*1 building of a posed construction and use den- 1, aas Block 6 of the addition
on Lot re- a violation
tal clinic deed covenants contained
strictive
dedication. plain- opinion are also
We their alle- in error failed
tiffs to establish
gation and restrictions claim that the especially enforced,
volved should not Block
with north half of addition, changed con-
in said because of property surrounding
ditions
neighborhood. claim The denial of such the evi- trial court accord and the law.
dence
Judgment of the trial court is affirmed. DAVISON,
CORN, J., V. C.
HALLEY, BLACK- WILLIAMS and JJ.,
BIRD, concur. J.,
JOHNSON, dissents. Application MARTIN
Matter of M. G. al., Clarifying for an Order Orders et 24158, 24402, 26021, Numbered 27218 and Directing be Taken Action to Applicants, Company and Shell Oil Constantin, E. Jr.
Nos. 36930.
Supreme Court of Oklahoma.
April 24, 1956. Opinion
Dissenting Oct. 1957.
Rehearing Denied Oct. 1957.
Application for Leave to Pile Second Peti Rehearing Denied tion Feb. 1958.
Hudson, Wheaton, Tulsa, Hudson & Watts, Looney, Ross, Looney Nichols, & City, plaintiff Oklahoma in error. Tulsa, Goldwyn, F. Robinson, Shipp, S. Barnes, Green, & Floyd Robertson and Mac Williamson, Q. Atty. Gen., City, Oklahoma defendant error. BLACKBIRD, Justice.
Early in 1949 a certain half-section of land now included in Elk City Field of Oklahoma, unexplored Western was undeveloped pur- for oil mining poses, M. G. Martin and others owned an oil and thereon. lease Instead of performing exploration develop- contemplated lease, ment in said said lessees Constantin, Jr., ed. The above-described reservation E. assign it decided incorporated assignment by refer- term- what is unto themselves and reserve ence. royalty in the oil *3 might said land minerals that Thereafter, been dis- having into entered Accordingly, they produce. area, Corpora- covered in State and the whereby with Constantin a contract previous tion by having, Commission a him, to assignments execute agreed to order, well-spacing 120 included acres following reservation: subject to to, half land referred section of above designated in what Hoxbar exempt from was as the parties shall “First Sand-Conglomerate unto Common Source reserve assignments Field, successors, Supply City Elk October heirs, of the on themselves, their 27, 1950, 2846, entered in CD No. its Cause 5/14ths of undivided assigns, an original unitizing its Order No. equivalent (being estate leasehold a majority creating of the area produc- gross of the 8/8ths 5/16ths “Elk designated as the oil, and known and other tion), all of the Unit”, City Hoxbar-Sand-Conglomerate saved, and produced, sold minerals terms, subject in accord with and premises and creditable from said provisions and a Plan of conditions of deliver- shall be the interest reserved cause, presented Unitization in said Assignors Assignee amended, order. modified said develop- all costs of and clear of free acreages Other within have been included prop- operating said ing, equipping and by subsequent said unit orders of the erties, that said reserved interest Commission numbered perpetual a shall be nature 28533,respectively, amending 27218 and royalty; shall there Plan The original order and of Unitization. produc- from the sale of he deducted particular mention- 120 acres of land above gross to said interest all tion reserved produce ed now 3 thereon that has wells taxes other taxes as- casinghead gas conjunction “wet” or by proper gov- sessed assessable production. oil with their crude except erning authorities as hereafter provided. existence, began Since the Unit effective committee, operating in accord with “Assignee right shall have the to de- Unitization, provisions Plan has of the Assignor’s of said liver share charge operating been the leases and pipeline or lines to which it n connectthe wells unit, and, addition, has wells within the upon said located constructed, plant situat- operating, and is Assignors leasehold tracts. shall en- area, whereto all raw or ed on the unitized payment direct for titled receive their separated being after gas, wet products sold, joint share di- wells, produced by the Unit crude oil vision orders or of sale shall contracts “processed.” piped stream” to in “one parties. ibe each of the Pro- executed performed (not By that notice the so-called vided reasonable hydrocarbons thirty plant, gasoline and other days) Assignee, than less As- pentanes, pro- butanes and signor shall sold as have the to receive in later Company, dispose panes 'kind or are extracted to Shell Oil their residue, dry, share and receive from said proceeds therefor, Field’s reservoir or common proper if returned to the facili- produc- repressure provided by Assignors supply, its ties are in which source production.” the ultimate maximum an aid to ing receive such sand as recovery therefrom. of oil record, .