Presentation:
Oil & Gas
Chapter 3: Surface versus Mineral Estate
Professors Wells
September 16, 2015
Dominate Mineral Estate and Accomodation Doctrine:
Stradley v. Magnolia Petroleum Co.
Stradley v. Magnolia Petroleum Co., 155 S.W.2d
649:
1.  Facts
Surface Rights
Southwest
2.  Court reasoning
Surface Rights
Hawk
Mineral Rights
“It is unnecessary for us to determine whether
water is a mineral since we believe that the
reservation in the deeds by implication
retained to the Southwest the right to use the
amount of water from the land reasonably
necessary to enable it to develop the mineral
rights.”
2 Dominate Mineral Estate and Accomodation Doctrine:
Brown v. Lundell
Brown v. Lundell, 344 S.W.2d 863:
1.  Facts
2.  Court reasoning
“The operator did not obtain the right to permit the
salt to drain and seep down into the subsoil and the
resultant damage. The use of the lessor’s land is
limited. In other words the lessor has granted and
leased to the lessee only so much of his land as will
be reasonably necessary to effectuate the purpose of
the lease, and to be used in a non-negligent manner.”
3 Dominate Mineral Estate and Accomodation Doctrine:
Jones v. Getty Oil Co.
Jones v. Getty Oil Co., 458 S.W.2d 93:
W ½ of §4
E ½ of §4
1.  Facts
Getty
Getty
Amerada
Adobe
17’
Bice #1
2.  Court reasoning
JONES
34’
Bice #2
4 120 acres
200 acres
320 acres
Dominate Mineral Estate and Accomodation Doctrine:
Getty Oil Co. v. Jones
Getty Oil Co. v. Jones, 470 S.W.2d 618:
1.  Facts
W ½ of §4
Getty
Getty
E ½ of §4
Amerada
Adobe
2.  Court reasoning
“The evidence and circumstances here are
17’
such that a proper initial inquiry would be
whether Jones had reasonable means of
Bice #1
developing his land for agricultural purposes
other than by use of the sprinkler system in
question. *** If such is not found to be the
34’
case, Jones is under the burden of a second
showing that Getty's present manner and
Bice #2
method of use on this land is unreasonable
because there are alternative methods used in
the industry on this type of property which are
available to Getty whereby it can produce its
wells without interfering with the existing
uses of the servient estate being made by
Jones. If this is found to be the case, Getty is
bound to convert to a noninterfering use.
120 acres
JONES
200 acres
320 acres
5 5 Sample Lease Accomodation Provisions
¶1. “Grants, leases and lets exclusively unto Lessee for the purpose of investigation, exploring,
prospecting, drilling and mining for and producing oil, gas <and all other minerals>, laying pipe
lines, building roads, tanks, power stations, telephone lines and other structures thereon and on,
over and across lands owned or claimed by Lessor, adjacent and contiguous thereto, to produce,
save, take care of, treat, transport, and own said products and housing its employees, the
following described land in _____ County, Texas
¶3 Lessee shall have free use of oil, gas, coal, and water from said land, except water from
Lessor’s wells, for all operations hereunder . . . .
¶7 When required by Lessor, Lessee will bury all pipe lines below ordinary plow depth, and no
well shall be drilled within two hundred (200) feet of any residence or barn now on said land
without Lessor’s consent.
6 Surface Owner’s Perspective
7 Dominate Mineral Estate and Accomodation Doctrine:
Sun Oil Co. v. Whitaker
Sun Oil Co. v. Whitaker, 483 S.W.2d 808:
1.  Facts
1/16th L.O.
Royalty
GANN
Surface Rights
267 acres
2.  Court reasoning
“[w]here there is an existing use by the surface owner which will otherwise be precluded or
impared and where under the established practices in the industry there are alternatives available
to the lessee whereby the minerals can be recovered, the rules of reasonable usage of the surface
may require the adoption of an alternative by the lessee.”
