501 Long v. Miken Oil, Inc.
Tuesday, December 8th, 2015
The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.
Long v. Miken Oil, Inc. held that no tenancy in common exists between two parties when one does not have the present right to possess the property in question. Long held a lease covering the Pettit formation and Tate held a lease covering the Woodbine formation under the same tract. In 2001, the parties agreed to recomplete Long’s Pettit well into the Woodbine leased by Tate. In consideration for use of Long’s wellbore, Tate agreed to give Long fifty percent of the net proceeds from all of the production in Tate’s Woodbine wells. Tate never made an assignment of the Woodbine lease to Long. In 2008, Tate and Long discussed the need for a workover on a well and agreed to undertake the workover. Tate paid the bills for the workover, amounting to approximately $150,000.00. The workover was unsuccessful and Long never paid any part of the bill. Tate sued Long for equitable contribution based on the claim that Tate and Long were cotenants. The trial court held that a tenancy in common existed between the parties and that Tate was entitled to reimbursement from Long.
“A cotenancy exists when two or more persons share the unity of exclusive use and possession in property held in common. Cotenancy may exist in mineral estates as in surface estates. Each cotenant may enter upon the premises for the purpose of exploring for oil and gas and may drill and develop the premises. The present right to possession is essential because one who is not entitled to possession of the property is not a cotenant. Actual possession of the minerals in the case of oil and gas means drilling and production of oil and gas.”
Long had record title to an oil and gas lease covering the Pettit while Tate had record title to oil and gas leases covering the Woodbine under the same tract. “The parties agreed that this in itself did not create a cotenancy.” Tate testified that Long agreed to take a fifty percent interest in Tate’s Woodbine wells and Long received the net revenue for eight years, but Tate never assigned the Woodbine leases to Long. Tate testified that “Long did not have an interest to assign” in the Woodbine. Furthermore, Tate testified that “Long had no right to drill a well into the Woodbine formation” under the common tract. Thus, the Court held “Tate’s testimony shows that Long had no right to possession of the leases in question. Absent this essential element, there is no cotenancy . . . and Tate . . . had no right to contribution from Long based upon cotenancy. . . .”
The significance of this case is the Court’s scrutiny of the elements of tenancy in common and the holding that without a present right to possession there can be no cotenancy or a right to contribution based upon cotenancy.