‘Said contract was filed of and in controversy present as to how the .June, 1949, contemplated assignment executed, overriding royalty in land includ- ^therein delivered and record- proceeds, paid share of said and Constantin for their shall be ed within appealed intervened. When that case was land from said gas production judgment to the Circuit Court from a in, would never inception had its Cir., processing, Martin, system of favor arisen, except Constantin v. his court, upon deciding several F.2d at a cost of paid installed and appeal lessees of over- involved construction of millions of dollars unit, riding royalty reservations or whereunder none natural, quoted “raw” in its such as and of Unit wells is sold hereinbefore occur, Plan, state; and, “wet” sales visions by paragraph derivatives or No. 7 of Order are of above-mentioned *4 processed Concededly, Corporation by-products. those the had retained Commission price interpret pro- bring higher jurisdiction a much continuing commodities Plan, of than sale visions of said ordered the action could derived production prejudice, “raw” ground in its natural or dismissed without unit’s on elsewhere, royalty before wellhead state at the owners had not exhausted expensive processing put through remedy their being administrative in said Com- Nevertheless, royalty all referred to. mission. above pro paid were the same rata owners Thereafter, similarly Martin and other by-products, that proceeds of these of the situated owners overriding royalty un- they paid wells’ crude oil were Units unit, applied der land in the Cor- five months after production, for first poration clarify- Commission order plant was constructed and processing previous ing 24158, Orders Numbered 1950, late in without operating began 28533, 27218 and and the the cost con- whatsoever for deduction adopted Plan thereby, of Unitization “in operating structing, maintaining so far as said orders and Plan relate to plant. to the fact that processing Due constructing the assessment costs of during negotiation the formulation and/or and operating plant” processing unitization, plan lessees stages of the equipment above referred to. After a agreed that the of the unit owners of hearing rehearing matter, on the one-eighth interest in min- landowners’ Corporation Report Commission entered its rights in the within the unit eral land and Order No. 29870. The of said royalty owners”) to as “basic (referred Report designated as “Order” is as follows: pro their rata these should receive share of “It is therefore ordered Cor- process-
proceeds without deduction of such poration Oklahoma, Commission of controversy costs, ing no has existed with right their continued to thus reference to AS FOLLOWS: participate proceeds hydro- That it intended “1. and understood However, for time carbons. some Constan- 24158, 24402, 26021, its Orders Nos. position taken the that the over- tin has 27218 and 28533 to mean that each owners, royalty assignors, riding such as his owner of interests in a in- leasehold Martin, al., being et beneficiaries cluded within Plan of partic- not agreement, are entitled to portion entitled to receive that proceeds ipate in such without some de- liquids produced by oper- a unit processing Accord- said costs. duction plant represented by ated his frac- 1951, 4, prevailed upon he ingly, on June ownership tional interest of lease-hold Company, purchaser, Oil with- Shell production tract tracts payments proceeds further of such hold volved, of that percentage out royalty overriding said owners. assigned total to such tracts, latter, Thereafter, Martin, and that in including tract or plant pro- Company participation in all of the the Federal Shell Oil sued and all of the alleged recover their duction District Court assume, however, liquid hydrocarbons We will oil, evidence. unit, after were on by said 88 forms duced Producers operated plant, (inferred to be through “regular” in counsel’s argument) that, among owners thereby be treated on lessors them- were to divested granted selves and appellant, was the basis. produce casinghead market by said orders “2. That produced (gas conjunction oil) and understood intended Plans was as well “dry oil, as so-called gas”, and royalty owners the overriding premises. leased In this connection see required primarily to bear Hammett Oil Gypsy Co., Co. v. Oil building, pay any part the cost 235, 501, Okl. 218 P. 34 A.L.R. operating maintaining or other cases Summers, discussed in Oil and operated plant, only be liable but should (Perm. Gas Ed.) Vol. sec. failure leasee in the event of a annotated at 82 A.L.R. and 34 A.L.R. primarily charged with such costs 291. Most forms, Producers 88 lease costs, pay and that deduct which there are types, several different overriding royalty owner’s from an *5 prescribe the royalty lessor’s casing- on liquids processed a share of the gas, head or produced wells, from oil portion charge thereof as reí enable a (like the here) involved as frac- to obtain such part tional of such well, at the liquids impose upon would in fact wellhead, “at well”, or the mouth of the overriding such a share owner production. less all costs Hopkins See plant, operating such cost Co., Cir., v. Texas 10 62 F.2d contrary intention Commission’s to Annotated, Oklahoma Form Book approving such Plan. Highley Kleinschmidt & (8th Ed.) Secs. language which was That “3. 