El Paso Production Co. v. Blanchard , 371 Ark. 634 ( 2007 )

PaulE. Danielson, Justice,

concurring in part; dissenting in part. tice, with a large part of the majority opinion and the holding to reverse the order of the circuit court, I do not believe that El Paso violated Rule B-42. Furthermore, while the majority remands “for a determination of actual damages to Blanchard’s property,” it is my opinion that Blanchard chose to waive damages for the tort of trespass when he instead sought damages below based on unjust enrichment, as noted by the circuit court in its findings of fact and conclusions of law. Therefore, I would dismiss the case as to any damages claimed against El Paso for trespass.

For clarification purposes, I begin with a review of the most basic facts. El Paso and Swift were both companies engaged in the exploration and development of oil and gas. Blanchard was the surface owner and owner of a one-half undivided mineral interest in the land relevant to this lawsuit. North Central was the owner of the other one-half interest in the mineral rights on Blanchard’s property. Swift had entered into an oil and gas lease with Blanchard on February 21,1997, that granted it the right to develop the property for oil and gas, including the right to use seismic exploration. By virtue of an oil and gas lease from North Central, dated August 20, 1997, El Paso also held a leasehold interest in one-half of the mineral estate.

After some prior dealings with Swift on Blanchard’s property, El Paso learned, around February of 1998, that one of its projects would involve some of Blanchard’s property and approached Blanchard to request a permit for these seismic shoots. Blanchard denied that permit, advising El Paso that his lessee, Swift, had the exclusive right to permit seismic operations, and he could not give such permission. Therefore, El Paso sought a permit from Swift, which Swift agreed to. However, Blanchard denied El Paso access to the property. Under advisement of their in-house counsel, El Paso obtained a temporary injunction against Blanchard for access to the land, which was served upon Blanchard on May 22, 1998. El Paso proceeded and conducted the seismic explorations on the property. Thereafter, Blanchard asserted that Swift had breached its lease by granting the permit to El Paso and that El Paso had wrongfully trespassed by conducting the seismic exploration. It should be noted that the court order obtained by El Paso was never appealed.

It is my opinion that El Paso did everything reasonable to attempt to comply with Rule B-42. First, El Paso approached Blanchard, the surface owner, to get a permit. Blanchard informed El Paso that he could not give such permission because his lessee, Swift, had the exclusive right to permit the seismic operations. The only choice that El Paso, or any other third party seeking a seismic permit, had was to approach Swift. Blanchard effectively sent El Paso to Swift himself. Swift then granted permission for El Paso to conduct the seismic operations, yet Blanchard still denied El Paso access to the property. El Paso went so far as to get a court order to gain legal access to the land. All of these facts are consistent with a finding that El Paso complied with Rule B-42. The right of exploration was not Blanchard’s, therefore he had no right to keep El Paso from exploring for minerals.

This was a situation in which the surface owner attempted to hold up the owner of the mineral rights from exploration and used Rule B-42 to do so. Rule B-42 has since been changed by the Arkansas Oil and Gas Commission, now requiring only notice to a surface owner before certain mineral exploration takes place. Rule B-42 of the Arkansas Oil and Gas Commission now provides in pertinent part:

No entry shall be made by any person or entity upon the lands upon which such seismic operations are to be conducted without the person or entity having first given notice as provided in Ark. Code Ann. (1987) § 15-72-203 to the surface owner of the lands upon which such operations are to be conducted.

(Emphasis added.)

For the above reasons, I would hold that El Paso did not violate Rule B-42 and, because Blanchard waived his option to sue based on the tort of trespass, I would dismiss any claims for damages against El Paso for trespass.