*1 mortgagee protection such afford the a law which would mean thought Legislature It noted he should have. will be as meaning holding give effect majority opinion and no language quoted To statute above. whatsoever thinks he mortgagee which afford the portion have, necessary out a to strike it has thus been should regarded adequate. Legislature the statute which Appeals. I of the Court Civil would affirm the 10, Opinion July delivered 1957.
Rehearing 2, 1957. overruled October v. C. F. DeBardeleben, Railroad of Texas Jr. No. A-6222. Decided 1957. July Rehearing overruled October (305 141.) S.W. 2d Series *2 Wilson, General, Will Attorney Ludlum, James N. James Wilson General, and Edward A. Cazares, Attorney Assistants petitioner.
Small, Craig, Austin, Small & respondent. all of Justice Culver delivered the of the Court. Mr. brought
This by respondent, DeBardeleben, suit attacked an order of excep- the Railroad Commission that denied him tions to the Statewide Rule for four wells in the Bethany Field in Harrison and Panola Counties. Court of Appeals Civil respondent. affirmed in favor of S.W. 2d 203. In that affirmance we concur.
Substantially only question decision here whether or not the evidence shows a matter of law that gas producing properties being confiscated, other in words, was the reasonably order of the Railroad Commission supported by substantial evidence. Originally composing the area Bethany now Gas Field
was separate treated the Commission as two and distinct fields, Bethany lying principally south and in Panola County Elysian County. Fields to in the north Harrison As development progressed, the distance between two these fields gradually mergence. point was Septem- narrowed to the On pro- ber 1955 the Commission found that the two fields were them ducing reservoir and ordered from common combined Bethany designation and under
under spacing to this combination Field Rules. Prior substantially. In the fields rules the two differed effectively determined that one well would Field it had been up set one proration units with were so drain acres well unit was Field the the unit. In the well to acres. respondent’s leases were located
Petitioner admits “twilight fields might the two zone” between called the what at the time in either possibly considered and could have been original designation by respondent. latitude Considerable determining operator field his permitted which *3 placed. properties should be acres
Respondent approximately 640 owned four units of designated being in the each and him and as the Commission original Bethany tracts one well Field. On each of these four according applica- had drilled Rules. The been to the part the latter wells were tions to drill these made issued, drilled early the wells were and Permits were production and obtained. July more respondent application to drill four
In made each, out wells on four additional of 320 carved units acres permission acre of or of four 640 units. This was done without falsely represented tracts notice to the Comimssion. He these lying examined, Elysian applications as appeared within Field. His were compliance Elysian in order and in with be accordingly Field Rules of one well to 320 acres. Permits granted and the wells drilled. misrepre- having
The Commission thereafter discovered the grant production sentation for these four refused allowables respondent’s ap- then wells ordered them sealed. It denied ground plication exception Rule on the pre- justify not an evidence did either for the rights. vention of Although waste for the of correlative extenuating circumstances, are there can there some question respondent be no but did obtain the through question misrepresentation of fact this conduct is condoned, not in the least as to be said of Civil Appeals. so, if Even entitled to would have been against protect confiscation drain- drill the four wells of and east, offsetting north wells age property his from as close Elysian according drilled that were the Beth- line, under respondent’s property while feet neighbor’s line nearer respondent could drill no any Rules should feet, wells production think from these we than 1320 denied. points: upon these Respondent’s is based claim of confiscation com- (1) Fields the reservoir under the pressure communication; (2) the mon, and in free continuous is uni- units drilled on the 640-acre of the four surrounding formly higher wells and it than offset high physical from is an admitted pressure fact will flow pressure is con- area to a area if the reservoir low communication; (3) that one well will tinuous and in the area by the Railroad to be drain had been determined units; respondent’s original (4) 640-acre wells are on 640-acre units, units, and east offsets to the north are on 320-acre respondent’s are closer to the northern and eastern limits of units, per producing and the offsets feet more cubic acre pro- respondent’s wells; (5) than if was allowed to approximate duce from the four additional wells he would production adjoining cubic feet acre of the offsets units; recognized (6) 320-acre the Railroad Commission itself by reciting order, combining fields, the situation in its the two causing different rules for the two fields were “ineouitable exist;” drainage (7) conditions to 640- *4 uncompensated by drainage any properties acre units is his south, from the east and west.