1077-1089, inclusive, Summers, both pro’- Plans is orders and used supra, 7, chap. think, Vol. 43. We conformity interpreted in perly wording, quoted the hereinbefore reserva- here- intentions as the Commission’s tion appellees’ creating ordered and inabove determined. followed pattern; and that cross-application That to “4. oil, reservation “of all gas and other min- plans modify or the several amend * * * erals produced, saved and sold hereby of unitization be it and creditable to the interest reserved denied.” ” * * * is sufficient include casing- of similar From said Order and the one dispute in the absence of head rehearing, import entered before the matter, concerning evidence perfected present appeals Constantin has parties intention contrary briefing), (herein consolidated (The assignment. “oth- contract terms Appellant. hereinafter be referred will is in a different context in er minerals” overriding royalty other Martin and the than it instruments was as inter- these will hereinafter appearing herein Co., preted v. Blackwell Oil & in Wolf Gas Appellees. Corpora- to as be referred equal- 81, think it 484.) 186 P. We 77 Okl. will hereinafter be re- Commission tion however,. clear, the reservation ly merely as the “Commission”. ferred beyond, contemplated nothing addi- pro- outset, to, “oil, and other minerals At the we observe that tion ” * * * state; in their creating oil and leases natural original duced interests, appellees right give leaseholds, working does %ths proceeds gasoline, pen- portion fractional was reserved which a any hydrocar- butanes, propanes or by assignments tanes, appellees such as here- from, made, to, manufactured referred were never introduced bons inbefore participated and Arizona shared in New Mexico See gas. raw Supp. Elkins, F. of such D.C.N.M. v. Land Co. “min- 771, owned had tracts not the been citing definitions organized, nature”. legal “in and with same found
erals” as substances assignment in force and effect.” wording of Though the v. Hamill Refineries Co. Danciger Oil & VI, Section among things, provides: other Co., 171 S.W.2d Drilling Tex. “ * * * Property rights, leases, specific than that of more contracts, and all other form here assignment reservation obligations that, purpose involved, for the think we gas rights in and to sep- the several determination, there present arately owned tracts within them, and our material between difference * * * Area hereby shall be and are court accord with those views here amended and modified to the extent question precise here in that on the case necessary make the conform think views dealt We and our with. provisions requirements to the’ appellees’ share is conclusion Unitization, of this Plan of but other- theirs, measured, becomes the mouth at wise to remain full force effect.” well, wellhead, sup- is further (Emphasis ours.) ported the reser- appellant, “assignee”, vation giving attempt No was made hearings at “ * * * assignors’ to deliver before the Commission show pipe share appellees’ of said line or gross pro- natural lines to connect the wells lo- duction wells could not be com- tracts”, cated puted said leasehold from the produc- volume of such *6 viding for the execution division of orders tion as measured wellheads, at payment purchas- direct appellees facilitate paid therefor on the basis of the products, for their share er to them thereof, market or that value it towas upon right, them reasonable giving any necessary” amend, modify “extent notice, their in kind. The receive share change production or the character of the change the Plan of Unitization did not they their were entitled reservation products ap- in character which provisions require- to “conform to the pellees were reserved an interest. thus ments” of the Plan. any Nor was there “Unit 1(f) Plan’s Sec. defines While said showing gas that said in then its raw and produced as “all oil and Production” valueless, is natural state or that there is ”*** oppo- and, the unit area from no market therefor. In this connection section, in “(e)” “Oil and site Armstrong Co., Skelly Cir., notice 5 v. Oil including “casinghead Gas” as is defined 55 and Danciger F.2d Oil & Refin- gasoline, hydrocar- other distillate or Co., eries Hamill Drilling supra. Co. v. ” ** * (in addition to oil and bons thorough After a examination of the Plan’s provision specificallygiving is no gas) there ambiguity we find no various overriding royalty the owners of interests any therein which is of force and effect as proceeds types in interest of those appellees’ our a deterrent to conclusion that “production”. para- of unit The second rights obligations extend further no provides: graph VII of the Plan of Sec. receiving, (at free of cost least until than production pay assignee “The unit allocated to their fails to his share of expenses, contingency tract shall separately owned not each persons among arisen) the several en- their share shown to divided in casinghead aforesaid, value titled tract, products, separately owned character manner, applies, proportions in same which their share has not been same conditions, upon necessarily they shown to be affected
