Sonat Exploration Company, Etc. v. William D. Mann and Mann Production, Inc.

POLITZ, Circuit Judge:

In this diversity jurisdiction case, we must determine the legal effect, under Mississippi law, of the execution of an AFE (“Authorization for Expenditure”) by a non-operator who was not party to the operating agreement covering the subject exploratory gas well. The district court concluded that neither the AFEs signed by the defendants nor their conduct obligated them to pay the drilling costs demanded by Sonat Exploration Company. For the reasons assigned, we affirm.

Facts

In the summer of 1977, Sonat, Texas Crude, Inc., and Stone Oil Corporation entered into a…