Elm Ridge Exploration Company v. Engle

MATHESON, Circuit Judge.

This case concerns a dispute between Elm Ridge Exploration Company, LLC (“Elm Ridge”), the operator of certain oil and gas leases in New Mexico, and Fred Engle, the majority owner of the leases. An operating agreement (the “Operating Agreement” or “Agreement”) governs their relationship. Elm Ridge seeks to recover costs it incurred in drilling a well on the leasehold property (the West Bisti 22-1T well or “IT” well). Mr. Engle contends, among other things, that he should not have to pay for unauthorized expenses that Elm Ridge incurred.

Their dispute became a diversity…