Lead Opinion
OPINION ON REHEARING
A mineral estate owner has an implied easement for reasonable use of the surface estate in developing and extracting the minerals below. In this appeal, we decide what happens when a mineral estate owner, Key Operating & Equipment, Inc., wants to use that easement to extract minerals from several mineral estates that it pooled together after the surface estate was severed from the mineral estate. Key Operating appeals from the trial court’s injunction in favor of Will and Loree He-gar, the current owners of the surface estate, which prohibits Key Operating from using the road on their property to produce oil from a neighboring property. We affirm.
BACKGROUND
Key Operating
When the well on the Curbo tract stopped producing around 2000,
In 2002, the Hegars purchased the surface estate and a one-fourth mineral interest in the Curbo tract from Charles Curbo. The Hegars knew when they bought the property that it was subject to oil and gas leases and that Key Operating used the road on the tract to service wells on the adjoining Richardson tract. The Hegars themselves currently use the road to access the home they built on the property. They tolerated Key Operating’s use of the road until Key Operating drilled a new well on the Richardson tract that increased its use of the road. Will Hegar testified, “We’re trying to raise a family and we can’t do it with a highway going through our property.”
In December 2007, the Hegars sued Key Operating for trespass and sought a permanent injunction against Key Operating’s continued use of the road. The parties contested the nature of Key Operating’s operations at trial. According to the He-gars, none of the oil Key Operating produces from the Richardson-Curbo pool is actually from the Curbo tract. They assert that Key Operating merely pooled the Curbo and Richardson leases to provide a basis for continuing to use the road on the Curbo tract to access its wells on the Richardson tract. According to Key Operating, the oil under the Curbo tract is migrating toward the Richardson tract as
After a bench trial, the court permanently enjoined Key Operating from using the Hegars’ surface, including the roadway, “for any purpose relating to the extraction, development, production, storage, transportation, or treatment of minerals produced from an adjoining” tract. The trial court filed findings of fact and conclusions of law at Key Operating’s request, and this appeal ensued.
Standing
In its second issue, Key Operating argues that the Hegars lack standing to complain about the formation of the Richardson-Curbo pool because they are not parties to the Curbo lease. The Hegars, however, are not challenging the formation of the pool. Rather, they contend that Key Operating has no right to use the surface of their tract to benefit another tract, even if all or a portion of those tracts are pooled together. As the surface estate owners, the Hegars have standing to bring this action for trespass on their property.
Key Operating’s Surface Rights
In its first issue, Key Operating contends that the trial court erred by enjoining Key Operating from using the surface of the Curbo tract. Key Operating contends that it has the right to full use of the road across the Hegars’ property to access its wells on the Richardson tract by virtue of its lease and pooling agreement, and therefore it cannot be a trespasser and the court’s order enjoining it from use of the road is in error. More specifically, Key Operating argues that because its lease not only authorizes it to create pooled units, but also expressly recites that the acreage constituting such units shall be treated as if those acres were included in the lease, the lease terms allow Key Operating to use the surface of the Curbo tract to produce and remove minerals from that tract, as well as adjacent properties, so long as those other properties have been pooled with all or some of the Curbo tract.
The Hegars do not dispute that Key Operating has the right to use the road across their property to produce minerals from the Curbo tract alone, but they dispute that Key Operating may use the road to produce from the pool. They further contend that Key Operating’s surface rights would extend to the pooled area only if the lease authorizing pooling had been executed on or before the date the mineral estate was severed from the surface estate, but Key Operating’s lease and pooling agreement was executed after the mineral estate was severed from the surface.
We agree in part and disagree in part. Specifically, we agree that Key Operating’s lease and pooling agreements, which are not part of the Hegars’ chain of title and to which they did not agree, cannot contractually expand Key Operating’s right to use the Hegars’ surface. But we disagree that Key Operating’s surface rights necessarily exclude production from other tracts that have been pooled with the Curbo tract. We conclude that Key Operating has the same surface rights it has always had: the right to use the surface of the Curbo tract to produce oil from beneath the surface, regardless of whether that oil is comingled with oil from other tracts. Thus, Key Operating’s right to use the road depends on the outcome of its third issue on appeal: whether the evidence is sufficient to support the trial court’s finding that Key Operating is not producing any oil from the Curbo tract.
