Carnegie Natural Gas Co. v. South Penn Oil Co.

49 S.E. 548, 56 W. Va. 402, 1904 W. Va. LEXIS 143
CourtWest Virginia Supreme Court
DecidedDecember 6, 1904
StatusPublished
Cited by22 cases

This text of 49 S.E. 548 (Carnegie Natural Gas Co. v. South Penn Oil Co.) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Carnegie Natural Gas Co. v. South Penn Oil Co., 49 S.E. 548, 56 W. Va. 402, 1904 W. Va. LEXIS 143 (W. Va. 1904).

Opinion

POEEENBARGER, PRESIDENT:

This case involves the rights of separate owners of the oil and gas in the same tract of land, as determined, not by principles' of law governing the rights of separate owners of adjacent or superjacent strata, but by a contract, entered into by them presumably to enable both to develop their territory and take out the substances belonging to them in the most practical, economical and advantageous manner.

J. E. Carnahan, being the owner of thirty-seven oil and gas leases on lands in Wetzel and Doddridge counties, entered into two contracts with the Carnegie Natural Gas Company, on the 33rd day of October, 1899. By the first, he sold, transferred and set over to said company, its successors and assigns, in consideration of. one dollar, the gas and gas rights in said leases together with all his “estate, right, title, interest and privilege in and to the gas and gas rights” in the land described in the leases. This left in Carnahan the title to the oil in the same land. ■ By the other contract, made on the same day, and, no doubt, a part of the same transaction, he and the Carnegie Gas Company, determined the rules which should govern their respective rights and powers, while, operating in the territory, the-former for oil and the latter for gas.

By the first clause, the gas company bound itself to commence a Well on a certain tract, within sixty days from the date-of the agreement, and drill the same with due diligence “through the Gordon Sand, unless oil or gas be found in paying quantities-at a lesser depth.” Should this well prove to be a good pro[405]*405•ducer of either oil or .gas., as determined by certain standards fixed by tlie contract, a second one on another part of the territory included in the leases, covering nearly three thousand acres of land, was to be put down in like manner by the gas ■company; and if it should come up to the same standard, a third well was to be drilled, and upon its measuring up to the requirements in production, a fourth one was to be drilled. 'These four wells were dealt with specially by the te,rms of the contract. Whether any terms used in reference to them shall be ■allowed to fix the meaning of the terms used in the clause, relating to the general development of the territory by both owners, will be discussed later on.

That clause reads as follows: “The parties hereto shall have the right to operate said territory under tlieir respective interests, and should Carnahan in his operations for oil develop a -gas well or wells, the Gas Company shall have the right or privJega of having any such well or wells transferred to it upon payment of the actual cost of drilling the same, together with the cost of the rig and casing, and should the Gas Company in its operations for gas develop an, oil well or wells, Carnahan •shall hare the right or privilege of having any such well or wells transferred to him upon the payment of the actual, cost ■of drilling the same, together with the cost of the rig and casing.

“Each party shall have Thirty (30) days from the completion of any such well or wells in which to exercise its option to ■so purchase a well from the other and make payment therefor, and during which time they shall have the opartunity of testing and inspecting any such well drilled by the other.
“Any Gas Well drilled by Carnahan, and any oil well drilled by the Gas Company which shall not be so purchased by the other party within the time above designated, shall together with the product thereof, be and become the absolute property of the party drilling the same.
“Either shall give immediate notice to the other of »the completion of any well in which the other would have an interest or right to purchase under this paragraph.”

Carnahan, on, the 14th day of February, 1902, conveyed all the interest and estate vested in him by these leases, to the South Penn Oil Company. L. G. Eobinson and others, having acquired some interest in them, joined in the conveyance. Both ■companies then proceeded with the work of development under [406]*406tbe contract, each turning over to the other productive wells-pursuant to the agreement, until the South Penn Company drilled a large gas producing well, known as “Genine-Kobinson> No. 19.” TJpon striking the gas, the workmen withdrew their tools and notified the gas company, but, soon after the agents of that company appeared upon the ground, the gas company was informed, bjr the agents of the South Penn (Company, that the latter intended to drill the well on down into the oil-bearing stratum and would not then surrender it. Another large gas producing well, known as “Die No. 1,” was drilled by the' South Penn Oil Company, and this, it decided to drill deeper and refused to surrender to the gas company. Thereupon the Carnegie Company instituted two suits in chancery against the South Penn Company, setting out in its bills in detail the-facts hereinbefore substantially given and praying injunctions. As to the Genine-Kobinson well, the prayer is that the South Penn Oil Company, its agents, and employees be restrained and inhibited from, in any manner, interferring with the plaintiff in its works and effort to pack said well for the purpose of saving the gas, and that the plaintiff may be protected in its peaceable, posession thereof. As to the Die Well, the prayer is that the defendant be restrained from drilling said well any deeper and that it be required and compelled either to close and case in the gas, or allow the plaintiff to' do so,- to the end that the-gas may be preserved until the matters in dispute between the parties shall be settled by the court. The bills allege that the-Carnegie Company has no immediate use for the gas, in consequence of which, it desires to have the wells shut in, for the time being, in order to prevent loss by its escape. The demurrer of the South Penn Company having been overruled, it answered the bill, admitting all, or substantially all, the facts but claiming the right under the contract to drill the wells into the oil bearing sands, below the “Gordon Stray” sand in which the gas was found; denying that it was permitting the gas to escape, and alleging that it was possible to operate the wells for both oil' and gas, saving both by proper casing and piping and the use of certain appliances made for that purpose. Depositions were' taken and filed by both parties, and upon the hearing, the court decided that the South Penn Company had the right to continue its operations, but, in doing so, was bound to prevent the -escape of ,the gas as far as the same could be avoided by the [407]*407use of the best methods, means, devices and appliances known to operators in the oil business. Accordingly a bond in the penalty of twenty thousand dollars with condition'to take the precautions aforesaid for preventing the escape of gas was required in each case, and the decrees provided! that upon the execution of the bonds the injunctions should stand dissolved without further order of the court. From this decree the Carnegie Company has appealed.

Nothing is said by eounsel for the appellee in support of its demurrer. To avoid repetition and endeavor to make the opinion clearer on that phase of the case, than it would be otherwise, as well as to put it in closer relation with the discussion of the propriety of the remedy sought, what is to be said about the demurrer is deferred until after the announcement of the conclusion, respecting the main question, the right involved.

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Bluebook (online)
49 S.E. 548, 56 W. Va. 402, 1904 W. Va. LEXIS 143, Counsel Stack Legal Research, https://law.counselstack.com/opinion/carnegie-natural-gas-co-v-south-penn-oil-co-wva-1904.