«65 problem of finding whereby entitled to a formula Being Unitization. Plan of natural, price raw, paid uniform to owners of this a share of more than state, interests natural to none sold raw they entitled production, are made, and to other of like interests hydrocarbons or processed therefrom. the same field that is previous not sold manufactured pay processing, obligated is not one. Similarly, are a new It has been present in commod- deriving price-fixing cases. No- of the cost nn quotations tice the production, without their ities from such discussions of Commission’s obligation might come Orders Numbered 26096 and (unless assent Pipe 28884 in Natural Gas Line there- Co. v. being of a lien into creation Corp. Comm., Okl., 272 ways provided by P.2d 425 on in one and Cabot some Carbon Phillips Okl., Co., Co. v. Pet. law). showing modification Without 675, 677, P.2d respectively; Phillips necessity to, above referred without Pet. Co. Oklahoma, v. State any question determined, 340 U.S. being raised or 190, 71 S.Ct. re- L.Ed. approved at the time the Commission ferring to Plan, “the determination in- by an overriding royalty as to the owners’ tegrated company of proceeds realized by-products, how can the from gas at the involving wellhead” as subsequent expression, Commission’s “complicated problems in cost account- appealed from, orders previously of its un- ing.”). simple It would seem a enough expressed intention entering approval pay appellees matter for their order, share of change interpret the situation? To wellhead, at the in the ab- the Plan in expression, accord any showing sence that under the unit is not to do violence to the Plan’s up” Therefore, “set this cannot be done. plain provisions, it constitutes an indirect neither appropriate, nor way or circuitous changing possible, Court, if for this without nec- appellees’ visions of reservation with no essary data, attempt to arrive what at apparent consideration, adjudication fractional gross of the total value terpretation them, justification (un- hydrocarbon the Unit’s production appel- quoted der the above Section VI of *7 might paid. lees say, Suffice Plan) change. for such therefore, We hold accord with the expressed, views above that the order was erroneous and without appealed the orders from should be vacated. legal justification, or substantial evidence It is so ordered. support it. In Ap- this connection see plication of Little Nick Co., Oil 208 Okl. J., CORN, and JOHNSON, C. JACK- 258 P.2d 1189. We also hold HUNT, JJ., and concur. SON appellees that are not entitled to hydrocarbons’ of the proceeds, as such. WILLIAMS, J., HALLEY, V. C. However, if convenience or other consider- J., dissent. ations dictates paying them for their share
of the casinghead gas by paying por- them a WILLIAMS, (dissenting). Justice proceeds, payment tion of such then such majority opinion with the agree I do not not be made should without deduction aof opinion that such not feel accurate- charge and do processing, Ludey reasonable v. the facts and ly all of issues involv- Co., states 102; Oil Pure 157 Okl. 11 P.2d but applicable thereto. law I there- or the receipts, event, their net in no should less present impelled my view of the feel proportionate than their fore share of the mar- value ket case. gross casinghead gas of the Unit’s production. In this connection see the def- expensive plant The referred to inition of royalty overriding quoted in opinion just gaso- majority is more than Co., Cities Co., Service Oil Geolograph v. equipment proc- plant contains line
208 Okl. 254 P.2d (The stabilizing 780. essing gas, separating and pres- furnishing gas under
crude oil and into with overriding owners maintenance pressure cycling sure for such overriding royalty are ultimate programs in order increase the with- participate therefore not entitled throughout en- oil out cost. recovery of argument appear Such does to be supported by herein, tire field. the record how- ever. operation In Unit and of the
plant, Analysis facts, various presented by as included in ducing cause, wells on record in leases this will reveal that Martin plant. At piped directly to the Unit area is and others by were contract with entitled plant, separated appellant gas and oil are produc- to receive 5/16ths gas, oil which is is then sold. The tion of the oil and assigned, leases free processed through clear wet is then of the cost of equipment operation extracts leases, which was assumed is, liquid hydrocarbons, appellant, assignee. ap- Thereafter pellant joined propane, these gasoline, butane and with other lessees and formed liquid The hydrocarbons sold. then Law, oper- are Oklahoma a Unit Plan of dry extraction remaining plan after the pre- ation. This of unitization was pared liquid hydrocarbons, is com- approved these then the lessees and by the- pressed injected Corporation back into reser- majority Commission. The opinion pres- only the re-cycling voir as a paragraphs refers to two program opera- plan, pertinent for the provisions- sure maintenance thereof, order tion of the field increase insofar as this controversy con- cerned, recovery and oil. ultimate are as follows: proposition presented of error “Plan of City Elk appellant Corporation Com- Conglomerate Hoxbar Sand Unit. misconstrued the Plan Unit- mission has All By “Know Men These allowing ization the Statute over- Presents: riding royalty owners the full value of “The following shall constitute the- products manufactured from their share of applicable Plan of Unitization production, Unit free cost of manufac- City Elk Hoxbar Conglomerate Sand ture, by roy- confusing of basic pursuant created authority contract, alty owners, acquired by of House Bill No. 339 of the 1945 overriding owners who had those Legislature of Oklahoma, the State of rights. contractual no such having purpose for its the unitized management, operation, Appellant contends that further de- velopment of the *8 expense Hoxbar Sand Con- owners must in the glomerate common