Texas Supreme Court Issues Decision in Oil and Gas Subsurface Trespass Case
Austin, TX (Law Firm Newswire) October 11, 2017 – The Texas Supreme Court issued a decision in a closely watched case regarding whether trespass occurred when an oil and gas production company drilled horizontally through another party’s mineral interest to produce oil and gas from a lease held by the driller. The state high court upheld the opinions of the lower courts and stated that trespass did not occur.
“Horizontal drilling raises unique legal issues, and until the Texas Supreme Court decided this case, it was not entirely clear that a surface estate owner could drill through a subsurface estate in which they held no mineral rights,” said Gregory D. Jordan, an Austin oil and gas attorney with the Law Offices of Gregory D. Jordan.
In the case, Lightning Oil Company v. Anadarko E&P Onshore, LLC, Anadarko obtained a lease for the subsurface mineral rights on the Chaparral Wildlife Refuge, but was not able to use the surface estate of the Refuge to drill wells. The Briscoe Ranch is located just north of the Refuge, with a mineral lease held by Lightning and the surface estate owned by Briscoe Ranch. Anadarko entered into an agreement with Briscoe Ranch to build several well pads on the surface of the property and drill horizontally through the subsurface to reach the minerals under the Refuge, with no “take points” along Lightning’s lease. Lightning filed a lawsuit claiming trespass and tortious interference with contractual relations, seeking a temporary injunction preventing Anadarko from drilling.
In 2014, the trial court denied the request for a temporary injunction and dismissed the case. Lightning appealed to the San Antonio Court of Appeals, which also sided with Anadarko in 2015. In May 2017, the Texas Supreme Court upheld the decisions of the lower courts. The state high court said that while mineral estate holders have the exclusive right to possess and appropriate oil and gas when a lease is in effect, they do not have the right to “possess the specific place or space where the minerals are located.” The Court also found that the small amount of Lightning’s minerals that would be displaced by the drilling was outweighed by the interests of the industry and society in “maximizing oil and gas recovery.”
“The case makes good common sense,” notes Jordan. “To hold otherwise would effectively eliminate certain acreage from potential production.”