United States v. 1,606.00 Acres of Land

698 F.2d 402
CourtCourt of Appeals for the Tenth Circuit
DecidedJanuary 18, 1983
DocketNo. 81-1360
StatusPublished
Cited by2 cases

This text of 698 F.2d 402 (United States v. 1,606.00 Acres of Land) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. 1,606.00 Acres of Land, 698 F.2d 402 (10th Cir. 1983).

Opinion

WILLIAM E. DOYLE, Circuit Judge.

The United States here instituted an action in the nature of a condemnation pro[403]*403ceeding in which it sought to subordinate all oil, gas and other mineral rights in four tracts of land with the right of the United States to flood the tracts as necessary for the construction or operation of the Optima Lake project in Texas County, Oklahoma. The estates taken are described in the government’s Declaration of Taking set out below.1 Natural gas was being produced from each of the four tracts on the date of the taking. The appellants also owned the mineral rights to the tracts’ non-producing minerals.

The district court appointed a condemnation commission pursuant to Rule 71A(h) of the Federal Rules of Civil Procedure to determine the issue of just compensation. The mineral owners and the government presented evidence as to the compensation which might be due the mineral owners but much of this evidence consisted of expert testimony as to the value of the producing and non-producing minerals as of the date of the filing of the suit and the difference in value as a result of the actions of the government.

The commission filed its report on August 27, 1979. It found no evidence that the United States intended to plug the existing wells, or that all producing reserves could not be recovered. It adopted nominal compensation figures for the subordination of the producing minerals. The commissioners awarded total damages to the producing minerals as follows:

Tract 132 Mineral Easement of $1090
(hereinafter “ME”)
Tract 211ME of $1500
Tract 212ME of $2100
Tract 338ME of $2000

The award was made with respect to the non-producing minerals as follows:

Tract 132ME $14,926
Tract 211ME $14,091
Tract 212ME $ 4,050
Tract 338ME $25,750

The mineral owners filed objections to the commission’s report. The district court upheld the commission’s findings and entered final judgment for each Tract on March 10, 1980.

SUMMARY OF THE EVIDENCE

The appellant, Commissioners of the Land Office of Oklahoma, called two witnesses. One was C. Fred Morton who testified as to the value of the minerals in producing wells which had not been recovered as of the date of the taking.

The Land Office also called Mr. Robert Shipman. Mr. Shipman testified that the value of the non-producing minerals as of the date of the taking was $100 per acre. He said that he had multiplied the bonus value per acre in 1977, which was $50.00 per acre, by 3 and obtained $150.00 per acre and that he took $50.00 off because of the producing zone, and arrived at a value of the non-producing minerals as of the date of taking as $100 per acre. His conclusion was that the award for the non-producing minerals should be $90.00 per acre.

The individual defendant royalty owners called four witnesses. The testimony of three of them was considered by the commissioners as their opinion.

Edmund H. Benton gave extensive testimony regarding the royalty interests, using an exhibit admitted into evidence. He described the exhibit as representing “eom[404]*404puter simulations of the various present worths of the royalty interests under ... five wells depending upon certain price conditions of price for the products.” Benton testified that the non-producing horizons under some of the land would be more valuable than the producing horizons for the reason that there is a great unknown as to the quantities of reserves to be found in the other horizons which have produced already at suppressed prices and the new horizons would be at new prices being allowed at the time and therefore would have sufficiently greater present worth than the existing zones.

Bobby Darnell was called by the royalty owners. He testified that he had been purchasing leases and blocks of leases and buying royalties since 1966. He was of the opinion that there was a probability of producing in the non-producing zones considered in this action. Today minerals in Oklahoma had a minimum value of $250 per acre depending on where they are developed. He testified that the value of the non-producing minerals under the tracts here were somewhere between $250 and $550 per acre. He said he had no opinion as to the value of the minerals after the date of taking, but that his opinion was as to their value before the taking. He also said that he “wouldn’t want to mess with the Federal Government” and therefore to him they wouldn’t be worth anything with the easement.

Lewis Mayer, a royalty holder, also testified. But his testimony pertained to a comparable sale of minerals.

The United States introduced many exhibits and called only one witness. That was Gordon L. Romine, who testified as an expert on the side of the United States. He said he had appraised the four tracts in •question and the non-producing ones and had made appraisals of all of the interests. He detailed the complex steps that he had taken in making the appraisals. His conclusion was that the possibility of production from non-producing zones were not favorable and were speculative and that production was occurring in other similar areas and was limited. He also pointed out that several dry holes in the area had been drilled by knowledgeable operators. He stated that production in zones where dry holes were drilled would be highly speculative. He estimated values of the non-producing minerals in three of the four tracts was $30.00 per acre and the fourth was $60.00 per acre. He stated that the fourth tract was valued higher due to the fact that no deep tests had yet been conducted there. He reached this conclusion as a result of talking to property owners and based on, among other things, comparable sales. Mr. Romine’s testimony was quite extensive and in large part consisted of supporting information. For example he testified that all existing wells had been rehabilitated with dikes so as to keep them above flood water and that it would therefore be possible to recover the reserves from all producing wells, suffering only a moderate loss of recovery. He later stated that the producing wells could produce all remaining reserves under then existing conditions.

He further testified that all of the tracts in this action could be directionally drilled from points outside the reservoir and not require permission from the Tulsa District to do so. He did admit, however, on cross examination that directional drilling is more expensive than straight hole drilling. He estimated the losses for non-producing zones to be as follows. This is presented in a table prepared by the commission:

Tract 132 - 34% loss
Tract 211 - 33% loss
Tract 212 - 18% loss
Tract 338 - 25% loss

Finally Mr. Romine testified that he understood that the Corps of Engineers would give permission to drill new wells in this area so long as the reservoir was not polluted and spacing rules were complied with. Romine stated that the sale testified to earlier by Mr.

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698 F.2d 402, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-160600-acres-of-land-ca10-1983.