Confiscation, here, as term is used means the denial gas to an owner or a lessee of fair recover the oil or chance to equivalent in or under his land or the in Railroad kind. Com Co., mission of Texas v. Production Gulf 134 Texas 254; Refining Co., 2d S.W. Gulf Land Atlantic 134 Texas Co. v. 59, 131 2d S.W. being
A valid contention a tract of land is drained and property being finding upon confiscated must a be based underlying actually reservoirs the tracts are one reservoir with free communication between the tracts. September pro-
The Railroad Commission’s order of part vides in as follows:
“Whereas, and from at said fro mevidence adduced reports, it and contained in records information among Ely- that, things, other The appears to the Commission area, had de- sian Fields each of which Fields had, through veloped separately years, such con- for several joined tinuing development operation a common and become recognized underlying with area as the reservoirs such field * * throughout common and continuous area two-field (Emphasis supplied.) Only two witnesses testified on the trial this K. case. Jack gas Baumel, engineer, petroleum a consultant and natural employ respondent. in a witness for Mr. Baumel was years Di- the Railroad for some fifteen and was charge Engineer in of the Oil rector of Production and Chief Cameron, years ending ten in & Gas Division for 1952. John S. engineer charge gas department, testi- the Commission’s fied behalf of the Railroad Commission. testimony witness, Baumel, of the substantiates
respondent’s testimony contentions. That is forth in set con- Appeals’ opinion siderable detail in the Court of Civil and will not be reinstated here. Mr. stated that a Cameron his idea of common is one that reservoir continuous and in reasonable throughout length through its communication breadth semi-permeable formation of some sort. Mr. Cameron refused drainage testify regarding case, giving his sufficiently acquainted reason that he was not the forma- with posi- tion of the reservoir. On the other hand Mr. Baumel was opinion, data, tively says, engineering of the based as he knowledge pressures area, and his in this structures drainage respondent’s taking properties place oper- unless additional wells will continue these are allowed to Otherwise, says, he does not ate. have fair hydrocarbons liquid chance to recover the the Pettit properties. Considering underlying his the amount zone production from wells and the wells, that, run on the new Baumel calculates actual tests if the granted allowables, respondent on his tracts will new neighbors production approximate acre *5 formerly Elysian Field, what was east but that north respondent present conditions would lose half of under the re- drainage gas his under to offset wells coverable northeast, assumption that the Commission’s one well Based on would produc- are seven acres, there effectively an area of drain In properties. respondent’s within ing that reach well offsets from their appear these offsets would of three fact each sides. on two respondent’s units proximity to drain respon- position that petitioner-Commission takes drainage, that his wells rather problem is not one of dent’s original wells the four poor producers and that three of are they under quota are entitled their to which are to make unable pro- offsetting formula, wells while the seven comparison argues that full Petitioner duce their allowable. original respondent’s wells pressures hole between of bottom drainage respon- necessarily prove not and the offsets does respon- disadvantage. testimony of Petitioner cites the dent’s witness, Baumel, porosity Pettit the effect that in this dent’s throughout spotty, that it can area is zone the East Texas greatly less local area that a distance of differ so within a small good may a the difference a well than mile result between poor testimony, says petitioner, can one. This establishing poor as at all unusual for relied it not unon locally neighboring to occur with- communication between wells equalized pressures in this field and the fact that have after years development there is no number would show throughout free and unrestricted communication the field. On hand, speaking the other Mr. Baumel was of the Pettit zone generally through East Texas. He as a result testified that study respondent’s extensive he property had determined that regard favorably porosity situated in to the trend of in that particular drilling area operations and that concentrated near respondent’s property confirm that conclusion. He asserted that production pressures if equal- discontinued would tend to producers ize but not while seven offset gas producing per
wells are twice as much acre. Assuming must, keeping as testimony we with the that an equal respondent’s property amount of acre underlies east, under respon- contained those to the north and if poor producers dent’s four are it would seem that fact in itself tend would to show rather without the additional wells would not have a fair chance of producing gas underlying properties long his at so least production preponderates as the heavily rate of so in favor of neighbors to the north and east. equally convinced We also established compensated by drainage is not proper- that this loss to his *6 524 south, Respondent’s east and west.