liquid hydrocarbons, supply source extracting the and oil gas and underlying the out- operators en- lands and are owners by map lined the solid line on portion price here- a to retain of the sale titled to attached A’, and marked expense. to ‘Exhibit cover such of such greater all to the end that appellant’s ultimate gist argument seems nothing recovery of gas may there in Plan oil and be that of Unit- be had' therefrom, prevented, waste any ization which and the entitles of the rights respective- correlative proceeds participate owners protected. hydrocarbons without deduction sale whereby cost of “I obtained; hydrocarbons are said “Definitions participate so right to was transferred Unitization,, sep- contract royalty owners “As used in this Plan of the basic apart plan, expressions following from unit but terms are arate such contract was ever or entered as follows: made defined City Elk “(a) shall mean provided ‘Unit’ herein shall have effect Unit. from Conglomerate Hoxbar Sand after the effective date of unitizing development all further n ? n n n n 5fC operations production oil re only “(e) ‘Oil and Gas1shall not and gas from the Unit and of Area combina to oil and as stick in fer pooling and unitizing other, tion zvith the but one shall obtained, all to the if same extent as oil, gas casinghead reference the Unit distillate, or Area had casinghead gasoline, gas been included in a single 'rights lease all any combina thereunder hydrocarbons, or thereof, owned by tion or combinations lessees in undivided thereof, in or may one found terests. Property leases, be rights, con- produced tracts, from Area. and all other rights obliga- tions in oil mean
“(f) ‘Unit Production’ shall produced and include all oil in and separately to the several after owned Area, from Unit Area from and tracts within Unit regardless of hereof and after effective date date here- the effective Area of, Unit well or tract within the shall hereby be and are amended produced. ±rom which modified to the extent to make the conform to any own- “(g) ‘Lessee’ shall mean requirements -er, part, oil and visions and of an Plan whole or of this Unitization, mineral in- unleased to remain lease otherwise * * * in full terest, alone association force or in and effect. who persons person has the with another “Nothing herein contained shall be except Unitiza- right, this Plan of require or construed to result tion, operate explore, develop, transfer vesting Unit separately owned tract for oil :a separately of title to the owned tracts overriding royal- An owner ;gas. within Unit Area or to leases interest, profit payment, net con- ty oil thereon, other than use tract, gas rights or other aof operate the same to the extent set out nature, .similar who does not have the Unitization; in this Plan of nor shall n right develop operate, shall regarded the Unit be owning any of n regarded as a lessee. Unit Pro- The Unit Production. Operator’ ‘Unit shall mean and “(h) proceeds duction and the the sale carry designated to refer to the lessee shall be owned the several thereof n onand conduct operations the unitized persons whom the same is allocated provided Unit within the Area as * * * under this Plan Unitization. I hereof. Section n * * * * * amount of “The Expense’ 'Unit shall include each “(k) allocated to owned n anyand cost, expense, or indebted- amount, regardless tract and erator ness Unitization mission n incurred as authorized creating the Unit. [*] *9 or the order [*] Unit [*] by this or Unit [*] the Com- Plan Op- [*] regardless less than from which from the well well or wells amount of whether it or wells, if produced, be any, production more on Area any or shall, separately tract owned such “VI intents, uses, purposes, re- be Unitization "Effect of production and considered as garded separately owned tract. such adoption Plan of Uniti- from * of this “The * * of the Unit as zation and the creation hereto, pursuant tions carried on * * * “VII Disposition of “Allocation and “The Operator Unit shall have the Production Unit right to take utilize so or use much ganized, take same ing, maintaining Area, production, and, divided owned separately own, veloping, operating, among and allocated unavoidably lost, shall be with this Plan of titled to share in each which is from the B’. thereof as is used er arately or other “The “All unit operations entitled effect. or sell manner, separately separately tract had not have among owned tracts zvithin the Unit and with accordance Unit purchaser. attached facilities, except production as it is deliver- Each participated carried receive production in the from the several share of owned pressure, and in owned of such conditions that or hereto as Unitization, cycling, with the Unit same on in accordance payment directly production consumed in latter event shall shall plant tract allocated tract persons allocated to proportions, several persons, apportioned legal separately repressur- separately so or Formula been shall ‘Exhibit in the shared plants much force or shall sep- oth- en- de- or- be thorized and terms and things necessary, proper, and conven- and duties: have which is taken ient for carrying out the ments, to the erations of its maintenance, spirit of this Plan of any shall sary quired for cycling, cluding, [*] * “(2) “(h) the unit use of control other Plan Unitization. No