Texas Court of Appeals Rules Anadarko Can Drill through Competitor’s Leasehold Estate
Austin, TX (Law Firm Newswire) October 6, 2015 – A Texas appeals court ruled against a subsurface mineral rights holder in an oil and gas case.
In the case of Lightning Oil Co. v. Anadarko E&P Onshore LLC, the Fourth Court of Appeals held on Aug. 19 that Anadarko, which held surface rights, could drill through Lightning’s subsurface leasehold estate to reach the minerals under a nearby property for which Anadarko held the subsurface rights.
“At issue in this case was whether a surface estate owner controls the earth beneath the surface estate, when the mineral rights are controlled by another party,” said Gregory D. Jordan, an Austin oil and gas attorney with the Law Offices of Gregory D. Jordan. “The appeals court held that the surface owner does maintain that control.”
Anadarko owned an oil and gas lease for a property that the Texas Parks and Wildlife Department (TPWD) operated as a wildlife sanctuary. Unable to obtain surface rights from TPWD, Anadarko entered into an agreement with Briscoe Ranch, the surface owner of an adjacent property. Lightning Oil owned the mineral rights for the Briscoe Ranch property, which had been severed from the surface prior to leasing. Anadarko placed wells on the Briscoe Ranch surface and drilled through Lightning’s mineral estate to reach the oil and gas underneath the TPWD property.
Lightning sued, arguing that the drilling constituted a trespass through its mineral estate and tortious interference with its oil and gas lease. However, the trial court granted Anadarko’s motion for summary judgment on both claims. The appeals court sided with Anadarko, holding that the earth beneath the surface estate is controlled by the surface estate owner.
Austin oil and gas lawyer Jordan noted the court’s holding is viewed as controversial by some lawyers and he would not be surprised if it is appealed to the Texas Supreme Court. “Horizontal and directional drilling creates a host of novel legal issues,” said Gregory D. Jordan. “I expect the Texas Supreme Court may ultimately rule on this matter.”