579 Lightning Oil Co. v. Anadarko E&P Onshore LLC, 480 S.W.3d 628 (Tex. App.—San Antonio, 2015, pet. filed)
Monday, June 19th, 2017
The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.
Lightning Oil Co. v. Anadarko E&P Onshore LLC, 480 S.W.3d 628 (Tex. App.—San Antonio, 2015, pet. filed) (Surface estate and subsurface trespass by drilling) held that the surface estate includes the right to locate a well on the surface and to drill through the earth beneath the surface, even if the mineral estate has been severed. When the fee owner severed the surface and mineral estate in the Briscoe Ranch, the interest reserved to the mineral owner was “all oil, gas and all minerals, on and under the said land,” but the reservation did not expressly include any right to, or control of, any subterranean structures—the earth—underlying the surface estate.” Lightning Oil Co. (“Lightning”), as lessee, acquired from the mineral owner a lease for oil and gas under the Briscoe Ranch. Anadarko E & P Onshore LLC (“Anadarko”) entered into a Surface Use and Subsurface Easement Agreement with Briscoe Ranch to site wells on the Briscoe Ranch and to drill through the earth under the Briscoe Ranch to open wells that bottomed on Anadarko’s adjacent leasehold acreage. Lightning sued Anadarko for trespass and for tortious interference with Lightning’s lease.
Lightning contended that Anadarko could not site wells on the Briscoe Ranch surface or drill through the earth included within the boundaries of Lightning’s lease beneath the surface of the Briscoe Ranch. “[O]wnership of the hydrocarbons does not give the mineral owner ownership of the earth surrounding those substances.” “[U]nder Texas law, the surface estate owner, not the mineral estate owner, ‘owns all non-mineral ‘molecules’ of the land, i.e., the mass that undergirds the surface of the [conveyed land].’” “[T]he surface of the leased lands remaining as the property of the [surface estate owners] included the geological structures beneath the surface.”
“[W]e conclude that the surface estate owner controls the earth beneath the surface estate. The mineral estate owner is entitled to ‘a fair chance to recover the oil and gas in or under [the surface estate],’ but absent the grant of a right to control the subterranean structures in which the oil and gas molecules are held, the mineral estate owner does not control ‘the mass that undergirds the surface of the [conveyed land].” The court held that Anadarko needed only the permission it had already obtained from Briscoe Ranch, but Anadarko could not open or bottom its wellbores within the boundaries of Lightning’s lease. Therefore, there was no trespass.
Anadarko raised justification as an affirmative defense to Lightning’s claim of tortious interference with contract. Because Anadarko’s agreement with Briscoe Ranch gave it the legal right to site and drill Anadarko’s wells, the court found that Anadarko had established its justification defense.
The court noted that although Briscoe Ranch controls the surface and subsurface, Briscoe Ranch’s and Lightning’s use of the surface estate are subject to the accommodation doctrine. This implies the doctrine extends beneath the surface and presumably Anadarko can have no greater right than Briscoe Ranch’s right. It should also be noted that this case involves the rights of a severed surface owner not subject to an existing lease and not a surface owner who is also the lessor. That is, many lease forms grant the “exclusive” right to drill, which may produce a different result.
The significance of the case is the holding that the surface estate includes the right to locate a well on the surface and to drill through the earth beneath the surface, even if the mineral estate has been severed.
