Law School Case Brief
Lightning Oil Co. v. Anadarko E&P Onshore, LLC - 520 S.W.3d 39 (Tex. 2017)
While the mineral estate is dominant, the rights of a surface owner are in many ways more extensive than those of the mineral lessee. A property owner's rights are often described as a bundle of rights, or a bundle of sticks. And an owner of realty has the right to exclude all others from the use of the property, one of the most essential sticks in the bundle of rights that are commonly characterized as property. But the right to exclude is both dictated and circumscribed by the scope of an owner's rights in the property. Property does not refer to a thing but rather to the rights between a person and a thing. A trespass is referred to most often, but not always, as an interference with a physical place. Consequently, a trespass is not just an unauthorized interference with physical property, but also is an unauthorized interference with one of the rights the property owner holds.
Anadarko E&P Onshore, LLC (Anadarko), entered into an oil and gas lease that restricted its use of the surface estate and required it to drill from off-site locations "when prudent and feasible." As a result, Anadarko planned to locate well sites on the surface of adjacent tracts and use horizontal drilling to produce minerals from its lease. Briscoe Ranch, Inc., owned an adjacent surface estate and agreed that Anadarko could drill from the surface of the Ranch. Lightning Oil Co. (Lightning), lessee of the minerals underlying the Ranch, was not a party to the agreement. Lightning sought to enjoin Anadarko from drilling on the Ranch, claiming that Lightning's consent was necessary before Anadarko could drill through the Ranch's subsurface covered by its mineral lease. The district court dismissed the claim. The court of appeals affirmed. Lightning sought further review from the Texas Supreme Court.
Did Andarko have the right to exclude Lightning’s operations?
The Court agreed with the court of appeals that Anadarko was entitled to summary judgment on the tortious interference with contract claim. The Court held that Anadarko did not have the right to exclude Lightning’s operations because it did not own or exclusively control the earth surrounding any hydrocarbon molecules that may lie without the boundaries of the lease, and because Anadarko did not have the right to exclude, Lightning was not trespassing on Anadarko’s property. Lightning’s drilling activities would be subject to the Texas Railroad Commission's rules and oversight. Lightning’s rights were not greater than those of the surface estate as surface owner, and Anadarko’s mineral estate remained the dominant estate. The loss of minerals Anadarko would suffer by a well being drilled through its mineral estate was not a sufficient injury to support a trespass. Lightning’s drilling plans did not tortiously interfere with Anadarko’s contractual lease rights.
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