Samson Exploration, LLC v. T. S. Reed Properties, Inc.

521 S.W.3d 26, 2015 WL 5042151, 2015 Tex. App. LEXIS 10866
CourtCourt of Appeals of Texas
DecidedOctober 22, 2015
DocketNO. 09-13-00366-CV
StatusPublished
Cited by8 cases

This text of 521 S.W.3d 26 (Samson Exploration, LLC v. T. S. Reed Properties, Inc.) 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
Samson Exploration, LLC v. T. S. Reed Properties, Inc., 521 S.W.3d 26, 2015 WL 5042151, 2015 Tex. App. LEXIS 10866 (Tex. Ct. App. 2015).

Opinion

MEMORANDUM OPINION

HOLLIS HORTON, Justice

We issued our original memorandum opinion in this cause on August 27, 2015, and afterwards, the appellant and the ap-pellees filed motions for rehearing. The court denies the motions for rehearing; however, the panel withdraws its opinion and judgment and issues this opinion and judgment in their stead.

In this oil and gas case, filed by several stakeholders with interests in two pooled gas units, we are asked to decide two principal issues. First, whether the stakeholders participating in one of the pooled units can recover damages from the operator of the unit when the operator amended the boundaries of the unit to exclude a well that was within the boundaries of the original unit, and where the stakeholders accepted royalties attributable to the amended unit without challenging the operator’s authority to amend the original unit’s boundaries. Second, whether the stakeholders in another unit, based on their claims for breach of contract, can recover *32 damages from the operator due to the operator’s failure to pay royalties on oil and gas produced from a well that the operator contends was included in that unit by mistake.

With respect to the stakeholders in the first unit, given their actions following the amendment to boundaries of the unit, we conclude they ratified the operator’s amendment to the boundaries of the first unit. Based on their ratification of the amendment to the unit, we hold they are entitled to recover nothing on their claims. With respect to the stakeholders in the second unit at issue in the appeal, and given the operator’s failure to file an amendment to the description defining the unit’s boundaries to correct its alleged mistake, we hold the stakeholders in that unit can recover damages from the operator for its alleged breach of them leases. However, with respect to these stakeholders, we also conclude the trial court’s awards are excessive, as the awards include royalties on production that occurred before the date their unit first existed.

Background

This case involves numerous plaintiffs, 1 three gas wells, and two pooled units, the first of which the operator amended to change the unit’s name and its boundaries. In the trial court, the following plaintiffs 2 *33 sued Samson Exploration, LLC 3 based on their claims that they owned an interest in mineral leases that Samson pooled into the units at issue.

Samson created the first of the units that are at issue in this: appeal in 2001, when it filed a declaration creating the “Black Stone Minerals A No. 1 Gas Unit.” 4 In January 2002, Samson completed a second successful gas well within the existing boundaries of the Black Stone Unit on the Joyce DuJay lease. The well is perforated between 13,150 feet to 13,176 feet subsurface, so its gas is produced at a level that also falls within the boundaries of the Black. Stone Unit’s pool. In 2002, after Black Stone refused consent to Samson’s -attempt to pool its lease into the Black Stone Unit, Samson filed an amended declaration that changed the boundaries of the Black Stone Unit’s pool. In the amendment, 5 Samson renamed the “Black Stone Minerals A No 1 Gas Unit” as the “Joyce DuJay No. 1 Gas Unit.” 6 Following the Black Stone Unit’s amendment, Samson did not attribute the gas produced by the Black-Stone-lease well to the amended and renamed Joyce DuJay Unit.

In late 2002, Samson successfully completed a third gas well that was perforated *34 from 12,197 to 12,343 feet, which is above the pool that is associated with the Joyce DuJay Unit. However, the- third well is located on the Joyce DuJay lease, and the Joyce DuJay lease is one of the leases that is included in the Joyce DuJay Unit. Approximately ten months after completing the third well, Samson created the “Joyce DuJay A No. 1 Gas Unit,” 7 defining a pool consisting of 704 acres that lies in Hardin and Jefferson counties, “provided such production occurs below a depth of 12,000 feet subsurface.” Based on the description in the document that Samson filed in creating the DuJay-A Unit, the DuJay-A Unit’s pool includes most of the leases and a significant portion of the zones that Samson previously defined for the Joyce Du-Jay Unit’s pool. The two units share the zone that is being produced by the well located on the Joyce DuJay lease, and the Joyce DuJay lease is pooled into both units.

In 2004, six of the stakeholders in the Joyce DuJay Unit sued Samson claiming that Samson had breached its duties under leases by refusing to allocate any of the gas produced by the Black-Stone-lease well for their accounts. Subsequently, additional plaintiffs, some of them stakeholders in the Joyce DuJay Unit and some of them stakeholders in the DuJay-A Unit, joined the suit. 8 The DuJay-A Unit stakeholders claimed that Samson failed to comply with its contract obligations under the terms of their lease. All of the DuJay-A claimants based their claims on a lease between Samson and T.S. Reed Properties 9 and the declaration Samson filed when it created the DuJay-A Unit.

*35 In a series of interlocutory summary judgment rulings between 2008 and 2013, the trial court resolved the parties’ claims and defenses. 10 In its final judgment, the trial court awarded the prevailing Joyce DuJay claimants damages on their breach of contract claims, basing the awards on the royalties the Joyce DuJay claimants would have earned had Samson attributed production from the Black-Stone-lease well to the Joyce DuJay Unit. 11 The trial court awarded the DuJay-A claimants damages based on their breach of contract claims. The damages awards to the Du-Jay-A claimants are based on the royalties they would have derived from the unit had Samson allocated production from the well located on the Joyce DuJay lease to both the Joyce DuJay and DuJay-A Units.

Samson and the DuJay-A claimants timely filed appeals; both complain about various aspects of the trial court’s final judgment. Tex.R.App. P. 26.1 (Time to Perfect Appeal). Generally, Samson argues the trial court erred in granting judgment in the plaintiffs’ favor, and it contends the trial court should have granted its motion for summary judgment as to all of their claims. Alternatively, Samson argues that the trial court should have denied the motions for summary judgment filed by the Joyce DuJay and DuJay-A claimants because fact issues existed that require a trial. With respect to their cross-appeal, the DuJay-A claimants argue the trial court failed to properly calculate their respective awards under the provisions of the lease to which they all trace their interests.

Standard of Review

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Bluebook (online)
521 S.W.3d 26, 2015 WL 5042151, 2015 Tex. App. LEXIS 10866, Counsel Stack Legal Research, https://law.counselstack.com/opinion/samson-exploration-llc-v-t-s-reed-properties-inc-texapp-2015.