United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit ____________ FILED No. 23-30860 January 6, 2025 ____________ Lyle W. Cayce Clerk Elizabeth Fry Franklin; Cynthia Fry Peironnet,

Plaintiffs—Appellees/Cross-Appellants,

versus Regions Bank,

Defendant—Appellant/Cross-Appellee. ______________________________

Appeal from the United States District Court for the Western District of Louisiana USDC No. 5:16-CV-1152 ______________________________ Before Smith, Clement, and Higginson, Circuit Judges. Edith Brown Clement, Circuit Judge: This case involves a dispute between two lessors and the bank in charge of managing their mineral interests on a tract of property atop the Haynesville Shale in Louisiana. In 2007, Regions Bank accidentally extended a lease for drilling rights on this entire tract when the lessors only intended to convey rights to a portion. Advances in drilling technology drastically increased the value of the resource-rich tract in the years that followed, so the mistaken extension threatened to box the lessors out of the boom. But the lessors had their day in court. Case: 23-30860 Document: 75-1 Page: 2 Date Filed: 01/06/2025

No. 23-30860

In 2021, the district court held a bench trial and found Regions liable for breach of contract. On remand to determine the meaning of the lease’s royalty provision for calculating the damages award, the district court considered extrinsic evidence and concluded that the parties intended the royalty to be calculated based on gross proceeds. The court fashioned its award of royalty damages accordingly, accounting for prejudgment interest on past losses and projected future losses discounted to present value. We AFFIRM the district court’s ruling that the lease conveyed a gross proceeds royalty and the admission of extrinsic evidence to reach this conclusion. However, we REVERSE the district court’s award of royalty damages plus prejudgment interest and REMAND with instructions for the district court to consider evidence of actual loss data insofar as it is available for years past. I. Elizabeth Franklin and Cynthia Peironnet (“Landowners”) own an undivided interest in an 1,805.34-acre tract of land in Caddo Parish, Louisiana. The tract sits above the Haynesville Shale, which is a rock formation deep below the surface containing significant quantities of natural gas. The Landowners each entered into agreements with Regions Bank (“Regions”) to manage their mineral interests on the property. Regions subsequently negotiated and executed two leases and a lease extension on the Landowners’ behalf. In 2004, a Regions representative negotiated an oil-and-gas lease with Prestige Exploration, Inc. (“Prestige”) on the entire tract for a three-year term. This lease provided for a $100.00 per acre bonus and royalties of 20% of gross proceeds received, or a fair and reasonable price, whichever was higher. The lease contained both a Pugh Clause, under which the lease automatically extended if the lessee had a well that was producing in paying

2 Case: 23-30860 Document: 75-1 Page: 3 Date Filed: 01/06/2025