Bass Enterprises Production Co. v. Kiene

437 So. 2d 940, 78 Oil & Gas Rep. 456, 1983 La. App. LEXIS 9123
CourtLouisiana Court of Appeal
DecidedAugust 15, 1983
Docket15,549-CA
StatusPublished
Cited by5 cases

This text of 437 So. 2d 940 (Bass Enterprises Production Co. v. Kiene) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bass Enterprises Production Co. v. Kiene, 437 So. 2d 940, 78 Oil & Gas Rep. 456, 1983 La. App. LEXIS 9123 (La. Ct. App. 1983).

Opinion

437 So.2d 940 (1983)

BASS ENTERPRISES PRODUCTION CO., Plaintiff-Appellee,
v.
Paul C. KIENE, et al., Defendant-Appellant.

No. 15,549-CA.

Court of Appeal of Louisiana, Second Circuit.

August 15, 1983.

*941 Hargrove, Guyton, Ramey & Barlow, Shreveport by David L. Smelley, for plaintiff-appellee.

Robert J. Moffatt and Frederic L. Miller, Shreveport, for defendant-appellant.

Rabun & Post by Armand F. Rabun, Farmerville, for defendant-appellee.

Before JASPER E. JONES, FRED W. JONES and NORRIS, JJ.

NORRIS, Judge.

This appeal involves a concursus proceeding brought by Bass Enterprises Production Company, against defendants, Paul C. Kiene and Minnie Lee Graves, both of whom answered the proceeding, to determine who is entitled to a deposited sum representing production proceeds attributable to a royalty interest in gas and condensate produced from a unit well located in the Southwest Quarter of the Southwest Quarter of Section 16, Township 20 North, Range 3 West, Lincoln Parish, Louisiana, for the Cotton Valley Formation, Reservoir A, Hico-Knowles Field. Bass is the operator of the unit well which is presently producing gas and condensate in commercial quantities.

The threshold issue presented by this appeal is: whether operations conducted in connection with a well drilled in 1974 and later plugged in 1975 on a unit, including a portion of the servitude tract but not on the servitude tract itself, constitute sufficient good faith operations for the discovery and production of minerals so as to interrupt the running of nonuse prescription against a mineral servitude created in 1968? The trial court answered affirmatively, and finding no error in the ruling, we affirm.

The following facts are undisputed. On November 20, 1968, Minnie Lee Graves and her husband, W.F. Graves, now deceased, sold the following described property to Paul C. Kiene reserving unto themselves one-half of the minerals:

"SW ¼ of SW ¼ of Section 16; S½ of SE ¼, Section 17, less and except that portion of the SW ¼ of SE¼ of Section 17 lying and being South and West of the Dubach-Hico Road, Township 20 North, Range 3 West, Lincoln Parish, Louisiana, containing 110 acres, more or less, together *942 with all improvements" (hereinafter sometimes referred to as the "servitude tract").

By instrument dated June 21, 1974, Mr. and Mrs. Graves granted an oil, gas and mineral lease to Thomas A. Durham with a primary term of five years covering land including the SW ¼ of SW ¼ of Section 16, Township 20 North, Range 3 West, Lincoln Parish, Louisiana. On August 19, 1974, Paul C. Kiene granted an oil, gas and sulphur lease to Bradco Oil & Gas Company with a primary term of five years covering land including the SW ¼ of SW ¼ of Section 16, Township 20 North, Range 3 West, Lincoln Parish, Louisiana.

Effective December 1, 1953, Louisiana Department of Conservation Order No. 137-C-2 created the entirety of Section 16, Township 20 North, Range 3 West, Lincoln Parish, Louisiana, as a drilling unit for the McFearin Sand in the Hico-Knowles Field, Lincoln Parish, Louisiana and provided that the unit was subject to the field rules set forth in Louisiana Department of Conservation Order No. 137-C, effective January 9, 1953. A portion of the servitude tract (SW ¼ of SW ¼ of Section 16, Township 20 North, Range 3 West) was included in this drilling unit.