ties to adjoining reasonably producers offset seem to be well pressure these properties sides and the for each of on those Pettit zone well that of offsets in the is below is from a low four wells. It admitted that will not flow high pressure is true. In our to area the converse of that respon- evidence that confiscation of establishes taking properties place is decision dent’s and that sup- contrary reasonably Railroad to the Commission ported by substantial evidence. argued
It that issued Commission void, being in drill the four additional wells were violation regulations permittee rules and that Commission’s illegal authority permit under received no to drill such so an the issue confiscation should never have been reached. petitioner says judgment should Therefore be reversed required remedy rendered DeBardeleben to seek his proper point peti- in a manner. On before Commission tioner cites Railroad Texas v. Gulf Production Co., Refining supra; Co., supra, Gulf Land Co. v. Atlantic Gillespie Commission, App., & v. Railroad Sons Texas Civ. 161 159, er. ref. an S.W. 2d From examination of these authorities they support appear lend petitioner’s little aid or conten- Company, tion. In Railroad v. Commission Gulf Production there neither court found was nor waste In confiscation. Refining Company, principal ruling Gulf v. Atlantic was that where a effect subdivision came into existence after the effective date of Rule it was not entitled to against Gillespie In confiscation. v. Railroad Commission con- fiscation was not involved. upon Mag also relies
Petitioner Railroad Commission v. Co., App., nolia Texas Petroleum Civ. 2d S.W. er. ref. granted exception In this case the Commission an Rule confiscation, prevent permittee but the had drilled the well specified at a different permit. location The Appeals affirmed the trial Civil court’s set ting enjoining aside Commission’s production because was not a from the well there compliance substantial order, although the drainage with the court considered that justify an sufficient to to Rule 37 had been shown. prejudice judgment was entered without applicant’s right apply to the an order to drill aat In that it proper location. case although observed that objection made no the Commission location of the well non-compliance with the order for this did not validate only after notice and Commission could act reason hearing. applicable facts. No is not to our We think this case *7 objection urged the the wells are here so far as locations of concerned. argument presented respondent has
The is further that proper way application for an no a made Commission necessary exception Density says Rule. Petitioner the filing steps application a ac include the of Form 1 for each well showing companied by plat (1) a certified the entire unitized proposed located, (2) tract on the to the acre which well is age assigned proposed well, (3) the previ to the assigned ously says judg all other Petitioner to wells. ment adverse to in this case would work a for wells; go feiture of his four that he should back file the proper application exception spacing for an rules and then have the Commission determine the matter of confiscation. agree
We do not with place this contention. In the first all of the facts were before the Commission at time of hearing. Respondent’s petition asserts the Railroad Com- gave mission on its own motion 20, on December notice hearing of to be held to consider whether these wells should be granted an to Density the Statewide Order. Be that may, as it order of the “whereas, Commission recites that notice, after due the Railroad Commission of held a Texas hear- ing 11, January on to consider application of C. F. DeBardeleben, to Jr. apply- Order ing Field, four wells Panola and Harrison * * Counties, Texas, application rejected The was not any sufficiency, account lack of Commission, after reciting fully good of the “that all facts found no and sufficient at reason was advanced said justify which would ex- ception special field either prevention said rule for the rights.” waste or for the of correlative The order rehearing the motion further recited that was denied. Under any open to see this record we fail recourse other applying took of than the one he the court for redress. We likewise do not understand how the reversal and rendition of this case in favor of Commission would not be final ad- rights produce judication from the four wells course, unless, should reverse itself on the finding of confiscation. Appeals is affirmed. of Civil
Opinion July delivered concurring. Norvell,
Mr. Justice agree proposition, an I with As abstract am inclined argument Attorney Railroad advanced General to De- properly permits issued Commission could consider the drilling Bardeleben wells Lower Pettit permits area as null and such Fields void because regula were issued in rules and violation of Commission’s withholding as a applicant tions result of the fraud of the required data. It factual would follow properly for such until valid could refuse to set allowables Gillespie Rail A. v. had been obtained. F. & Sons Co. *8 Commission, 159, App., 2d ref. road Texas wr. Civ. S.W. ground special upon However this was not the which the denying application exceptions order for DeBardeleben’s density placed. order was Railroad Texas v. Commission of 122, Company, Gulf Production 2d 254. 