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13 Cards in this Set
- Front
- Back
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Does surface owner have to sign off on seismic testing? |
Court: Even though this is exclusively surface level activity, no. Right to authorize exploration goes with the mineral estate. Oil Co. pays the mineral estate owner to explore. Mineral estate is the dominant estate. Note: This is a common law rule and can be K-ed around. |
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Enron v. Worth |
Right to surface exploration is severable and once severed the grantee can use that right to explore. |
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Kennedy v. General Geophysical Co. |
- Seismic testing of neighbor's tract led to seismic view of P's tract - That info is worth $ and will be sold to O&G Co. Court: Not a trespass, no physical entry |
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Villareal v. Grant Geophysical |
- Are 3D seismic surveys a trespass? - Ps did not want survey done of their land and did not authorize it - All P's neighbors did so company gets one anyway. P's sue for value of the survey. Court holds for Grant, based on Kennedy, even though here Ds got more info. Smith thinks they should have been compensated for survey value. |
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Intentional trespass damages |
If you knew or should have known that you were on someone else's property, lessor gets gross value of production. |
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Unintentional trespass damages |
If you act in good faith, lessor is entitled to net value of production (production-costs of drilling) |
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Two common situations that lead to trespass |
(1) Title dispute (2) Dispute over whether a lease has terminated or not |
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Horizontal drilling - Is that a tespass? |
-Texas courts are split Acc. to Smith: - Unless horizontal drill intereferes with your ability to drill, no trespass - If it does, trespass + nominal damages |
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Coastal Oil v. Garza - Trespass issue |
- Well drilled 467 ft from property line, but hydraulic fluid and proppants likely travel to P's land - Court dodges issue and applies ROC |
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Coastal Oil v. Garza - Criticism |
- Smith: How can you decide ROC if you don't know whether production was proper?- My take: No self-help option so should be more scrutiny or forced pool bc CO is acting in bad faith to dodge the royalty it owes Garza |
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Court's justification of Coastal Oil v. Garza (4 reasons) |
1. Self help (I call BS, land is leased to same Co) 2. Deference to RRC (if spacing for fracking should be different from traditional wells that's up to the RRC) 3. Difficulty of determining amount and value (cop-out reason IMO) 4. Adverse impact on development (this is the real reason) |
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Smith's take on fracking + trespass |
As a matter of law, fracking should not constitute atrespass. If there are concerns about injuries, there is another cause ofaction from which to recover for negligent or intentional injury to reservoir. |
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FPL Farming v. Environmental Processing Systems |
- P alleged that injecting salt water back into reservoir would lead to trespass as material migrated under ground - D countered that they had permit from the Texas Nat Resources CC, CoA ruled in D's favor - SC overturned, saying permit is not binding on tort liability but doesn't decide trespass - O&G Cos are concerned about this being left open |