A well was never physically located on any part of the servitude tract drilled for the exploration of hydrocarbons between November 20, 1968 and November 20, 1978. However, on or about October 24, 1974, Bass applied to the Louisiana Department of Conservation for a permit to drill the Paul C. Kiene No. 1 Well to the Smackover Formation at a proposed total depth of 11,500 feet. The drilling of this well was a good faith operation for the discovery and production of oil, gas and other minerals, that is drilling to a depth at which there was reasonable expectation of commercial production. Located on the SW ¼ of SE ¼ of Section 16, Township 20 North, Range 3 West, Lincoln Parish, Louisiana, the Kiene No. 1 Well was spudded by Bass on November 11, 1974 and drilled by Bass to a depth of 10,746 feet. On or about January 14, 1975, CSC/IMC Exploration took over operations of the well from Bass and continued drilling to a total depth of 11,520 feet, which was reached on or about February 9, 1975. This well was commercially unproductive of hydrocarbons from the Smackover Formation and on or about February 10, 1975, was plugged back to a depth of approximately 9,084 feet. On or about February 12, 1975, casing was run in the Kiene No. 1 Well to a depth of 9,075 feet in order to facilitate testing of various intervals in the well above the Smackover Formation. Thereafter, it was determined that the Kiene No. 1 Well was not capable of commercial production of hydrocarbons from any zone, and the well was plugged and abandoned on or about July 15, 1975.

By Louisiana Office of Conservation Order No. 137-X, effective June 21, 1978, as amended by Order No. 137-X-1, effective December 12, 1978, a drilling and production unit comprising the entirety of Section 16, Township 20 North, Range 3 West, Lincoln Parish, Louisiana, was established for the exploration for and production of gas and condensate from the Cotton Valley Formation, Reservoir A, in the Hico-Knowles Field, Lincoln Parish, Louisiana. A portion of the servitude tract, particularly the SW ¼ of SW ¼ of Section 16, Township 20 North, Range 3 West, is included in this unit. On or about May 6, 1979, Bass spudded the Etta H. Colvin No. 3 Well on the unit. This well has been completed and is presently producing gas and condensate in commercial quantities from the Cotton Valley Formation, Reservoir A, Hico-Knowles Field, Lincoln Parish, Louisiana. The Colvin No. 3 Well is the unit well and Bass is its operator. The portion of the proceeds of production from this well amounting to a .00390786 royalty interest attributable to one half of the oil, gas and other minerals in and under the SW ¼ of SW ¼ of Section 16, Township 20 North, Range 3 West, Lincoln Parish, Louisiana is the disputed amount arising from the conflicting claims of Kiene and Graves. The competing claims arise from a dispute as to whether the mineral servitude created in the sale from W.F. Graves and Minnie Lee Graves to Paul C. Kiene on November 20, *943 1968, has lapsed by ten year liberative prescription.

In addition to the aforementioned facts obtained from the stipulations of the parties, the following findings of fact were made by the trial court after considering testimony and numerous exhibits. During the time that Bass operated the Kiene No. 1 Well, prior to transferring it to CSC/IMC, the following logs were run on the well which evaluated the McFearin Sand: (1) dual induction lateral log; (2) density neutron log; (3) micro log and (4) mud log. These logs were run to gather information regarding the potential of the McFearin Sand while the well was initially being drilled to the Smackover Sand. After taking over the operations of the Kiene No. 1 Well, CSC/IMC engaged the services of an independent oil and gas consulting firm to evaluate the information previously obtained to determine the productive possibilities of and the procedure and cost to test the McFearin Sand in the well. It was the opinion of these consultants that the McFearin Sand merited testing. Based on these recommendations, on March 31, 1975, CSC/IMC applied to the Louisiana Office of Conservation for a work permit to perforate and acidize the McFearin Sand in the Kiene No. 1 Well.

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Bluebook (online)
437 So. 2d 940, 78 Oil & Gas Rep. 456, 1983 La. App. LEXIS 9123, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bass-enterprises-production-co-v-kiene-lactapp-1983.