A. The Hegars are not bound by Key Operating’s lease or pooling agreement
The pooling of an oil and gas lease is a matter of contract, and the terms of a pooling agreement are interpreted according to general contract law. See Wagner & Brown, Ltd. v. Sheppard,
Generally, a mineral lessee’s implied surface easement extends to the surface of a pooled area. Prop. Owners of Leisure Land v. Woolf & Magee, Inc.,
But Key Operating has not demonstrated that its pool-authorizing lease or pooling agreement is part of the Hegars’ chain of title, that the Hegars otherwise took their title subject to the pool-authorizing lease or the pooling agreement, or that the Hegars are in any way bound by the lease or pooling agreement. Thus, although Key Operating relies heavily on the provisions of its pooling agreement to support its right to use the road on the Hegars’ land, the pooling agreement does not, itself, create that right. We thus turn to Key Operating’s inherent surface rights, as the mineral lessee, to determine whether its use of the road across the Hegars’ property is permitted.
B. Key Operating has an implied easement to use the road on the Hegars’ property as reasonably necessary to produce oil from the Curbo tract
When a property’s mineral estate is severed from the surface estate, the mineral estate is the dominant estate. See Moser v. U.S. Steel Corp.,
A mineral estate lessee’s implied surface easement is not unlimited. The common law protects a surface owner through the accommodation doctrine, which requires that the mineral estate owner make reasonable use of the surface estate and exercise due regard for the rights of the surface owner. See Lesley v. Veterans Land Bd. of State,
The question here is whether Key Operating’s implied surface easement allows it to use the road across the Curbo tract to produce from the Richardson-Cur-bo pool. We conclude that, subject to the accommodation doctrine, Key Operating’s common law surface easement gives it the right to use the road on the Curbo tract to produce oil from the Richardson-Curbo pool so long as that production includes production from the Curbo tract. We reach this conclusion based on (1) the nature of the implied surface easement, (2) practical and public policy considerations, and (3) analogous cases.
1. Pool-related rights are governed by contract principles but a mineral lessee’s surface rights are imposed by law
Unlike pooling agreements and rights, a mineral estate owner or lessee’s surface easement is not a matter of contract. It is a right imposed by law rather than agreement. See, e.g., Tarrant Cnty. Water Control,
Absent contractual modification, the operation of the implied surface easement is determined not by the terms of a contract but by the need from which it arises.
Specifically, Key Operating’s implied easement includes a right of “egress and ingress” and a right to “use of such portions of the surface for drilling, storing, pumping and transporting as are incidental to the full enjoyment of the lessee’s exclusive privilege to drill for, produce and market the oil and gas.” Mobil Pipe Line Co. v. Smith,
Thus, while the Hegars are not bound by the terms of Key Operating’s pooling agreement, Key Operating’s need (if any) to pool the Curbo tract to maximize recovery of the oil from that tract is a circumstance that may affect what use of the Hegars’ surface estate is “incidental to the full enjoyment of [Key Operating’s] exclusive privilege to drill for, produce and market the oil and gas.” Mobil Pipe Line,
2. Practical considerations favor allowance for pooling
Under the Hegars’ theory of the law, mineral estate owners who did not own the surface estate could be prevented from pooling — although each would have a right to use the surface above his own mineral estate to produce from his mineral estate alone, none would have a right to use the surface above his mineral estate to produce from the pool. Effectively, a mineral estate owner who did not also own the surface could be precluded from recovering his minerals when production from his mineral estate alone was infeasible or cost prohibitive. Such an outcome would be
3. Robinson and other cases addressing similar, but distinguishable fact scenarios
The Hegars rely primarily on Robinson v. Robbins Petroleum Corp. In Robinson, the owner of a surface estate, Robinson, sought damages from an oil and gas lessee for three million barrels of salt water the lessee took from the surface estate and used to flood three waterflood units, each of which included a portion of the surface estate.
