Midstream Cos. Lose Appeal Over Nixed Sabine Contracts

Law360, New York (March 13, 2017, 6:42 PM EDT) -- A New York federal judge has upheld a bankruptcy court decision that allowed oil and gas producer Sabine Oil & Gas Corp. to reject gas-gathering contracts with two midstream service companies in Chapter 11, finding that the agreements did not grant the companies an interest in Sabine’s land.

In a March 9 opinion, U.S. District Judge Jed Rakoff affirmed a holding that Sabine could reject executory contracts it penned with Nordheim Eagle Ford Gathering LLC and HPIP Gonzales Holdings LLC since those prepetition service agreements did not contain covenants that “run with the land” as interpreted under Texas law.

Upholding a...

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