134 Texas S.W. in said While order the recited that rules had Commission its violated, application been was denied because the Commis- density sion was of the and found “that the well on the question four unitized tracts is one well to each acres which is in density pattern accordance with the allowed Bethany good special rules; field no sufficient and reason was at justify advanced said which would ex- ception special to said prevention field rule either for the of protection rights.” waste for the of correlative appears It further the contention that the four well permits subject involved to avoidance the Commission squarely presented not of Appeals. Court Civil The point urged there was that trial granting “the court erred in equitable relief to DeBardeleben for the reason DeBardeleben did come into court with clean hands and he was a law may violator.” there While respec- be similarities between the contentions, tive there are also obvious accept- differences. The of hands ance the “clean dbetrine” would bar DeBardeleben’s prevent a claim to court’s prop- confiscation of his erty. Appeals correctly The of Court Civil held that such doc- applicable trine was not here. On the other hand the avoidance simply require applicant of the well would to start orderly way permits, and in an obtain over allowables, etc. Considering of the Commission’s basis upon judgment authorized to reverse fact that are not we in the Appeals, I concur point in the of not raised Civil affirmance. of Opinion July delivered dissenting. Smith, Griffin, joined by
Mr. Justice Justice brought in the District Court This suit was County validity acts of the of to test the of orders and Travis pur- Texas, specifically for Eailroad pose Commission determining validity Eailroad Order 6-3219, February 20, “Special No. Denying dated Order entitled DeBardeleben, excep- Application F. Jr. C. Field, tions to the Order for Four Wells in the Texas,” validity Counties, Panola and Harrison as well as the agents Texas, of actions of the Eailroad its employees applying Special the Commission’s No. 20- Order (statewide respon- density) 27-088 wells. The sought enjoin interfering dent the Eailroad Commission from producing with him ratably natural from same com- reservoir; applying mon Special the Commission’s (statewide density) Order No. 20-27-088 to said four wells. question primary before us is: Was the Eailroad Com- 32,919, denying application mission’s order No. of C. F. De- Bardeleben, (state- Jr. Order 20-27-088) wide Field, No. Panola Counties, Texas, reasonably supported Harrison by sub- *9 stantial I question evidence? think this should answered in this, then, the If I am affirmative. correct in we do reach question by the majority. discussed question the The deemed controlling by majority the paragraph stated in the second of its is:
“Substantially only question the for decision here whether or not the evidence shows as a matter of law that gas producing properties being confiscated, in other words, was the order of the Eailroad reasonably supported by substantial evidence.” majority holding
I construe this to mean that the that the supported by order as to confiscation was not substantial evi- dence.
Eespondent petition states in his filed in the District challenges validity No. 32619. he Order the respondent violated order entered had
That because 20-27-088, In Special Order. Order No. Statewide shown, words, respondent secured other as will be hereinafter units, on four of 640 permit to drill four wells assigned having previously to four wells. acres each unit been by respondent were in accordance with These four drilled governing here- density Bethany Field. I shall “legal first wells as and the after refer four wells” “illegal four as the wells.” last denying application
The order for permits density showing order recites facts obtained “illegal respondent by filing by applications drill wells” represent Respondent which did not the true facts. failed applications “illegal four disclose these wells” Elysian said to be in units Fields were included in the previous “legal applications his four covered wells” Bethany Field. respondent presented applications The sets of two language such spacing form that no rule required. or the rule was in each instance regular were issued for locations. 1955, respondent application In 1954 and made drill a (640 well on acres) each the unitized tracts Beth-
any Field. well spacing Each location was within the 2640-1320 required distances Field rules and each unit was of sufficient proration size to constitute 640-acre unit. So far as this record shows the and the laiw rules of the Railroad Com- strictly “legal mission were so far followed as the wells” are concerned . The fact that the Field and the Fields Field merged
were later and combined order of the Commission 13, 1955, September and the dated two fields were found to be producing- a common reservoir does not wrong- validate the prior ful acts of the committed to the order of mer- ger At of the two fields. the time the presented both applications it sets was not even known that the two fields *10 producing from common were reservoir. The sep- fields were entities, Bethany arate and distinct and the Field rules were substantially Elysian different from those in the Fields Field. Bethany spacing Field the the provided In rules gas that no any well on the feet to than 2640 drilled nearer be well shall constituting any line spacing pattern. Pro- to than 1320 feet or nearer same tract unit, proration a 160-acre of a the limits acreage in per cent tolerance with a ten of 640 acres ration units determining for established, the formula allocation were acreage upon well. was based allowables 2/3 1/3 provided Elysian spacing rule In the the Fields any less than 933 feet well on the shall drilled no well any line, property a 20- or nearer than 330 feet to same tract pattern. spacing Proration units of 320 acres with ten acre acreage established, tolerance in were and the alloca- cent determining tion was based on formula allowables 100% pressure. Both the times bottom hole the Elysian provided spacing Field rules the distances Fields operator flexibility were minimum distances to an allow locating spacing a well the rule and that and the other rules designed promulgated permit only pro- were one well to each ration unit.