8 Subsequent Developments to Sun Oil Co. v. Whitaker:
Texas Water Code §27.0511
p. 3-21
1.  §27.0511(a)
Requires submission of information on water usage
2.  §27.0511(b)
Texas Water Commission has right to be notified of a well permit request and given an
opportunity to comment on the application.
3.  §27.0511(c)
Railroad Commission must specifically consider economic feasibility of alternatives to
injection of freshwater such as other solids, liquid, or gaseous substances that are
available and economically and technically feasible.
4.  §27.0511(d)
Railroad Commission must condition permit on usage of alternative methods if other
alternative substance are found to be available and economically and technically
feasible.
5.  §27.0511(e)
Grandfather rule for well permits as of September 1, 1983
Also, consider the creation of Water Conservation Districts
9 Surface Waste
1.  Rule 8:
Regulates pits, discharges of oil and gas field waste into water.
2.  Rule 9:
Regulates underground injection wells used for disposal
3.  Rule 13:
Governs casing, cementing, drilling, and completion requirements to ensure that all
usable-quality water zones are isolated and sealed off to effectively present
contamination or hamr and all potentially productive zones are isolated and sealed off
to present vertical migration of fluids or gases behind the casing.
4.  Rule 14:
Contains cementing requirements for plugging and abandoning wells.
5.  Rule 15:
Requires freshwater sands to be protected with surface casing which has been
cemented and which may not be removed from the well at abandonment.
6.  Rule 20:
Requires operator to immediately notify Railroad Commission of a fire, leak, spill, or
break.
7.  Rule 21:
Contains additional regulations to prevent fires such as a prohibition against storing
crude oil in open pits
10 Surface Accomodation of Horizontal Wells
Horizontal Well Diagram #1
(Overview of a Horizontal Well)
Mineral: Bigg Oil
Horizontal Drilling
Deviated Drilling
> <
> <
> <
> <
> <
> <
Terminus
Penetration Point
> <
Correlative
Interval
C
Mineral: Bigg Oil
> <
Kick-Off Point
B
> <
Mineral: Bigg Oil
Surface: Brown
Surface: Brown
> <
A
Surface: Able
“Take-Points” (Perforations)
Horizontal Drainhole Displacement
11 Surface Accomodation of Horizontal Wells
Horizontal Well Diagram #2
(Penetration Point on Tract A)
B
Mineral: Bigg Oil
Horizontal Drilling
Deviated Drilling
> <
> <
> <
> <
> <
> <
> <
Terminus
Penetration Point
> <
> <
Correlative
Interval
C
Mineral: Bigg Oil
Mineral: Bigg Oil
Kick-Off Point
Surface: Brown
Surface: Brown
> <
A
Surface: Able
“Take-Points” (Perforations)
Horizontal Drainhole Displacement
12 Review Problem
p.3-27
Review Problem: In Hunt Oil Co. v. Kerbaugh, 283 N.W.2d 131 (N.D. 1979), Ivan and Shirley Kerbaugh, as
grantees, owned the surface estate under a warranty deed which reserved in the grantors all the minerals under
the land, together “with such easement for ingress, egress, and use of the surface which may be incidental or
necessary to use such rights.” An oil company leased the land from the mineral owner and conducted seismic
operations on the tract. The process interfered with the Kerbaughs’ wheat operations and also, in their
opinion, destroyed a natural spring of water on their tract. When the company sought to enter upon the wheat
fields a second time to do another seismic survey, the Kerbaughs sought an injunction against the lessee.
Question: Assuming Texas law applied, what must the Kerbaughs prove to win this lawsuit?
13 Ownership of Hard Minerals:
Anderson & Kerr Drilling Co. v. Bruhlmeyer
Anderson & Kerr Drilling Co. v. Bruhlmeyer, 136 S.W.2d 800:
1.  FACTS
Johnson
Surface Rights
plus what?
