Lightning Oil Co. v. Anadarko E&P Onshore, LLC
520 S.W.3d 39
| Tex. | 2017Background
- Anadarko leased minerals under the Chaparral (state-owned surface) but its lease limited surface use and directed it to locate drilling off the Chaparral when "prudent and feasible." Anadarko arranged to site wells on adjoining Briscoe Ranch surface and drill horizontally into the Chaparral formation.
- Briscoe Ranch (surface owner) consented to Anadarko’s drilling on the Ranch by a Surface Use and Subsurface Easement Agreement; Lightning Oil (lessee of the minerals under the Ranch) was not a party and objected.
- Lightning sued Anadarko for trespass to its mineral estate and tortious interference with its lease, seeking injunctive relief; Anadarko asserted it had Briscoe’s permission and raised justification as a defense.
- The trial court granted Anadarko partial summary judgment on trespass and tortious interference; the court of appeals affirmed, holding the surface owner controls the earth matrix and may authorize Anadarko’s pass-through drilling.
- The Texas Supreme Court affirmed: it held (1) extraction of the small quantity of minerals incident to pass-through drilling does not support a trespass injunction given competing conservation and recovery policies, and (2) Anadarko was justified as a matter of law on Lightning’s tortious-interference claim because it acted under Briscoe’s contractual permission.
Issues
| Issue | Plaintiff's Argument (Lightning) | Defendant's Argument (Anadarko) | Held |
|---|---|---|---|
| Whether pass-through drilling that traverses a lessee's mineral-bearing formations is trespass | A mineral lessee has the right to exclude pass-through drilling that physically intrudes into formations containing its minerals | Surface owner (and its licensee) owns/control subsurface matrix and may permit pass-through drilling; mineral owner only has right to a fair chance to recover oil/gas | Not a trespass warranting injunction; surface owner’s permission suffices for pass-through drilling absent proof of irreparable harm |
| Whether minerals lost/removed incident to drilling constitute actionable injury | Loss of minerals embedded in cuttings and permanent subsurface structures will injure mineral lessee’s dominant estate | The quantity lost is de minimis; policy favors efficient recovery and waste minimization | Loss is too small and outweighed by public/industry interest in efficient recovery; not enough for injunctive relief |
| Scope/effect of accommodation doctrine and dominance of mineral estate | Ruling would dilute mineral dominance and improperly expand accommodation to benefit adjacent mineral owners | Anadarko’s activity is a surface use authorized by the surface owner; mineral estate remains dominant for development needs | Accommodation doctrine remains flexible; result does not abolish mineral dominance—surface owner’s rights (and its assignee) govern unless mineral lessee shows interference with reasonable development |
| Whether Anadarko’s conduct justified (affirmative defense) to tortious-interference claim | Anadarko cannot justify interfering with Lightning’s lease because Lightning’s rights include exclusive control to prevent pass-through | Anadarko acted under a valid agreement with the surface owner and thus exercised contractual rights | Anadarko entitled to summary judgment on tortious-interference claim because it was exercising rights granted by Briscoe Ranch Agreement |
Key Cases Cited
- Coastal Oil & Gas Corp. v. Garza Energy Trust, 268 S.W.3d 1 (Tex. 2008) (rule of capture and mineral owner entitled to a fair chance to recover oil and gas)
- Humble Oil & Refining Co. v. West, 508 S.W.2d 812 (Tex. 1974) (surface owner’s fee includes reservoir storage space; balance interests in reservoir use)
- Brown v. Humble Oil & Refining Co., 83 S.W.2d 935 (Tex. 1935) (recognizing ownership of oil and gas in place and that a lease grants a determinable fee)
- Getty Oil Co. v. Jones, 470 S.W.2d 618 (Tex. 1971) (mineral estate dominant; right to use surface reasonably necessary to produce minerals)
- Merriman v. XTO Energy, Inc., 407 S.W.3d 244 (Tex. 2013) (scope of lessee’s surface-use rights and application of accommodation doctrine)
- FPL Farming Ltd. v. Environmental Processing Sys., L.C., 457 S.W.3d 414 (Tex. 2015) (addressing trespass claims for deep subsurface migration of fluids)
- Dunn-McCampbell Royalty Interest, Inc. v. National Park Serv., 630 F.3d 431 (5th Cir. 2011) (applying Texas law that surface owner owns non-mineral molecules of land mass)
- Key Operating & Equipment, Inc. v. Hegar, 435 S.W.3d 794 (Tex. 2014) (Texas policy favors recovery of minerals and prohibits waste)