Phillips Petroleum Co. v. Mecom

395 S.W.2d 828, 23 Oil & Gas Rep. 695, 1965 Tex. App. LEXIS 2901
CourtCourt of Appeals of Texas
DecidedOctober 28, 1965
DocketNo. 14659
StatusPublished

This text of 395 S.W.2d 828 (Phillips Petroleum Co. v. Mecom) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Phillips Petroleum Co. v. Mecom, 395 S.W.2d 828, 23 Oil & Gas Rep. 695, 1965 Tex. App. LEXIS 2901 (Tex. Ct. App. 1965).

Opinion

COLEMAN, Justice.

By this action appellant sought a judgment requiring appellee to abandon and plug a producing gas well located on leases owned by appellee within the City of Hitchcock, Texas. Essentially it is appellant’s theory that the drilling of a producing gas well by appellant, under a permit issued by the city, on a block created by a comprehensive drilling ordinance enacted by the city, which limited to one the number of wells which could be drilled on each block to each producing sand, gave appellant the vested right to be the sole producer of the gas underlying the lands within this block despite the action of the city in repealing this ordinance, passing a new ordinance, which did not designate blocks, and issuing a permit to appellee authorizing the drilling of a gas well on leases owned by him within this block. On a trial to the court without a jury, the relief sought was denied.

Appellant has concisely stated the chronology of events giving rise to this controversy as follows:

“This controversy arises under the Ordinances of the City of Hitchcock, Galveston County, Texas. The Northeast Hitchcock 9100-foot Frio Field was discovered by the Phillips Petroleum Company-Thompson, Trustee Well in 1957. In that same field Phillips, as operator, drilled and completed the Phillips-Davis D. Well in 1957; the Phillips-Delaney Well in 1958; the Phillips-Louise Well in 1958; the Phillips-Prets Well in 1958; and the Phillips-Huff Well in 1959. At this point in the development of the field, the City of Hitchcock was incorporated at an election held on January 30, 1960. Ordinance No. 4 was passed and became effective April 6, 1960. This ordinance was a comprehensive drilling ordinance, designed to regulate the drilling of all wells for oil and gas within the City of Hitchcock. Attached to and a part of said Ordinance as Exhibit ‘B,’ was a plat, dividing the City into blocks for the purpose of drilling gas wells. This plat showed the existing gas units, designated by letters, and gas blocks not drilled at the time the ordinance was passed were signated by numbers. After the passage of Ordinance No. 4, Phillips made application for and obtained the permit from the City to drill and operate the Sundstrom Unit, being Block 4 on Ex. ‘B’ of Ordinance No. 4. There is no controversy herein as to this Block 4 Unit.
“The City of Hitchcock passed Ordinance No. 11 amending Sections 6 and 9 of Ordinance No. 4 effective June 2, 1960.
“On April 5, 1961, the City of Hitchcock issued to Phillips Petroleum Company a permit to drill and operate a well on Block 5. This unit is referred to variously as Block 5, or as the Lasalo Unit, or as the Phillips Petroleum Company-Lasalo Unit. On August 17, 1961, Phillips Petroleum Company as operator completed a gas well in the NE Hitchcock 9100-foot Frio Field on this block 5 Unit.
“On August 27, 1962, the City of Hitchcock passed Ordinance No. 66. This is a comprehensive drilling ordinance to control the drilling of wells for oil and gas within the City of Hitchcock and amends and supersedes Ordinances 4 and 11. In many respects this Ordinance 66 is quite similar to Ordinances Nos. 4 and 11; but Ordinance No. 66 does not have any exhibits ‘A’ or ‘B’ to delineate drilling blocks, and nowhere contains any provisions delineating the area of a drilling block. By its terms (Section 31), Ordinance No. 66 purports to repeal all ordinances in conflict therewith.
“After the passage of Ordinance 66 the City of Hitchcock issued to Mecom [830]*830the permit dated November 26, 1962, for the Mecom-Kipfer Well to be drilled on a unit of 30.6 acres of land carved out of the Block 5 Unit on which Phillips had previously completed the Lasalo Well. * * * In January, 1963, Mecom commenced operations on the.Mecom-Kipfer Well, and said well was completed as a gas well in the Northeast Hitchcock 9100-foot Frio Field.”

Ordinance No. 66 provided that the drilling ordinance passed April 6, 1960, “is expressly repealed in its entirety.” Among other provisions Ordinance No. 4 provided that it was unlawful to drill a gas well within the City without a city permit; that only one well could be drilled to each sand in each block created by the ordinance; that the “person holding the greater area of ground within the drilling block by ownership in fee or by lease or other contract authorizing the drilling and operation on land for oil or gas” should be granted the permit where more than one application is filed; that the permit should not be construed as a grant to occupy any land except by consent of the owner.

Ordinance No. 11 was enacted for the stated purpose of correcting typographical errors in certain sections of Ordinance No. 4, including Section No. 6. As amended this Section reads:

“Section 6. In the event an application for a permit for the drilling, completion and operation of a well for oil or gas shall be made by any person not owing or not holding oil and gas leases or drilling contracts from the owners of all lots, blocks or parcels of land included in or embraced within a drilling block as shown upon the maps attached to said Ordinance No. 4, marked Exhibits ‘A’ and ‘B/ and made a part thereof, a permit shall be issued to such applicant, his heirs, successors and assigns, only upon the following conditions, in addition to such other conditions as may be provided in other sections of this Ordinance, to wit:
“The applicant shall be free to enter into such contract and agreements with the owners of such other lots, blocks or tracts as he may be able to make. If agreements are not reached with all owners of lots, tracts and blocks within the drilling block, then the owners or owner of any given lot or lots, block or blocks, tract or tracts with whom permittee has failed to reach agreement shall have the right or option by notice to the permittee given in writing within thirty (30) days after the issuance of a permit for a well on the drilling block involved, either (1) to treat his interest as a working interest and contribute toward the actual costs and expense of drilling, completing and operating said well with all necessary appurtenances currently each month in the proportion that the number of square feet in area owned by him in the drilling block bears to the number of square feet embraced in said block and thereupon receive the same proportion of the oil or gas produced and saved from such well or its value at the well at the option of the permittee, and a like proportion of natural gas produced, saved and utilized or sold, or the value of the same at the well at the option of the permittee; or (2) to treat his interest as being leased to permittee, and receive a sum in cash equal, on an acreage basis, to the highest cash bonus per acre paid by the permittee for any lease covering lands within said drilling block; and to receive as a royalty, a share of all oil and gas produced and saved from such well equal to one-sixth (14) of the proportion of the whole quantity of oil so produced and saved that the number of square feet in the area owned by him bears to the number of square feet in such drilling block, or at the election of permittee to receive such proportion of the value at the well of the oil [831]

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Bluebook (online)
395 S.W.2d 828, 23 Oil & Gas Rep. 695, 1965 Tex. App. LEXIS 2901, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phillips-petroleum-co-v-mecom-texapp-1965.