Key Operating & Equipment, Inc. v. Will Hegar and Loree Hegar
435 S.W.3d 794
| Tex. | 2014Background
- Key Operating operated the Richardson No. 1 well on an adjoining tract and built a road across part of the Curbo/Rosenbaum tract to access Richardson and Rosenbaum wells.
- Key later obtained a mineral lease and an undivided mineral interest in part of the Curbo/Rosenbaum tract and pooled under-10 acres of that tract with 30 acres of the Richardson tract into a single unit.
- The Hegars purchased 85 acres of the Curbo/Rosenbaum tract in 2002, which included the road; they used the road for years but sued after increased traffic following drilling of Richardson No. 4.
- Expert testimony at trial showed only Richardson No. 4 was producing in the pooled unit and it did not produce from beneath the Hegar acreage.
- Trial court enjoined Key from using the portion of the road on the Hegar tract for producing minerals from the Richardson tract; the court of appeals affirmed.
- The Texas Supreme Court granted review to decide whether pooling makes production from one pooled tract legally production from each pooled tract, and thus whether Key could use the Hegars’ surface to access the producing well.
Issues
| Issue | Plaintiff's Argument (Key) | Defendant's Argument (Hegar) | Held |
|---|---|---|---|
| Does pooling treat production anywhere in unit as production on each pooled tract? | Pooling legally treats production on any pooled tract as production on every tract in the unit, so Key can use any pooled surface. | Pooling cannot expand surface burdens on nonconsenting surface owners to benefit production exclusively on another tract. | Yes — pooling’s legal consequence applies; production anywhere in the pooled unit is treated as production on each pooled tract. |
| Does a mineral lessee have an implied right to use surface of pooled tracts to access producing well located on a different pooled tract? | Yes; lessee has implied surface rights (ingress/egress) reasonably necessary for production across pooled acreage. | Implied rights only permit surface use to produce from the same tract beneath that surface; trespass otherwise. | Yes — implied easement extends across pooled tracts for operations incidental to production from any part of the pooled unit. |
| Does Robinson v. Robbins bar surface use to benefit adjacent tracts? | Robinson is distinguishable because it involved no pooling; here leases authorized pooling. | Robinson supports restricting use of one surface to benefit production on other tracts without consent. | Robinson is distinguishable; lack of pooling there was controlling. |
| Was the accommodation doctrine properly applied to restrict Key’s use? | N/A — Key argues it was not raised below and is not applicable. | The court of appeals relied on accommodation in part. | Accommodation doctrine was not raised below and is not considered by the Supreme Court here. |
Key Cases Cited
- Merriman v. XTO Energy, Inc., 407 S.W.3d 244 (Tex. 2013) (mineral owner/lessee has right to use surface reasonably necessary for production)
- Se. Pipe Line Co. v. Tichacek, 997 S.W.2d 166 (Tex. 1999) (primary legal consequence of pooling: production anywhere in pooled unit is treated as production on each tract)
- Robinson v. Robbins Petroleum Corp., 501 S.W.2d 865 (Tex. 1973) (surface owner entitled to protection from uses for benefit of lands not pooled or authorized by lease)
- Southland Royalty Co. v. Humble Oil & Ref. Co., 249 S.W.2d 914 (Tex. 1952) (early articulation that unit production is treated as production on each tract in unit)