Respondent important provisions three violated of the four density (640 misrepresent- statewide unit) by acre ing applications the facts his drill the four “illegal doing By gained advantage he by wells.” so an elimin- ating by from consideration the Commission of the matter in- provision, is, volved in fourth by representa- he false got equivalent tions an density provisions supra, Order, of the Statewide without a presenting without the matter Commission for deter- applications mination. The sworn to represented a desire to drill four wells units of approximately Elysian each 320 acres Fields Field. Each location was shown to be within spacing the 933-330 distance required Elysian Fields Therefore, Field Rule. it is clear applications showed no information which would re- quire exceptions spacing rule or rule. Such being representations, the factual the Commission per- issued mits for four wells regular Fields Field for Had locations. disclosed in his applica- sworn proposed which tions that land on he to drill the four wells previously had been included units ap- covered “legal plications to drill the wells” in Field, the granted permits. would not have Respondent, gotten doubt, by, would no have the fact that after he gas production “illegal obtained the four wells” it became go necessary for him to back to the Railroad Commission for an *11 fixing order the allowables for each well. It was at this time representations discovered, the false and the Commission grant applications Then, refused to for the allowables. time, sought respondent hearing first on Density grant Statewide Rule. The Commission refused to exceptions, clear, me, it is at least to the Commission respondent primarily denied relief the fact that he on had vio- regulations, lated the Commission’s rules and re- without gard regard words, to the issue of confiscation. In other without denying exception to whether the order supported by evidence, denying was substantial the order exception apparent because deliberate violation of the regulations supported by rules Commission’s was substan- tial evidence and is deny and was within sufficient itself to present the relief he seeks in the case. Respondent permitid should not be to dedicate four 640 acre tracts, issue, all the land in Bethany pro- Field 640 acre units, subsequent ration and then in applications stating without applications in such authority he had without carved out of such units doing got four units By of 320 acres each. so he two wells for each 640 acres instead of one well for each such remembered, It connection, unit. must be in this that while it hearing true the ap- Commission did hold a on plication exception for an the Statewide Order there is no applications evidence filed other than those designating that Elysian wells were to be drilled in the fact, day Fields Field. In hearing, respondent on the filed acreage original affidavits Bethany ap- within his plications acreage remaining consisted of the after he carved Elysian out Fields Field units. Thus, seen, it is that none desig- originally nated to the Field units has any ever at time been lawfully separated from the units. Respondent’s mis- representations change fact, could not and I don’t think by holding hearing Commission under the circum- position stances intended to or was in a holding such hear- ing requirements waive the strict governing of the law its duties. held the February 20, setting findings entered its order out all the of facts I have been discussing and in addition following thereto made findings and order:
“WHEREAS, From evidence adduced hearing, at said is of the finds that fio’ acreage assigned requested reduce the per- request Elysian Field prior well the affiant’s
units ; accompanying requests plats that the unitized tract mits did not indicate Fields Field wells to drill *12 to previously had dedicated thereon the which been uni- approved said Field well locations on Commission part plats; such actions on the of affiant were tized tract express Special provisions 20-27- Order No. violative 088, August 28, 1953; dated
“WHEREAS, hearing, From evidence at said the adduced density is of the Commission finds that the well question on the four unitized tracts one well to each 640 density pattern by acres which is in accordance with the allowed special rule; good the field that no and sufficient hearing justify was at reason advanced said which would ex- special ception prevention said field rule to either for the rights. or for the waste of correlative “NOW, THEREFORE, by IT IS ORDERED the Railroad application of Texas that Commission of C. F. DeBardele- ben, Jr., together rehearing same, with his motion for on for exceptions to the Order his four wells in Beth- any Field, Texas, Panola and Counties, they Harrison be hereby denied.”