The Robinson Court went on to state that even if the lessee’s waterflood operation was reasonably necessary to produce oil from the mineral estate below Robinson’s land, “it does not follow that the operator is entitled to the use of [Robinson’s surface estate] for [the entire water-flood operation.]” Id. The Court observed that nothing in the lease, which did not allow for pooling, or the reservation in Robinson’s deed authorized the mineral owner to increase the burden on the surface estate for the benefit of additional lands. Id. at 868. The Court held that the lessee was entitled to “use of the salt water which was reasonably necessary to produce oil under [Robinson’s surface estate,]” if any, but was liable to Robinson for “that portion of the salt water which has been consumed for the production of oil for owners” of other mineral estates. Id.
In applying the principles of Robinson to this case, we are mindful of some factual distinctions. First, this case does not involve waterflooding or the extraction of water from the Hegars’ surface estate.
To the extent the Hegars rely on Robinson for the proposition that Key Operating cannot use the road across their land for the purpose of producing oil exclusively from the Richardson tract, we agree. See id. at 866-67. If the wells on the Richardson tract are producing oil only from the Richardson tract, Key Operating’s use of the road is not “reasonably necessary for the development and production of [the Curbo tract’s] minerals,” Sun Oil,
Robinson does not dictate a contrary result. The Robinson Court held that lessee was entitled to use the surface estate’s water for purposes of producing oil from the mineral estate beneath the surface estate, subject to the accommodation doctrine, but not for purposes of driving oil in other mineral estates. Robinson,
Because the judgment and issues before us relate exclusively to injunctive relief, we need not determine whether Key Operating could be held liable to the Hegars for any use of the road in excess of its easement rights as was the lessee in Robinson. See id.; see also Ball,
The central issue here, which is not addressed in Robinson, is whether Key Operating can use the road in a manner that is indivisible and reasonably necessary for both the Curbo and the Richardson miner
Texas courts have long decided disputes over the scope of a mineral owner’s or lessee’s surface easement and a surface owner’s rights by conciliating the parties’ rights and requiring reasonable accommodations between them. See Humble Oil & Ref. Co. v. W.,
Our holding is consistent with the holding in Miller v. Crown Central Petroleum Corp. In Miller, Miller, the surface owner, brought suit for injunction and damages when a mineral estate lessee laid a pipeline across his surface estate pursuant to a waterflooding program for the mineral estate beneath his land, along with adjacent mineral estates.
The Miller court reasoned:
Of course, no one would argue that the lessee did not have the right to lay pipelines or pipe said water across Millers’ land for the purpose of producing oil from wells on Millers’ land. More oil is being produced from Millers’ land as a result of piping the salt water across it. The lessee is certainly not deprived of the right to do so merely because it also has the effect of producing more oil from other tracts not included in the leases of Millers’ tracts but included in said unit.
Id. at 878 (emphasis added).
Thus, we conclude that Key Operating has the same implied easement for use of the Hegars’ surface estate that existed when it became a lessee of the Curbo tract’s mineral estate: “[the Hegars] may not interfere with [Key Operating’s] right to use the servient estate for the purposes of the easement” — i.e., for the purpose of exploring and producing oil from the Cur-bo tract. Severance,
But Key Operating has no implied right to use the Hegars’ surface for production of oil exclusively from other tracts. Key Operating’s right to use the road thus hinges on its contention that it uses the road for purposes of producing oil from the Curbo tract, and not merely the Richardson tract. We therefore turn to Key Operating’s challenge to the sufficiency of the evidence to support the trial court’s finding to the contrary.
Sufficiency of Evidence that Key Operating Is Not Producing from the Curbo Tract
In its third issue, Key Operating challenges the factual sufficiency of the evidence to support the following fact finding made by the trial court:
Key Operating Co. does not have authority to use the road on the surface of the [Curbo tract]. Although Key Operating Co. holds a lease of an undivided 12.5% of the minerals beneath the [Cur-bo tract], the usage of the surface is not reasonably necessary to enter upon and extract minerals from beneath the surface of the [Curbo tract]. Instead, the preponderance of the credible evidence shows that no minerals are being extracted from beneath the [Curbo tract] by the wells located on the Richardson [t]ract.
This finding, if supported by the evidence, is decisive of Key Operating’s appeal. If Key Operating is not producing oil from the Curbo tract, it has no right to use the surface of the tract. If Key Operating is producing oil from the Curbo tract, it has a right to use the surface of the tract subject to the accommodation doctrine.