J.R. Cother
2.  Issue: What was conveyed in this clause?
And the said N.J. and M.E. Johnson reserves ½ interest in all Minerells Paint Rock
&c found or will be found on said described tract of land,”
3.  Court reasoning
“When the comma is inserted and the erroneous spelling corrected, the clause is as follow:
‘and the said N J and M E Johnson reserves one-half interest in all Minerals, Paint Rock,
etc. found or will be found on said described tract of land.’
In our opinion it is well settled by the decision in this state that this reservation includes oil
and gas.”
14 Ownership of Hard Minerals:
Acker v. Guinn
Acker v. Guinn, 464 S.W.2d 348:
1.  Issue: Is iron ore a mineral?
“An undivided ½ interest in and to all of the oil, gas, and other minerals in and under,
in that may be produced”
2.  Court reasoning
“It is not ordinarily contemplated, however, that the utility of the surface for agriculture or
grazing purposes will be destroyed or substantially impaired. Unless the contrary intention
is affirmatively and fairly expressed, therefore, a grant or reservation of ‘minerals’ or
‘mineral rights’ should not be construed to include a substance that must be removed by
methods that will, in effect, consume or deplete the surface estate.”
15 Ownership of Hard Minerals:
Reed v. Wylie
Reed v. Wylie, 597 S.W.2d 743:
1.  Issue: Is lignite a mineral?
Conveyance of “oil, gas, and other minerals” to mineral estate
2.  Court reasoning
“The rule for near surface lignite, iron, or coal, therefore, is that if the deposit lies near the
surface, the substance will not be granted or retained as a mineral if it is shown that any
reasonable method of production would destroy or deplete the surface.”
16 Ownership of Hard Minerals:
Moser v. United States Steel Corp
Moser v. United States Steel Corp, 676 S.W.2d 99:
1.  Issue: Is uranium a mineral?
Conveyance of “oil, gas, and other minerals” to mineral estate
2.  Court reasoning
“We now hold a severance of minerals in an oil, gas, and other minerals clause includes all
substances within the ordinary and natural meaning of that word, whether their presence or
value is known at the time.”
3.  Surface: (1) Building stone, (2) limestone, (3) caliche, (4) surface shale, (5) sand, (6) gravel, (7)
near surface lignite, (8) near surface iron, and (9) near surface coal. Fresh water also part of
surface estate. Salt water?
4.  Mineral Estate: Uranium, oil, and gas, sulfur, deep coal, salt and deep lignite. Probably also gold,
silver, and other metallic substances.
5.  Unknown: gypsum? Other minerals?
17 Problems
p.3-41
A.  Conveyance after June 8, 1983 and issue is coal
B.  Pre-June 8, 1983 severance but post-June 8, 1983 lease for uranium
C.  Pre-June 8, 1983 severance but post-June 8, 1983 lease for uranium
D.  Post-June 8, 1983 severance and lease of lignite
E.  Post-June 8, 1983 severance and lease for uranium
F.  Deep lignite
G.  Royalty owner, post-June 8, 1983 severance and uranium
18 Problems
p.3-44
Review Problem: In 1930, Friedman owned Blackacre. In 1937, he sold two royalty deeds (deeds to NPRI
interests) to Roy Associates on “all oil royalty, and royalty in other minerals.” In 1939, Friedman conveyed a
lease to Mobil of “all the oil, gas, and other minerals” on Blackacre. In 1959, Friedman sold Blackacre to
Sam by general warranty deed, reserving “oil, gas and other minerals” to Friedman. In 1977, Sam, the
surface owner conveyed a uranium lease to Texaco.
The facts show the following:
•  Uranium deposits begin at a depth of 20 feet from the surface
•  Uranium can be strip mined and this is economically and technically feasible
•  Strip mining would destroy the surface.
Question: Who owns what rights to uranium and uranium royalties?
19