operation or business and affairs and the portion or or other end, To but without desirable carried unavoidably [*****] * general payable upon power production may gas, including royalties, utilized approve Operating empowered, subject or proper of the unit following repressuring, * other payments excluding on overall in the powers and authorize the or for that being lost. hereof, operations production * Committee shall Unit and the conduct or with used, it, specific power production management development residue shall be or terms limited * Area, be royalties, to do all pressure purpose, limiting or neces- pay- * aur op- re- to, be purchase, construction, location, the unit “The share al- aban- donment, sale, located owned disposal to each tract persons compressor kind processing plant, shall be delivered in plant, gas- plant, batteries, oline tank ownership entitled thereto virtue salt water therein, .disposal system, or to their or other facilities vendees, serving Area, or shall delivered to the or to contract pipe persons. line to the credit individually the owners Persons entitled take owned receive facilities to render in portion produc- in kind of the unit whole or in the service desired. * tion shall have at their own ***** expense construct, maintain, “XI operate within Unit Area facilities Expense “Unit purpose, provided for that the same are *10 maintained, constructed, operat- Operator so and “The Unit in first in- opera- ed as not with to interfere pay stance shall discharge and all cost develop- respon- expense primarily in not incurred and of pays sible part Area operation the Unit such of ment and therefor of and expense unit part the activities in or of whole in in the conduct and shall, ex- owner of Unit. cost the extent Such affairs thereof of such computed payment, accordance be pense subrogated in all the shall be rights Op- Procedure hereto the Unit Accounting the Unit with the of of erator made with attached, ‘Exhibit to the interest marked C or expense interests chargeable not with Any primarily a cost or part hereof. contemplated expense. be such by ‘Exhibit n shall unit A part C’ unit Operating sep- of allocated subject approval to each arately owned tract all shall in events Committee. regarded be as and shall be Expense Unit as it accrues “All such free expense and clear of sep- charged several shall be to the free of lien therefor. lien arately Area owned the Unit tracts in provided hereinabove for shall for be proportion percentage in- to the use, benefit, protection Unit to Unit terest of such tracts in Operator persons or other lessees or production. entitled to receive or share in “Except may herein- as be otherwise monies, payment of which is se- provided, or specifically after a lessee and, thereby, cured event responsible obligated lessees or failure of Unit to such enforce expenses sep- of operating cost and lien, Operator per- the Unit or other arately owned tract for oil and son entitled to shall the benefit thereof shall, absence unitization subrogated the lien proportion same ex- and to the Unit, including the of fore- tent, responsi- chargeable with and closure. payment ble for the unit ex- pense owned come a charged against such tract, part of the Unit Area. after such tract has separately ** be- * effective [*] “(a) As soon as [*] date, the Unit shall [*] practical [*] [*] make after the [*] preparations therefor, and prior “The Unit first shall have a diligence with and in accordance lien (ex- the leasehold interest good engineering production prac- royalty interest) clusive of a in and Y& engage pressure tices in cycling, main- tract, each separately owned in- operations tenance or repressuring terest of the owners thereof in and through the return of reser- equipment the Unit and all voir to the extent and in manner Unit, possession to secure greatest best calculated payment result in Expense recovery ultimate of oil from' other charged items of cost against tract, doing, the Unit Area. In such owned construct, provided purchase, such authorized to may be lien as enforced against acquire operate or otherwise overriding royalty, payments, plants, gasoline processing plants, interests in excess production, plants, compressor and other ]/s facilities terests judgment otherwise are in the best change- Op- costs, able with erating Committee be desirable event authorized, purpose, owner or is the interest should it or interests so- elect, primarily reponsible pay contract with the owners of fails expense plants individually when dtie. owned In the event the owner any royalty interest, to render in over- facilities whole or in riding royalty, gas payment, oil the desired services connection other interest which under the Plan therewith. *11 produced produc- them wet from the hydrocarbons gas from the Liquid