A. We apply a deferential standard of review
In reviewing a challenge to the factual sufficiency of the evidence, we consider and weigh all the evidence and set aside the judgment only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Maritime Overseas Corp. v. Ellis,
B. The parties presented conflicting evidence
The trial court heard conflicting testimony from the parties’ experts: George Hite for the Hegars and Don Urbanec for Key Operating. Generally, the experts disagreed about whether the wells on the Rosenbaum property, Richardson No. 1 and Richardson No. 4, were producing oil from the Richardson tract only or from both the Curbo and Richardson tracts. It is undisputed that the Rosenbaum No. 2 well, located on the Curbo tract under the Hegars’ surface, is no longer being used to produce oil.
Hite is a petroleum engineer with forty-five years’ experience. He began by discussing the basis for his opinions, which he formed by determining (1) what portion of the oil produced from the wells on the Richardson tract was produced by the Richardson No. 1 and what portion was produced by the Richardson No. 4 and (2) based on the production from the Richardson No. 4, from what area of land the Richardson No. 4 was draining oil. With respect to the first determination, Hite testified that the production from the Richardson No. 1 and No. 4 was “reported together and you don’t know how much each well produced, but you can estimate it by looking at the decline area for one well and then the difference is the other one.” Under this approach, Hite concluded that, of the approximately 25,000 barrels of oil produced from the Richardson wells from 2004 through July 2008, only 8,200 barrels were produced from the Richardson No. 4. Based on this calculation, Hite concluded that the Richardson No. 4 draws oil from an area with a radius of 216 feet, which did not reach the Curbo tract.
With respect to his ultimate conclusion, Hite testified as follows:
Q. Now, based upon the analysis that you performed, what is your opinion as to whether or not the Richardson well is draining oil from the ... Hegars’ property here?
A. I don’t think it is. At this point, there’s nothing being produced. There’s no drainage. There’s no production.
Q. So in your opinion is oil migrating from the ... Hegars’ property across the lease line to reach the Richardson No. 4 well?
A. No. I think what’s happened in the past, the Rosenbaum 2 well was drilled in the early to mid-50’s. It produced out of one sand, was completed and abandoned by Humble. It was reentered by another company in '95 and they got about 5000 barrels out of it. There’s another well — and it was a dry hole. There’s another well down here that’s a dry hole.
In my opinion whatever oil that was on [the Curbo tract] has, No. 1, either been produced by the wells on the [Curbo tract], or has been produced over here already.
When asked whether he agreed with the expert report of Key Operating’s expert, Urbanec, Hite testified:
A. I don’t agree with it completely, no.
Q. Why not?
*335 A. His report seems to say that there is still oil migrating from the Rosen-baum lease to the Richardson lease and that it will continue to do that.... I think what in fact has happened is that if in fact there are water drive reservoirs, the water has bypassed the [Curbo tract] and the oil on the [Curbo tract] or what was there has either been produced or it’s trapped by the — by the invading water. I mean, once the oil-water contact passes it, it can’t get through. It’s — it’s locked in place.
Don Urbanec is an oil and gas geologist and operator who also has over forty years’ experience. He testified that the Richardson wells were water driven and “that water is picking that oil up and moving it from the [Curbo tract] over to the Richardson property.” Urbanec disagreed with Hite’s assumption that the wells were pressure depletion, rather than water driven, and contended that Hite “ignored production from the Richardson No. 1” in reaching his conclusion.
C. We must defer to the factfinder’s resolution of conflicting evidence
Key Operating contends that the He-gars’ evidence is factually insufficient to support the trial court’s finding because “under cross-examination, Mr. Hite admits that he does not have enough information to say definitively that oil is not migrating from the [Curbo tract] to the Richardson [t]ract and wells.” The testimony underlying Key Operating’s contention is as follows:
Q. Have you done any investigation to see if there were any mechanical problems with any of these wells?
A. Have no way of knowing that.
Q. Thank you, sir. Let me just propose something to you and see just how far off I am. Is — is it possible, from a petroleum engineer’s standpoint, that there could be water driving in this direction to these wells?
