Bankruptcy: Sale of Natural Gas Liens: Priority; Sale of Natural Gas

摘要

Edge is a producer of natural gas that sells its production to Aurora and other related parties who in turn sell to Duke Energy which uien turns around the sells to third parties. Aurora and its related entities file for bankruptcy protection and Edge moves for summary judgment holding Duke liable for the payment of the natural gas and for conversion. Edge argues that it has a security interest in the gas pursuant to Tex. Bus. & Com.Code 9.343. Duke files its own motion for summary judgment claiming that Edge has no security interest in the gas while the bankruptcy debtors assert that Edge must file its claim for payment in their respective bankruptcy proceedings. Section 9.343 provides to the producer a security interest to secure the obligations of the first purchaser of oil and gas production to pay the agreed-to purchase price. It further provides that as for secondary purchasers of oil and gas they may buy free and clear of any producer's security interest or statutory lien by complying with any of the 4 conditions listed under 9.343(m). The court finds that Edge has a security interest in the natural gas being sold to the Debtors under 9.343 because it holds a recorded real property interest in the mineral estate from which the gas was produced and it sold the gas pursuant to a signed agreement to purchase gas. That purchase agreement was executed between Edge's agent and the Debtors. Duke argues that since the contract does not state that the seller is an agent for Edge that 9.343 has not been triggered. Based on the custom and practice of the industry when it comes to natural gas purchase contracts, the court concludes that entities such as Edge and Duke understood that the contract implicates the creation of a security interest on behalf of Edge even though it is not mentioned as the selling party. The security interest attaches to the proceeds of the Debtors' sale of the gas to Duke. ( 9.343(c)). There is some factual dispute as to whether Duke paid die Debtors for Edge's gas because Duke had been setting off some of its payment to me Debtors due to alleged overcharges by the Debtors. Nonetheless, the court finds mat if Duke had paid the Debtors, Edge would be die owner of a security interest in the proceeds. However, since the bankruptcy petitions have been filed the automatic stay provisions prevent Edge from exercising any control over the assets in the bankruptcy estate. Edge may not pursue its security interest against Duke without obtaining relief from the automatic stay provision because it would interfere with the Debtors' efforts to collect property of the estate. Such relief has not been granted. Thus if Duke has paid for the gas, Edge must pursue its security interest in the proceeds through the bankruptcy claims process. If Duke has not paid for the gas then Edge holds a perfected security interest in the proceeds due from Duke to the Debtors but that Edge's collection efforts would be subject to the automatic stay provision. In dicta, the court deals with the issue of whether the security interest follows the sale to Duke from the Debtors. Under 9.343 the first purchaser may terminate the security interest or statutory hen by making or tendering payment. That did not occur in this case. Likewise a person buying oil or gas from the first purchaser may buy it free and clear of the security interest or statutory lien if it meets one of the conditions contained in 9.343(m). If Duke paid the Debtors then it would not oldroceeds due to the first purchaser. If Duke did not pay for the gas then Duke would hold such proceeds. One of (he conditions of 9.343(m) that would relieve a subsequent purchaser of the security interest or statutory Hen is whether the gas is being bought in the ordinary course of business. The court finds that there are disputed questions of fact as to that condition that cannot be resolved on competing motions for summary judgment. Edge also asserts that Duke converted its natural ga