“(b) plan provides all wells. The further that pro- Unit shall be from the Area by production unit the as it is delivered unit Unit from those wells in duced plant plant from shall facilities ob- can be Area from which the same apportioned among be allocated or dis- tained smallest loss with the reasonably unit owned tracts within the area. sipation energy reservoir phaseology obviously Such not con- should mean operation possible practical only portion production that of the unit time from they exist ditions as should be allocated back to the mineral to time. drocarbons with hydrocarbons be shut the most tions as time. energy of or times judgment sible under ratios materially decreasing liquid hydrocarbons) shall be liquid hydrocarbons economically re- be excessive in phasis added.) restricted in such manner as coverable [*] “(c) “(e) connection gas may be of other Gas Wells which they may effective utilization [*] from the Unit or the practical operating condi- (other in such manner as in the reservoir from the Unit Area with the Area [*] wells relation gas-oil Operating production therefrom exist from than produce produced only producing reasonably pos- ratios Area.” gas at quantity Committee [*] such time liquid hy- produced produced found to to make without time to gas-oil liquid (Em- shall [*] gas authorized to withhold velopment term garded as leases and it the owner in Under the terms are and certainly owners. Unit impose upon such overriding royalty own- ers a share of the cost of operating such ing overriding royalty owners shall not be re- incurred any except that ing repressuring such as the from the unit for required hydrocarbons and operating the expense lessee is The lessees. To which is costs, use of residue gas for whole as defined through includes plant is defined pay operation specifically therefrom expenses their own all of this inor owners as such are pressure any plant owners for by impose the unit cost of construct- plan, plant or indebtedness would, here involved. expense. provided that use, of oil plan plan, maintenance. a charge on the lessees production to extract unit operator, save to mean includes process- cycling, the de- area, fact, The gas not plant, in direct plain contravention of the foregoing provisions The Plan of plan unitization, I appear relatively Unitization would to be opinion am of that the Commission plain and ambiguity. plan free from eminently correct in so holding. specifically provides any that Appellant argues that operators, mean shall and include all oil and lessees, only obligated are produce area, duced in the unit and oil and operate are the leases and not meaning obligated including defined as oil, process gas, casinghead hydro- the wet gas, extract the casinghead therefrom; gasoline, gas plan distillate or other carbons and order hydrocarbons require opera- combination or the construction com- do not processing binations thereof or one thereof. This tion of and that the certainly everything produced, means obligations lessees could have been obviously hydrocarbons simply repressuring includes the bymet and recycling present produced which are involved the wet the wells contro- with- versy. might It regard be noted in and extracting this out only way casinghead gasoline hydrocarbons therefrom. Such statements hydrocarbons produced, true, help could but I see how ap- do not from are least, plan at pellant’s Neither unitiza- extracting case.
671 plant re- the to be 100million of the Commission cubic the order feet of tion nor gas ex- plant per day and and the quires the build the cost of lessees to construc- gas prior $6,000,000. tion approximately hydrocarbons from the the tract reservoir, the gas into reinjecting representative Shell’s plan outlined plan such les- order authorize but such and contemplating the entire well effluent flow- they provided so action do sees to take such ing plant pounds under appealed expense. The order at their own pressure so that would there be no waste of operators process does not force any hydrocarbons, suggested and that the royalty charge; it free of owners procedure accomplish objective and simply operators if that choose tells obtain the proposed benefits program hydrocarbons from the extract the be: would produced, they account to owners must operators 1. agree The should hydrocarbons ex- thereof for all of the so principle to unitization under the Okla- tracted. homa Unitization Law of all working Appellant original suggests also royalty interests and interests plan contemplate a did not the erection of common supply. source of plant multi-million dollar and operating companies 2. The should plan provided opera- that when such that develop plans pres- for cycling and pay expense tors would it was not con- programs sure maintenance partic- templated expense that such would include ipation factors for unitization. constructing operating cost such 3. The unit gasoline should build a plant, ap- a and that the order at time plant n pay plant royalty on all proving plan such was entered there was products sold. presented issue concerning the division plant stipulated and that the order was representa- such It that Shell’s testify tive would entered have decided such issue Company, could Shell Oil policy reasons, for proposed agreed that the Commission therefore cannot pay interpret royalty deciding now such order as owners and all presented. percent major- issue which lessees one hundred prod- was not The of all the ity plant, opinion apparently adopts view, ucts reason for completely argu- plan this was refutes that when the record unitization discussed, was plan ment. The record reveals that for it was stated what while plant operation might proper impose upon unit and royalty was conceived and proposed by Company owners some cost processing, Shell Oil on mat- debating operators charge March in ter of meeting a what should be made owners, City royalty against the Elk thing Field was held at which time and one representative another, impede Company pro- Shell Oil actual posed plan adopted. in substance later of the unit that it would be better formation simply pay At meeting, which was attended in all instances Ellison, percent proposed plan Martin and one Shell’s hundred and evade briefly being: was outlined as whatever as to what would debate proper charge. been a operation City of the Elk
