Shale drillers and pipeline companies know how to exploit land. The former frack the rock beneath to extract the oil and gas, the latter follow with the pipes needed to remove the resulting bounty.

But they can’t use land as a conduit for preserving uneconomic pipeline contracts and covenants at the expense of secured creditors, a judge has opined in a closely watched bankruptcy case.

The preliminary ruling was the first in the current energy bust authorizing a bankrupt driller to reject its midstream contracts over a service provider’s objections. It carried extra heft because it came from the federal bankruptcy court in New York that handles the largest and most complex cases.

As the news circulated, the Alerian MLP Index dropped 2.5% in the final hour of trading on March 8. But it had largely erased those losses by the end of the week, aided by stronger energy prices.

Energy prices will ultimately determine how many insolvent drillers follow the lead of Sabine Oil & Gas in breaking onerous gathering and processing contracts.

Judge Shelley Chapman granted Sabine’s request to reject its agreements with two natural gas processors, one of them a unit of Cheniere Energy (NYSE: LNG). The pipeline owners had argued that the long-term commitments they secured from Sabine in exchange for providing it with gathering and processing facilities were “covenants running with the land” not breakable even in bankruptcy under governing Texas law.

Judge Chapman deferred a formal ruling on those claims pending further proceedings required to adjudicate factual disputes under case law. But her “non-binding analysis” of the covenant claims left little doubt that the gas gatherers would lose that round as well.

Despite contractual language asserting those land-based covenants the agreements in fact concerned the oil and gas Sabine produced, Chapman noted. The pipeline companies’ contractual rights to Sabine’s energy production or reserves were not secured with property and no notice to the contrary was given to the secured creditors who lent against those reserves, the judge pointed out.

Weeks earlier, the CEO of Williams (NYSE: WMB) cited “covenants running with the land” as one of the reasons his company would not lose big in the event of a bankruptcy filing by Chesapeake Energy (NYSE: CHK), which accounted for 18% of Williams’ revenue last year.

But Chesapeake is not Sabine, which has already used trucks to bypass one of its midstream services providers. Chesapeake operates on a much vaster scale and has few realistic alternatives to the Williams gathering pipelines, which Chesapeake built before spinning off its midstream business.

That hasn’t stopped Chesapeake from successfully renegotiating contracts with Williams and other providers to secure discounts on pipeline fees without the benefit of a bankruptcy filing. Such renegotiations could become less likely in the future as a result of the Sabine ruling, because any long-term leasehold dedications offered in exchange for short-term fee cuts would, under Judge Chapman’s interpretation of applicable law, depend on the driller’s continued solvency or its willingness to continue using those services while under bankruptcy protection.

Some broader perspective is in order here.  Although 51 North American drillers have filed for bankruptcy protection since the end of 2014, only seven of them had debts topping $1 billion (with Sabine the second-largest at $2.9 billion.) In total the cases involved debt of $17 billion, which is dwarfed by $237 billion in outstanding obligations as of the third quarter of last year just the 61 largest drillers tracked by Bloomberg.

Certainly Chesapeake and some of the others will be in jeopardy if energy prices remain low. But the cumulative bankruptcy toll seems unlikely to ever affect more than 10% of U.S. output. And that means that while such filings will pose an existential risk to some of the smaller and heavily concentrated midstream contractors, they’ll be a much more modest threat to the diversified giants delivering natural gas to power plants and other consumers.     

Keep that in mind as more tussles over midstream contracts are decided, including one in the Quicksilver Resources bankruptcy now pending before a Delaware federal court.

Know too that the recent equity and oil rally has unlocked billions of additional dollars for producers from equity offerings and new hedges.

U.S. energy equity offerings have already topped $10 billion in 2016, matching the record amount raised during all of last year.

Chesapeake’s share price has tripled over the last month, adding $2 billion of market capitalization that wasn’t there on Valentine’s Day. If that entire windfall could be converted into cash Chesapeake would likely be able to survive low prices until at least 2018, rather than needing a rebound by 2017 as had been the case before the rally.

The company hasn’t needed judge’s help to show that midstream contracts aren’t sacrosanct when times get tough. But if the discounts Chesapeake has secured help it survive, Williams and its rivals will have gotten their money’s worth.