A Petition for Review was filed in the Texas Supreme Court in March of this year by Lightning Oil Company, in which they ask the Court to reverse a decision issued by the Fourth Court of Appeals in San Antonio. I recently wrote about the Memorandum Opinion issued by the Court of Appeals which upheld the denial of a Temporary Injunction in their underlying suit. The injunction was requested to prevent Anadarko E&P Onshore, LLC, from located a well bore on an adjacent tract, and drilling horizontally to develop minerals under Anadarko’s leasehold.
The background is fairly simple. Lightning owns the mineral estate under approximately 3,000 acres in Dimmit County. Briscoe Ranch, Inc., is the owner of the surface estate. Nearby is a 15,200 acre wildlife sanctuary, the surface and 1/6 of the minerals of which is owned by Texas Parks and Wildlife. Anadarko is the owner of the lease that gives it the right to develop the minerals under the sanctuary.
Anadarko planned a drillsite on the surface owned by Briscoe, which necessarily would penetrate Lightning’s mineral estate, but would only have take points in the sanctuary’s mineral estate. Lightning filed suit against Anadarko, claiming trespass and tortious interference, as well as seeking an injunction preventing Anadarko’s location. At a Temporary Injunction hearing, the trial court denied Lightning’s Application for Temporary Injunction. The Court of Appeals upheld the denial, holding that Lightning did not show imminent and irreparable injury.
Lightning appealed this denial, arguing that the Court of Appeals, in refusing to consider whether a trespass occurred, which as a matter of law is an imminent and irreparable injury, erred. Lightning asks the Texas Supreme Court to address the following issues with respect to the alleged trespass:
Whether […] Texas has abrogated trespass law with respect to adjacent mineral estate owners such that the mineral estate owner of Tract B can now drill a well through the mineral estate of Tract A to reach the adjacent Tract B mineral estate without the permission of the Tract A mineral estate owner.
Whether, without the consent of the owner of the severed mineral estate of Tract A, a third party’s drilling of an oil-and-gas well bore starting on the severed surface estate into and through the severed mineral estate of Tract A and into an adjoining mineral estate of Tract B constitutes a trespass on the severed mineral estate of Tract A.
Whether, without the consent of the owner of the severed mineral estate of Tract A, the owner of the severed surface estate of Tract A can grant a third party permission to drill an oil-and-gas well bore into and through the underlying minerals of Tract A, in which the surface owner has no interest, to access an adjoining mineral tract (Tract B) owned by the third-party driller.
Most horizontal operators are aware that certain field rules allow an operator to locate a surface location off-lease so long as the operator has provided proper notice to affected mineral estate owners. If the Texas Supreme Court determines that drilling from an off-lease surface location, and through a mineral estate (with no take points), constitutes a trespass, it will affect many existing field rules, as well as many companies’ drilling plans. The reply brief is due soon, and we must wait to see if the Texas Supreme Court will agree to review the decision. If it does, we have many months to wait for their opinion, but it will hopefully address whether this is indeed a trespass or not, and settle the issue for good.