I think that occurred in the past. >
Okay. Can you rule out it’s not happening today? <©
The wells aren’t producing today. ¡>
Well, there could be a number of reasons, mechanical or whatever. Without regards to whether the well’s actually on line, could there be water taking oil over here? <©
I — I don’t know that without knowing more about the reservoir.
You can’t rule it out, can you? <©
Lots of these guys are ruling it out. í>
Okay. .£>
But I — but I don’t have — there’s not enough information to just — 1 don’t know what the pressures are. !>
There’s not enough information for you to emphatically say it’s not happening. O’
I know it’s not being produced. i>
Okay. But my question is, if there were production, assume that there was production for me from these wells, they’re on line. Okay? Can you tell this jury that water drive is not taking oil from over here into this area? <©
I’m pretty sure it’s not, but there’s nothing a hundred percent—
Thank you. <©
—but with reasonable certainly I think it’s not being pushed up into the Rosenbaum well. >
Okay. Based on your studies. &
Yes. <1
The applicable standard of proof in civil cases ordinarily does not require an expert to testify “emphatically” that a fact
As the factfinder, the trial court was within its province to assess the credibility of the dueling experts, to believe the testimony of one and disbelieve the testimony of the other, and to resolve any inconsistencies in their testimony. See Maritime Overseas Corp.,
CONCLUSION
Key Operating has a right to use the road across the Hegars’ surface to explore and extract oil from the Curbo tract, even if the extracted oil is comingled with oil from the Richardson tract and produced using a well on the Richardson tract pursuant to a pooling agreement. But in the absence of a pooling or similar agreement to which the Hegars have consented or to which they or their title are otherwise subject, Key Operating has no right to use the road across the Hegars’ surface to produce oil exclusively from the Richardson tract. Because the trial court determined that Key Operating’s use of the road across the Hegars’ surface relates to production of oil from the Richardson tract only, it did not abuse its discretion in enjoining Key Operating’s use of the road for that purpose.
We affirm the trial court’s judgment.
Justice SHARP, dissenting.
Notes
. Will and Loree Hegar have filed a motion for rehearing of our October 13, 2011 opinion in which we reversed the trial court’s judgment enjoining Key Operating & Equipment, Inc. from using a road that crosses the He-gars' property and rendered judgment in Key Operating's favor. We grant rehearing, withdraw our October 13, 2011 opinion and judgment, and issue this opinion and judgment in their place.
. For purposes of this opinion, unless otherwise indicated, references to Key Operating
. Key Operating’s predecessor in interest at this time was Energy Resource Management.
. The Rosenbaum-Curbo tract is 192 acres; 85 of those acres are the Curbo tract.
. The well on the Curbo tract is called the Rosenbaum No. 2 well.
. For purposes of this appeal, we assume that Key Operating’s lease and pooling agreements are valid, enforceable contracts. No challenge to the agreements' validity or enforceability is before this Court.
. Key Operating's lease provides that "production of oil or gas from any part of a pooled unit which includes all or a portion of the land covered by this lease, ... shall be considered ... production of oil or gas from land covered by this lease whether or not the well or wells be located on the premises covered by this lease,” and "the entire acreage constituting such unit or units ... shall be treated for all purposes ... as if the same were included in this lease.”
. In Texas, an oil and gas "lease” is not a lease in the traditional sense, but rather, it "grants a fee simple determinable interest to the lessee, who is actually a grantee.” Natural Gas Pipeline Co. of Am. v. Pool,
. In fact, a mineral owner or lessee's implied surface easement is sometimes treated as an implied easement by necessity. See Peacock v. Schroeder,
. While the exact nature of an implied easement may change over time as necessary to fulfill its purpose, the Texas Supreme Court has noted that the location of an implied easement typically is static. See Severance,
. The Hegars own both the surface estate and approximately one-fourth of the mineral estate. The Hegars’ one-fourth interest in the mineral estate does not appear to have ever been severed from the surface. See Birdwell v. Am. Bonding Co.,
. Hite testified that this area would be smaller if the well was water driven. Urba-nec testified that both of the Richardson wells were water driven.
Lead Opinion
DISSENTING OPINION ON REHEARING
dissenting.
For all of the following reasons, I respectfully dissent.