1. pressure cycling Field under plan of unitization Thereafter above programs maintenance which would prepared and set out was submitted to the complete unitization of the necessitate approval, for Corporation Commission field. the Commission on October enter- expense creating construction at unit approving
2. The its order plant point gasoline processing gas, Plan of Unitization. The to be two stabilizing furnishing that at least crude oil and here is noted over- present pressure cycling pressure owners were at riding programs, capacity conferences participated where the maintenance represented participation plan proposed were 100% *13 them, the but that when without cost to the Commission counsel before ap- plan necessary was since it was the entered. The not approving order proval of the in specifically overriding royalty mentions and owners plan as submitted plan owners, order to was royalty basic make the effective there overriding defines no reason or right need to extend such of specifies the royalty and lessees and owners participation to them and was regard payment same obligations of each effect, therefore not done. The 52 most obvious fal- then of costs. The statute lacy in enjoined argument, this than specifically its lack of O.S.Supp.1947 286.4 § pertinence, upon that duty ordering statute relied upon of the Commission approval as requiring the of the approval of the unit and the creation of 63% royalty plan basic only upon owners to the was not plan of unitization terms and reasonable, until fair, enacted 1951. The order of the Com- might conditions as plan mission approving equitable proper here involved which are promulgated 1950, was respec- protect, safeguard, adjust nego- and all the preparations tiations and of above rights obligations tive the several outlined prior time, occurred affected, royalty owners, that and at all persons including times there others, ap- no requiring was statute overriding royalties, and owners of proval owners, any royalty argument that consent of as well as the lessees. The otherwise, plan. basic presented already to such As there was no issue the Commis- stated, the unit here ap- proposed, involved original at the order was sion time approved created and authority proving plan of as to over- provisions chapter 3b, of obviously Title royalty riding owners without of the Oklahoma Session parties Laws merit. The statute under later repealed. required Such ap- Act proceeding were then raised issue and proval of the imposed upon duty lessees and the the Commission the Commission to any plan owners, it, Royalty whether raised unitization. deciding lessees or both basic overriding, presume had cannot not. We that Commis- appear before the carry statutory duty, protest its Commission did not out sion proposed plan, approval but their particularly face finding in the of its own required, dependent both were that it did. protection the Commission for the is also in the There record letter of Appellant’s rights. argument their that representative from the same recent date differentiating there was a valid reason for Company Oil above of Shell mentioned to royalty between basic owners and appellant’s attorneys in which one royalty completely owners is without basis representative royalty stated that own- or merit. he had in mind those owners of ers minerals any ambiguity If were there Plan who had consent to the Unit Plan before here origin- involved and the effective and that he it could become didn’t al order of the Commission position approving the overriding believe same, been royalty was ever same has resolved interests mentioned at the appealed meetings Appellant power from. original of the lessees. orders herein clarify previous length, letter, on the basis of of the Commission to so argues at 287.5, requires 52 O.S.1951 cannot be view of order doubted ex- § signed plan approved provision the Plan by press reserving of unitization jurisdiction continuing of not of record less than the Commission over 63% n purpose normal interest for the of determining, effective, interpreting modifying area before it can become terms and Plan, provision approval in order to secure such of 52 case, opinion voluntarily and the instant the lessees in the O.S.1951 § Appeals to such basic owners the Court case extended Circuit
673 Cir., F.2d Martin, v. Constantin invading done without can be and such Cabot courts. province
exclusive Co., Phillips Petroleum Company v. Carbon
Okl., P.2d 675. appealed orders error
I find opinion the and am of the be affirmed.
should *14 dissent. therefore
I CORPORATION, DISCOUNT
ASSOCIATES al., Corporation, et Plaintiffs Error,
v. CLEMENTS,
Earl Defendant Error.
No. 37467.
Supreme Court of Oklahoma.
Feb. 1958.
McClelland, Bailey McClelland, by & Bailey, City, Oklahoma O. Robert in error. plaintiffs Neuffer, Smith, City, Oklahoma & Johns in error. defendant