Title: State Oil and Gas Board of Mississippi v. Brinkley

State: mississippi

Issuer: Mississippi Supreme Court

Document:

329 So. 2d 512 (1976) STATE OIL AND GAS BOARD OF MISSISSIPPI and Texas Pacific Oil Company, Inc., et al. v. Robert S. BRINKLEY and Petro Grande, Inc. No. 48818. Supreme Court of Mississippi. March 30, 1976. A.F. Summer, Atty. Gen., by P.L. Douglas, Asst. Atty. Gen., Brunini, Grantham, Grower & Hewes, Edmund Brunini, Jr., Jackson, for appellants. Craig Castle, Green, Cheney, Jones, Hughes, McKibben & Stack, Jackson, for appellees. Before INZER, SMITH and SUGG, JJ. SMITH, Justice, for the Court: These proceedings were begun by Petro Grande, Inc., (successor to Robert S. Brinkley), by petition addressed to the Mississippi Oil and Gas Board in which *513 forced integration was sought of the S 1/2 of the NE 1/4 of Section 9 with the N 1/2 of the NE 1/4 of Section 9, Township 1 North, Range 11 East, Jasper County, into a proposed 160 acre drilling unit, with permission to drill. Pursuant to published notice, appellants, Texas Pacific Oil Company, Inc. (and others interested), objected, and, after a hearing, the petition was denied. Petro Grande Inc. appealed from the decision of the Oil and Gas Board to the Circuit Court of Hinds County where the order of the Oil and Gas Board was reversed. The Oil and Gas Board, Texas Pacific Oil Company, and other parties in interest, have appealed here from the ruling of the circuit court. The proceedings are statutory and were brought by Petro Grande under Mississippi Code Annotated section 53-3-7 (1972), which provides in part: Petro Grande alleged in its petition that the relief sought would result in "the prevention of waste" and "avoid the drilling of unnecessary wells." It appears from the record that Petro Grande, (successor to Brinkley), owned the mineral interests in the S 1/2 of the NE 1/4 of Section 9, Township 1 North, Range 11 East, in Jasper County. It owned .06% of the working interest in the NE 1/4 of the NE 1/4 of Section 9. Texas Pacific, (for convenience used in this opinion to include all objectors), owned virtually all of the working interests in the N 1/2 of the NE 1/4 of Section 9, except the .06% of the working interests owned by Petro Grande. Texas Pacific at one time had held the mineral leasehold in the S 1/2 of the NE 1/4 of Section 9 and had drilled a well which had resulted in a dry hole. Since then Petro Grande has acquired this interest and in its petition sought to have it combined through forced integration with the N 1/2 of the NE 1/4 of Section 9, owned substantially by Texas Pacific. While the matter was pending, Texas Pacific filed with the Oil and Gas Board its petition for approval of a plan for unitization of the Smackover Unit in the Lake Como Field which included the N 1/2 of the NE 1/4 of Section 9. The petition of Petro Grande and the petition of Texas Pacific were mutually exclusive and patently both could not be granted. After some postponements and continuances, one of the continuances having been granted by agreement and another at the request of Petro Grande, the two interrelated (but inconsistent) matters were heard together. It does not appear that there was any objection to this procedure. At the hearing conducted by the Oil and Gas Board, Texas Pacific put on two geologists who testified for objectors that the S 1/2 of the NE 1/4 of Section 9, sought to be integrated with the productive lands of Texas Pacific, was "dry" and was not underlain by any part of the Smackover Oil Pool of the Lake Como Field as a result of *514 an existing fault and that there was no oil producing Smackover formation beneath the S 1/2 of the NE 1/4 of Section 9. A geologist for Petro Grande gave a contrary opinion. The Board found, on this and other evidence, that to grant the petition of Petro Grande for the forced integration would not have the effect of preventing waste and would not avoid the drilling of unnecessary wells and denied the petition. On the present appeal it is argued that it was error on the part of the circuit court to hold that the Oil and Gas Board should not have considered the geological evidence. This Court has held, however, that decisions of the Oil and Gas Board may be based upon testimony of geologists. Superior Oil Co. v. Foote, et al., 214 Miss. 857, 59 So. 2d 85 (1952). It was for the Board, as trier of facts, to decide the conflicts in the testimony given by the geologists who testified for Texas Pacific and the geologist who testified for Petro Grande. While the posture of the case was different in Southwest Gas Producing Co. v. Seale, 191 So. 2d 115 (Miss. 1966), in which it was held that pooling of known dry lands with productive lands was unfair, the principle applies with equal or greater force here where such pooling is sought by forced integration. The circuit court's view that the role of the Oil and Gas Board with respect to Petro Grande's petition for forced integration was, in effect, ministerial and that the Board had no discretion and no alternative but to grant the petition, was not correct. The language of the statute itself provides that the Board "may" order forced integration (provided) it finds that such integration would prevent waste or avoid the drilling of unnecessary wells. In this case the Board found expressly that it would neither prevent waste nor avoid the drilling of unnecessary wells. The action of the Board in denying the petition was within its statutory power. In Barnwell, Inc. v. Sun Oil Co., 249 Miss. 398, 162 So. 2d 635 (1964), this Court held: The Court said: The circuit court was in error in considering that the Board's failure to take action within thirty days after the conclusion of the hearing (Mississippi Code Annotated section 53-1-29 (1972)) invalidated the Board's order. It has been pointed out that some of the delay, at least, resulted from postponements by agreement or at the request of Petro Grande. In any event, however, in Superior Oil Co. v. Foote, supra, this Court addressed the question as follows: It was error for the circuit court to reverse the Oil and Gas Board. The test on judicial review of the acts of an administrative body has been stated by this Court in numerous cases. In Mississippi State Tax Commission v. Package Store, Inc., 208 So. 2d 46, 48 (Miss. 1968), the Court said: REVERSED AND THE ORDER OF THE OIL AND GAS BOARD REINSTATED. GILLESPIE C.J., PATTERSON and INZER, P. JJ., and ROBERTSON, SUGG, WALKER and BROOM, JJ., concur.