Tenneco Oil Co. v. Bogert

630 F. Supp. 961, 88 Oil & Gas Rep. 537, 1986 U.S. Dist. LEXIS 28050
CourtDistrict Court, W.D. Oklahoma
DecidedMarch 18, 1986
DocketCIV 85-1900-B
StatusPublished
Cited by7 cases

This text of 630 F. Supp. 961 (Tenneco Oil Co. v. Bogert) is published on Counsel Stack Legal Research, covering District Court, W.D. Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tenneco Oil Co. v. Bogert, 630 F. Supp. 961, 88 Oil & Gas Rep. 537, 1986 U.S. Dist. LEXIS 28050 (W.D. Okla. 1986).

Opinion

MEMORANDUM OPINION AND ORDER GRANTING SUMMARY JUDGMENT

BOHANON, District Judge.

This matter comes now before the court upon two motions for dismissal pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state a claim upon which relief can be granted, filed by the defendants Richard D. Bogert and Bogert Oil Company (hereinafter collectively referred to as “Bogert”), and by the defendants Buck Drilling and Exploration Company, Buck Exploration, C. Paul Buck and Irene P. Buck (hereinafter collectively referred to as “Buck”). Inasmuch as defendants in connection with their motions have presented matters outside the pleadings which the court has not excluded from consideration, the motions shall be treated as motions for summary judgment and disposed of as provided by Fed.R.Civ.P. 12(b) and 56. Upon due consideration, the motions shall be sustained.

The entry of summary judgment is appropriate only when “the pleadings, deposi *963 tions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). “In determining whether summary judgment is proper, a court ordinarily must look at the record in the light most favorable to the party opposing the motion, drawing all inferences most favorable to that party.” Harlow v. Fitzgerald, 457 U.S. 800, 816 n. 26, 102 S.Ct. 2727, 2737 n. 26, 73 L.Ed.2d 396 (1982); Norton v. Liddel, 620 F.2d 1375 (10th Cir.1980). Giving the plaintiff Tenneco Oil Company (hereinafter “Tenneco”) the benefit of the inferences from all the matters presently in the record, the material facts of this case are as follows.

This dispute involves adjoining tracts of mineral properties in Blaine County, Oklahoma, namely, Section 3, Township 18 North, Range 10 West (hereinafter “Section 3”) and Section 4, Township 18 North, Range 10 West (hereinafter “Section 4”). By various orders of the Corporation Commission of the State of Oklahoma, Section 4 was designated a single 640 acre drilling and spacing unit for the production of gas and gas condensate. By further orders, the Corporation Commission force pooled five common sources of supply under Section 4 and designated Buck to operate the unit well.

In August of 1973, Buck commenced drilling the Pavlu No. 1-4 well in the southwest quarter of Section 4, having obtained a location exception from the Corporation Commission. On October 22, 1973, Buck and Tenneco executed an operating agreement for Section 4. Exhibit “A” to that agreement indicates that at the time of the agreement Tenneco owned 75.65841 percent of the working interest in oil and gas leases covering Section 4 and Buck and other parties owned the remainder. 1 The operating agreement required Buck to drill one test well, the Pavlu 1-4 well. The operating agreement also contained provisions allowing either party to drill and complete additional wells with or without the consent of the other. It expressly stated that

The liability of the parties shall be several, not joint or collective. Each party shall be responsible only for its obligations, and shall be liable only for its proportionate share of the costs of developing and operating the Unit Area____ It is not the intention of the parties to create, nor shall this agreement be construed as creating, a mining or other partnership or association, or to render them liable as partners.

The Pavlu 1-4 well was completed in the Mississippi, Chester, Oswego, and Manning common sources of supply, and production from the well is comingled from these sources. Production from the well has been continuous in paying quantities to this date, so far as the court is able to determine from the record before it.

In 1974, Buck drilled another well in the west half of the southwest quarter of the northwest quarter of the adjoining Section 3 where Buck or Bogert, or both of them, own a share of the working mineral estate but Tenneco does not have any interest. Section 3 at that time was unspaced, and Tenneco does not claim that the drilling of the Section 3 well, located just 330 feet east of the western boundary of the section was in itself illegal or contrary to the rules of the Corporation Commission. The Section 3 well, named the Mehew-White No. 1, was completed as a producing gas well only in the Oswego common source of supply. Subsequent to the completion of the Me-hew-White No. 1 well, Buck filed an application with the Corporation Commission to create a 640 acre drilling and spacing unit for the production of gas and gas condensate from the Oswego formation, to encompass all of Section 3. On September 12, 1974, the Commission granted this request and further granted a location exception *964 for the Mehew-White No. 1. Tenneco asserts that this location exception is void for lack of proper notice 2 and further asserts that it did not discover the existence of the Mehew-White No. 1 well until less than two years before it brought this action (July 26, 1985).

Tenneco claims that because of its location, the Mehew-White No. 1 well has drained and continues to drain hydrocarbons from under Section 4. 3 It also asserts that Bogert and Buck knew of this drainage. The gist of Tenneco's complaint is its assertion that Buck and Bogert owed a duty to Tenneco to drill an increased density well in Section 4 in order to counteract the drainage caused by the Mehew-White No. 1. Tenneco has alleged four grounds of this duty which can be summarized as follows:

1. By virtue of its position as the operator designated by the Corporation Commission for the well in Section 4, Buck owes Tenneco a duty to operate the well in a reasonable and prudent manner.
2. By virtue of its position as the operator under the joint operating agreement executed by Buck and Tenneco, Buck owes Tenneco a fiduciary duty of good faith and fair dealing.
3. The joint operating agreement imposed upon Buck an implied duty of good faith performance.
4. By virtue of their status as cotenants in Section 4, Buck, Bogert and Tenneco stand in a relation of mutual trust and confidence giving rise to a fiduciary duty.

Before considering each of these theoretical bases of liability in detail, the court must first observe that it is obvious that several of them do not apply to Bogert. Bogert was not the operator of the Pavlu 1-4 well as the term “operator” is comprehended by any of the orders of the Corporation Commission pertinent to the issues now before this court. 4

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Cite This Page — Counsel Stack

Bluebook (online)
630 F. Supp. 961, 88 Oil & Gas Rep. 537, 1986 U.S. Dist. LEXIS 28050, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tenneco-oil-co-v-bogert-okwd-1986.