future disputes will turn on careful parsing of the exact words used, rather than on generalized notions of purpose or “prime consideration.”

VII. Conclusion

David W. Cromwell v. Anadarko E&P Onshore, LLC is a significant reaffirmation of textualism and the anti‑forfeiture canon in Texas oil-and-gas law. The Court holds that:

• Passive-voice habendum clauses requiring that oil or gas “is produced from the land” are satisfied by production in paying quantities from the land by any operator, including a co-tenant, absent express language to the contrary.
• Ambiguous extension provisions like Paragraph 16 of the Tantalo Lease are construed as covenants, not special limitations, and thus do not cause automatic lease termination.
• Prior authorities (Mattison, Hughes, Cimarex) that read lessee-production requirements into passive-voice clauses are disapproved as inconsistent with the lease text and with long-standing Texas precedent recognizing royalties—not drilling per se—as the vital consideration of oil-and-gas leases.

By reversing the El Paso Court of Appeals and remanding, the Texas Supreme Court restores a bright-line rule: where the parties did not say “by the lessee,” the courts will not say it for them. For landowners, lessees, operators, and title examiners, the decision brings increased predictability and reinforces a central message: in Texas oil-and-gas law, the words on the page—not unexpressed assumptions about purpose or fairness—govern the existence and continuation of valuable mineral estates.