Sun Oil Co. v. Whitaker - 483 S.W.2d 808 (Tex. 1972)

Rule:

The oil and gas lessee's estate is the dominant estate and the lessee has an implied grant, absent an express provision for payment, of free use of such part and so much of the premises as is reasonably necessary to effectuate the purposes of the lease, having due regard for the rights of the owner of the surface estate. The rights implied from the grant are implied by law in all conveyances of the mineral estate and, absent an express limitation thereon, are not to be altered by evidence that the parties to a particular instrument of conveyance did not intend the legal consequences of the grant. The implied grant of reasonable use extends to and includes the right to use water from the leased premises in such amount as may be reasonably necessary to carry out the lessee's operations under the lease. Moreover, Courts hold waterflood projects to be reasonably necessary operations under oil and gas leases.

Facts:

Petitioner Sun Oil Company, a mineral leasehold estate owner, produced and used fresh water from respondent Earnest Whitaker, surface estate owner's land in order to maintain pressure and maximize production from its oil wells. Petitioner acquired its lease on the property from the then owners in the west one-half of the track. The surface estate was conveyed by the spouses, owner of the lease, to respondent. A dispute arose, and respondent sought to enjoin petitioner from producing and removing freshwater from their property. The trial court entered judgment for respondents, which was upheld by the lower court. Petitioner sought review.

Issue:

Was it reasonably necessary for petitioner to use the water in order to enjoy its leasehold rights?

Answer:

Yes.

Conclusion:

On appeal, the court reversed the judgment of the lower courts and rendered judgment for petitioner issuing the permanent injunction against respondents' interference with water removal. The court ruled that the reasonableness of petitioner's water-flood operation was uncontradicted in the record. The court found that the stipulations were conclusive that petitioner's use of the water was reasonably necessary to effectuate the purpose of the lease. The court said that it would be a derogation of the dominant estate if petitioner was required to purchase water from other sources. Thus, the court concluded that there was no evidence to support the jury's finding that it was not reasonably necessary for petitioner to use the water underlying respondent's land.