“This is not an accommodation doctrine case.”
The majority attempts to resolve this case based upon the common law accommodation doctrine, which it holds applies to this case — a point which even the He-gars dispute.
Under Texas law, the dominant mineral estate has the right to reasonable use of the surface estate to produce minerals, but this right is to be exercised with due regard for the rights of the surface estate’s owner. Getty Oil Co. v. Jones,
The majority’s reliance upon the accommodation doctrine is problematic for several reasons. First, as the Hegars acknowledged in their motion for rehearing, “This is not an .accommodation doctrine case.” Unlike typical accommodation doctrine cases, the Hegars are not contending that Key Operating’s efforts to develop the mineral estate under the Hegar tract are interfering with the Hegars’ existing use of the surface. See Getty Oil,
Second, by resolving this matter under the accommodation doctrine, the majority has effectively determined that the He-gars — who unequivocally dispute the applicability of the accommodation doctrine to their case and did not seek to enjoin Key Operating’s use of the surface on this basis — nevertheless, somehow managed to prove the applicability of said doctrine.
Third, although the applicability of the accommodation or alternative means doctrine depends upon the language utilized by the deed, lease, or other instrument severing the mineral and surface estates, the majority opinion presumes that the doctrine applies and never identifies— much less analyzes — the severing instrument. See Landreth v. Melendez,
Surface Usage Rights and Time of Severance
The majority contends that Key Operating is attempting to “contractually expand their surface rights against the Hegars in a lease and a pooling agreement entered after the mineral and surface estates were severed” — without ever establishing what Key Operating’s surface rights actually are in this case.
The majority acknowledges that a mineral interest owner’s surface usage rights are generally established at the time of severance, citing to 1 Ernest E. Smith & Jacqueline Lang Weaver, Texas Oil and Gas Law, section 2.1[B][1] at 2.17-18.2-18. Nevertheless, the majority never clearly articulates when Key Operating’s mineral interest was actually severed from the surface or identifies the severing instrument — a document which would undoubtedly impact the analysis in this case. For example, if the severing instrument gave Key Operating’s predecessor the right to pool or otherwise use the surface of the Rosenbaum-Curbo tract (a portion of which was later sold to the Hegars) for the benefit of oil and gas development on adjacent tracts, there would be no question that Key Operating was entitled to use the surface to develop the pooled unit’s mineral interest.
Factual Misstatements and/or Omissions
Aside from these analytical issues, the majority opinion also makes two factual misstatements or omissions which bear mentioning.
First, the majority acknowledges that because an oil and gas lease grants a fee simple determinable interest to the lessee/grantee, the execution of a mineral lease severs the mineral estate from the surface estate. Despite the existence of several oil and gas leases in the Hegars’ chain of title, some of which are expressly listed in the Warranty Deed from Charles Curbo, including the 1994 lease in which Curbo leased his entire mineral interest to Boatright, the majority nevertheless declares: “The Hegars’ one-fourth interest in the mineral estate does not appear to have ever been severed from the surface.”
Second, Will Hegar testified, “We’re trying to raise a family and we can’t do it with a highway going through our property.” Collectively, the Hegars and Key Operating hold an undivided interest in a little over one-third of the mineral estate. The remaining two-thirds is held by various other co-tenants — each of whom also has the unilateral right to use as much of the surface estate as is reasonably necessary to produce and remove the minerals from the property. Until those minerals are depleted or the Hegars acquire 100% of the mineral estate associated with their 85-acre parcel, it is unlikely that the He-gars will ever have the peace and solitude they seek. The roadway in question is the only means of egress and ingress that the Key Operating and the other mineral co-tenants have with respect to the property. While the proximity of the Hegar family home to the busy roadway is unfortunate, it was not unavoidable. When the Hegars purchased the 85-acre property from Cur-bo in 2002, they chose to build their home a mere 200 to 300 yards away from the roadway that Key Operating had been using since 1994 and had spent over $150,000 to build and maintain. •
For these reasons, I respectfully dissent.
. Despite repeated requests from the Court to do so, Key Operating declined to respond to the Hegars’ motion for rehearing. Thus, this panel did not have the benefit of an industry perspective when considering the Hegars’ motion for rehearing.
