Superior Oil Co. v. Humble Oil & Refining Co.

226 So. 2d 565, 35 Oil & Gas Rep. 200, 1969 La. App. LEXIS 5892
CourtLouisiana Court of Appeal
DecidedJuly 31, 1969
DocketNo. 3630
StatusPublished
Cited by6 cases

This text of 226 So. 2d 565 (Superior Oil Co. v. Humble Oil & Refining Co.) 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
Superior Oil Co. v. Humble Oil & Refining Co., 226 So. 2d 565, 35 Oil & Gas Rep. 200, 1969 La. App. LEXIS 5892 (La. Ct. App. 1969).

Opinion

HALL, Judge.

The Superior Oil Company (“Superior”) and The Pure Oil Company (“Pure”) filed this suit on September 29, 1964, each plaintiff seeking to recover the sum of $116,-966.24 from Humble Oil & Refining Company (“Humble”) in connection with the drilling of an oil and gas well in Acadia Parish, Louisiana. The California Company, whose name was subsequently changed to California Oil Company and then to Chevron Oil Company (referred to herein as “California”), was joined as a party defendant on plaintiff’s allegation that “it has an interest in the outcome of this litigation.”

[567]*567Subsequent pleadings disclose that after suit was filed Pure was merged with Union Oil Company of California. The latter company was substituted as a party plaintiff and thereafter dismissed its suit on the ground that insofar as it was concerned “the above matter has been settled in full.”

The claim has thus been reduced to the sum of $116,966.24 which Superior seeks from Humble; California being present herein as having “an interest in the outcome of this litigation.”

Both Humble and California filed de-clinatory exceptions:

1) To the jurisdiction of the Court over the person of exceptor and over the subject matter.

2) To the venue of the action,

and with reservation of the foregoing de-clinatory exceptions, both defendants filed a dilatory exception of prematurity.

Humble and California then propounded “Requests for Admissions of Facts and Genuineness of Documents” solely for the purpose of establishing the truth of certain facts and the genuineness of certain documents for use in the trial of the exceptions. Superior admitted all of the Requests and although they objected to some of the Requests on the ground of irrelevancy they admitted the truth thereof.

Following argument on the exceptions the Trial Judge maintained the exceptions of lack of jurisdiction over the subject matter and the exceptions of prematurity and dismissed plaintiff’s suit at its cost. Plaintiff, Superior, prosecutes this appeal from that judgment.

Briefly stated plaintiff’s petition shows that on June 2, 1960, Superior, Pure, Humble and California entered into a Joint Operating Contract for the exploration for and production of oil and gas from certain lands situated in Acadia Parish and that Humble was therein designated as the operator; that contemporaneously with the execution of the Joint Operating Contract a supplemental letter agreement was entered into between the parties; that “pursuant to said supplement agreement” Humble drilled and completed the well “therein provided for” as a producer of gas at a cost of $642,848.26 of which sum Superior and Pure each paid 31.25% or $200,-890.08 in accordance with the proportions set forth in the Joint Operating Contract; that further pursuant to said supplemental letter agreement the Louisiana Department of Conservation created a unit around said well and it was determined that the percentage of production from said well allo-cable to Superior and Pure on a surface acreage basis was 13.055% to each; that in conformity with the supplemental letter agreement the cost of drilling, completing and equipping the well should be adjusted so as to be borne in the same percentage; that therefore Superior and Pure are each entitled to reimbursement from Humble of the difference between 31.25% of the total cost of drilling the well and 13.055% thereof or the sum of $116,966.24 each.

From the allegations of the petition and the Admissions in response to the Request For Admissions the factual situation out of which this action arises is as follows:

On June 2, 1960, Superior, Pure, Humble and California entered into a Joint Operating Contract for the drilling by Humble, as operator, of a certain oil and gas well. Contemporaneously therewith the parties entered into a Letter Agreement which will be referred to hereinafter. Humble drilled the well to a total depth of 12,991 feet at a total cost of $642,846.26. The cost of drilling the well was advanced by Humble and Superior reimbursed Humble 31.25% of such costs monthly as its share thereof as fixed by the operating agreement. The costs reimbursed by Superior amounted to a total of $200,890.98.

In drilling the well to its total depth of 12,991 feet seven sands were encountered [568]*568all of them being unproductive except the Marg. 1-A sand which lay between 8663' and 8675' and the Frio 6 sand which lay between 9606' and 9620'. Tests run on the Frio 6 sand made on December 1, 1960 produced condensate and gas; tests made on the Marg. 1-A sand on December 28, 1960 also produced condensate and gas.

After testing, the shallower Marg. 1-A sand was sealed off on January 2, 1961 and the well was completed in the deeper Frio 6 sand on January 4, 1961.

The Louisiana Conservation Department created a pooled unit for production of the well from the deeper Frio 6 sand by order effective December 1, 1962. Under the terms of said order Superior was entitled to share in the production therefrom on a surface acreage basis which was shown by the unit maps to entitle Superior to a participation of 13.055% of the Frio 6 sand unit production. Superior thereupon demanded reimbursement from Humble of the difference between 31.25% of the total well costs ($200,890.98) which it had paid, and 13.055% of the total well costs ($84,-923.84) or a return of $116,966.24 which is the amount for which it has sued.

The above was the factual situation on September 29, 1964, the date the suit was filed. As of that date no unit had been formed for production of the well from the shallower Marg. 1-A sand and no supplement to the Joint Operating Contract had been executed by the parties for the operation of either the Frio 6 sand or the Marg. 1-A sand.

After suit was filed, viz. on December 20, 1965 the well ceased to produce from the Frio 6 sand and on August 13, 1966 the well was recompleted in the shallower Marg. 1-A sand, and on November 9, 1966 the Commissioner of Conservation established a unit for production from that sand, which had been encountered, tested and sealed off in the original drilling of the well. By supplemental order dated June 27, 1967 a formula was established by the Commissioner for the participation in the production from that unit area.

The Letter Agreement which was entered into by the parties on June 2, 1960 contemporaneously with the execution of the Joint Operating Agreement reads in all pertinent parts as follows:

“It has been agreed by you that Humble Oil & Refining Company will drill a well for the account of the parties hereto the depth of 13,000 feet unless an impenetrable formation is encountered at a lesser depth at a location approximately 400 feet south and east from the northwest corner of the Superior-Pure Lease. The cost of drilling this well and completing and equipping the same if it is a producer, or plugging and abandoning the same if it is a dry hole shall be determined in accordance with the Accounting Procedure attached to said Joint Operating Contract. Such cost and expense will be currently borne by the parties in accordance with the proportions set forth in said operating agreement.
“If the well is completed as a producer of gas an application for the creation of a unit around it will be made as soon as practical by Humble to the Louisiana Department of Conservation.

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Related

Desormeaux v. Inexco Oil Company
277 So. 2d 218 (Louisiana Court of Appeal, 1973)
Superior Oil Co. v. Humble Oil and Refining Company
241 So. 2d 911 (Supreme Court of Louisiana, 1970)
Superior Oil Co. v. Humble Oil & Refining Co.
230 So. 2d 89 (Supreme Court of Louisiana, 1970)

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Bluebook (online)
226 So. 2d 565, 35 Oil & Gas Rep. 200, 1969 La. App. LEXIS 5892, Counsel Stack Legal Research, https://law.counselstack.com/opinion/superior-oil-co-v-humble-oil-refining-co-lactapp-1969.