petro-pro-ltd-a-texas-limited-partnership-l-r-energy-corporation ( 2007 )

NO. 07-05-0327-CV
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL A
JUNE 14, 2007
_____________________
PETRO PRO, LTD., L&R ENERGY CORPORATION, NANCY WILSON BRISCOE,
JUDITH BROCK SEITZ, AND CAROLYN ROGERS, APPELLANTS
V.
UPLAND RESOURCES, INC., KCS RESOURCES, INC., GREAT LAKES ENERGY
PARTNERS, L.L.C., AND STEVE ZEMKOSKI, APPELLEES
_________________________________
FROM THE 31ST DISTRICT COURT OF ROBERTS COUNTY;
NO. 1893; HONORABLE STEVEN R. EMMERT, JUDGE
_______________________________
Before CAMPBELL and HANCOCK and PIRTLE, JJ.
CONCURRING AND DISSENTING OPINION
There is much in the Court’s opinion with which I agree. I do not quarrel with the
Court’s discussion of the nature of our task, or with its conclusion that the wellbore
assignments are unambiguous. I join in the Court’s disposition of Petro’s claims of
trespass, bad faith trespass, conversion, and money had and received, and of Petro’s
request that production proceeds of the Skeeterbee wells be placed in the registry of the
court.
With regard to the declaratory relief, I agree also that the trial court did not err by
rejecting Petro’s expansive view of its rights under the assignments. I further agree with
my colleagues that the Intervenors’ declaratory judgment position relying on Railroad
Commission well density rules is not persuasive.
My difference with the Court involves its conclusion that the language used by the
parties in the wellbore assignments reflects their intention that the assignee was conveyed
the right to recomplete the King “F” No. 2 well in the Brown Dolomite formation. From the
language used in these assignments, I would not find the parties intended both the
assignor and assignee to have the right to produce gas from the same formation.
The Court properly begins its analysis with the axioms that in Texas an oil and gas
lease is held to convey a determinable fee, vesting the lessee with title to oil and gas in
place, Cherokee Water Co. v. Forderhause, 641 S.W.2d 522, 525 (Tex. 1982); W. T.
Waggoner Estate v. Sigler Oil Co., 188 Tex. 509, 19 S.W.2d 27, 28 (Tex. 1929), and that
an assignment of an oil and gas leasehold is similarly treated, Rogers v. Ricane
Enterprises, Inc., 772 S.W.2d 76, 80 (Tex. 1989). As the Court ultimately construes the
assignments, however, Petro was assigned the leasehold right to recomplete the King “F”
No. 2 well for the purpose of producing gas from the Brown Dolomite formation but the
assigned right was not accompanied by any ownership interest in the gas outside the
confines of the wellbore. Rather than concluding the parties intended to grant Petro the
right to recomplete the well to produce gas it does not own, I would construe the
assignments’ language in a manner consistent with our state’s ownership-in-place theory.
2
My conclusion is that the trial court was correct to adopt the position asserted by
Upland.1 With respect to the leasehold rights that were at issue before the trial court, I
would enter judgment declaring that the assignments in question did not convey the right
to recomplete the King “F” No. 2 well for production of gas from the Brown Dolomite
formation.2 To the degree the Court’s judgment is otherwise, I respectfully dissent.
James T. Campbell
Justice
1
The court expresses the concern that adoption of Upland’s position requires us to
imply language the assignments do not contain. I do not agree. By the assignments, the
assignee received all the assignor’s right, title and interest in and to the leases, “insofar
and only insofar as said leases cover rights in the wellbore of the King ‘F’ No. 2 well.” It
seems to me we do not read language into the assignments merely by acknowledging the
undisputed, and indisputable, fact that the well referred to in the assignments as the King
“F” No. 2 (but not further identified or described in the assignments) is a well producing
only from the Lips, West (Cleveland) Field. See, e.g., Texas Pac. Coal & Oil Co. v.
Masterson, 160 Tex. 548, 334 S.W.2d 436 (Tex. 1960) (court’s construction of
unambiguous deed included references to stipulated facts).
2
Although title to gas in the Cleveland formation is not at issue, Upland’s brief
acknowledges that the assignments conveyed the “Cleveland Zone which was then open
to production in the wellbore . . . .”
3