It this filing was from order that appealed by this suit District It Court. is clear that unitized tracts by accepted once the Commission cannot be subdivided there- approval after without the prior Commission. The 20, February not, order of was as contended respondent, hearing involving drilling of second wells on tracts, contrary, unitized applications each the wells here in affirmatively issue states that the wells tobe drilled a 320 acre tract on which no other well had thing, been drilled. Another it seems me permit under record this case to have his four “il- legal wells,” ignore absolutely would be to the Railroad Com- spacing mission’s Rule 37 rule. No spacing for, applied granted. rule was neither was Therefore, it effect of the of the trial court Court Civil Appeals grant exceptions spacing is to rule without re- erspondent properly quiring comply with the rules which applications provide that spacing to both the promulgated by rules rules and the Commission shall of hear- body first after be filed considered notice ing. indicated, commission, as its heretofore bound contrary legally it desired. own rules and cannot act to the if so case, without Under the record in was “Ilegal But, authority wells.” lawful to validate may, authority certainly it without question of consider the confiscation. agrees holding
Petitioner that this does not work a forfeiture “illegal It of the four wells.” contends that at bar is case Mag principle similar in cases of Railroad v. Company, App., nolia Petroleum Texas Civ. 2d er. S.W. Corporation, ref. and Amerada Cheesman v. Petroleum Texas App., (no history.) Civ. 2d S.W. writ agree petitioner. Respondent I with the under the record application this case lawful was without and the respondent’s before record *13 justified the its proof order of confiscation, any, application (plead- if was of no avail since the ings speak) acreage by so to did not show all covered the of question. failure, together misrepresen- units in This with other alone, justified 20, regard- tations February of order merits, is, proof by respondent less of the offered pn question of confiscation. However, question if we assume that the of confiscation was Commission, before the I contend that Commission’s supported by respondent is substantial evidence. The in his petition complain did not or claim was he entitled to addi- only tional wells because of waste. His contention in the trial court that he was an exception entitled to Density to the ground Rule on the of confiscation. He makes the contention property right that he has vested land; in the oil under his that he has not been fair afforded his share the oil and (not just Bethany field), in the fields and that reason drainage right property his being inherent deprived is him. agree point, petitioner I with On says: when it
“Since DeBardeleben was entitled to no wells as a matter right his 640 except acres unitized tracts the four thereon, only he had wells contention that he was entitled to the new confiscation, wells because of go must for naught, grant because to him ground additional wells on this give east, every operator would to the south and west the same ground exceptions to rule.” destroy totally would allow this To program. proration-conservation acres one well evidence the trial court did not establish Since the before denying Density the order an Rule was illegal, arbitrary, unreasonable and and since the order was supported evidence, denial to substantial the Commission’s upheld. Rule should be attempt point shall I not set out the or in this evidence out lacking. respon- say, wherein evidence if Suffice getting gas produced dent his fair share of the from the get Field, way he proceed has a as to so fair unit, accepted share. He the 640 acre one towell the unit with- protest. voluntarily put out He all involved got four units and his one well unit. Now, getting if he is not share, way his fair one he could
get case, relief if he can make out a would be on the basis of limiting allowables either sixteen allowables north, increasing wells to the the allowables Certainly, the south. confiscation has not been shown. judgments I would reverse the below, of both courts and dis- prejudice right miss the cause without proper application file to the Commission.
Opinion July delivered 1957.
Rehearing overruled October
Mrs. Effie Trimble v. Clarence E. Farmer Et Al July 24, No. A-6175. Decided 1957.
Rehearing overruled October (305 157.) S.W. 2d Series