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Edmonston v. Home Stake Oil & Gas Corp. - 243 Kan. 376, 762 P.2d 176 (1988)

Rule:

Compelled unitization pursuant to the statutes must be limited in its scope to the accomplishment of the objectives of the unit formed. Statutory unitization or compulsory unitization is done pursuant to the police power of the state and the power of the Kansas Corporation Commission to prevent waste, conserve oil and gas, and protect the correlative rights of persons entitled to share in the production of oil and gas. Kan. Stat. Ann. § 55-1301. Under such circumstances the statutes should be strictly construed and limited so as to minimize disruption of interests in property not included in the unit. As specifically provided in Kan. Stat. Ann. § 55-1308, property rights can only be amended and modified to the extent necessary to meet statutory requirements and the order providing for the operation of the unit.

Facts:

The owners held a defeasible term mineral interest on a portion of a tract of land. Pursuant to the Kansas Compulsory Unitization Act, Kan. Stat. Ann. §§ 55-1301 et seq., the Kansas Corporation Commission (KCC) ordered unitization of an area that included part of the tract on which the owners' interest lay. Subsequently, the purchaser obtained title to the tract, with reversionary rights against the owners. In a quiet title action by the purchaser, the owners argued that the unitization applied to all of their mineral interests and the purchaser could not exercise the reversionary rights. The district court entered judgment for the purchaser and the owners sought review. The appellate court certified a question to the Supreme Court of Kansas on the appeal.

Issue:

When a term mineral interest in several tracts has been conveyed by a single instrument and one of those tracts has been unitized under the Kansas Compulsory Unitization Act, Kan. Stat. Ann. 55-1301 et seq., was the entire mineral interest extended by the unitized production?

Answer:

No.

Conclusion:

The Court held that, pursuant to Kan. Stat. Ann. §§ 55-1308 and 55-1306, the unitization only applied to the portion of land specifically set out. The Court found that the unitization did not encompass the remainder of the owners' rights, since the remaining land had not been included in the unit upon the KCC's order. According to the Court, compelled unitization pursuant to the statutes must be limited in its scope to the accomplishment of the objectives of the unit formed.

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