S ee T EX . R. A PP . P. 47. 4. 1 

## COURT OF APPEALS

SECOND DISTRICTOFTEXAS FORT WORTH
NO. 2 - 0 7 - 1 0 0 - CV
AFE O I LAN D G AS, L . L . C. AN D A P PE L L AN TS E X P L O O IL , I N C . V . C H A RLES A RM EN TRO U T, SU SA N A PPELL EES A R M E N T R O U TG IR V IN , L Y N N A . M OR R I S , S AL L Y NE L M S , AN D B I R DS F OR TL AK E , L T D.

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FR O M THE 48TH DI STRI CT CO URT OF TARRA NT CO UN TY

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### M E M ORANDU M OP I NI ON 1

----- ----- -- A ppe l l ant s A FE Oi l an d Gas, L. L. C . an d Ex pl o O i l , I nc. ap pea l f r om a j udgm enti n f avo rof A ppe l l ee s C har l es A r m ent r out , Susa n Ar m ent r outG i r vi n, Lynn A . M or r i s, Sal l y N el m s, and B i r ds FortLake, Lt d. t hat a m i ner al l ease had2

t er m i nat ed. I n t w o i ss ues , A ppe l l ant s a r gue t hatt he evi den cei s l ega l l y a nd f ac t ual l y i ns uf f i ci ent t o su pport t he j ur y’ s f i ndi ng t hatt he w el l ati ss ue w asnot capabl e ofpr odu ci ng gas w hen shut- i n r oyal t i es w er e t ender ed. Because w e h o l d th a t t h e e v i d e n c e i s l e g a l l ya n d fa c tu a l l ys u fficie n t to s u p p o rt th e j u ry ’s fi n d i n g , w e affi rm the tr i a l co u rt ’s j u d g m e n t. F ACTS AND P RO CEDU RA L H I STORY A ppe l l ee s A r m ent r out , G i r vi n, M or r i s, an d Nel m s exe cut ed an oi l , ga s, an d
m i ner al l ease w i t h A FE i n 19 97 . The l ease cover ed appr oxi m at el y 12 0 acr es ofl and i n t he f or m at i on k now n a s t he Bar nettShal e. I n Fe b ru a ry 2 0 0 2, t he
sam e part i es execut ed successorl eases i n f avorofA FE. O ne oft hese l eases
cover ed a 40

- acr e t r act , descr i bed as “Tr act A ”; t he A r m ent r out N o. 2 w el l had been dr i l l ed on t hi s t r actw hi l e t he 1 99 7 l ease w as i n ef f ect . Thi s 20 02 l ease is t h e le a s e a t is s u e o n a p p e a l. A F E a s s ig n e d a w o r k in g in t e r e s tt o E x p lo O il. A FE al so assi gned an i nt er esti n t he l ease t o Pr em i um Resou r ces I I ( “PR I I ”) t hr ough an agr ee m ent unde r w hi ch PRI I be ca m e t he des i gna t ed ope r at oroft he
w e l l a n d A F E m a i n ta i n e d a p o rti o n o f th e w o rk i n g i n te re s t. Th e l ease or i gi nal l y had a pr i m ar y t er m of one year ; t he l ease st at ed t hat i tw oul d be i n ef fe c tdur i ng t he pr i m ar y t er m “and as l ong t her eaf t eras oper at i ons . . . ar e condu ct ed upo n sai d l and w i t h no cessat i on f orm or e t hanS ee Ridge O i l Co. , I nc. v. G ui

nn I nvestm ents, I

nc. , 148 S. W . 3d 143, 2 158

- 160 ( Tex. 200 4) ( di sc us si ng ca se s con st r ui ng s i m i l arl ea sepr ovi si onsan d d e te rm i n i n g w h a t s o rt o f o p e ra ti o n s w i l l s e rv e to k e e p th e l e a s e i n fo rc e ). See Rei

d v. G ulf

O i l Cor p. , 3 2 3 S . W . 2 d 1 0 7 , 1 1 3

- 1 4 ( T e x . C i v. 3 A p p .— B e a u m o n t 1 9 5 9 , n o w ri t), a ff’d, 161 Te x. 51, 337 S. W . 2d 267 ( 1960) (c o n s t r u in g a m in e r a l le a s e in w h i c h t h e p a y m e n to fs h u t -in ro y a lt ie s c o u ld c o n s ti tu te c o n s tru c ti v e p ro d u c ti o n s o a s to k e e p th e l e a s e i n fo rc e ). 3 ni net y ( 90) con se cut i ve day s. ” The t er m “ ope r at i ons ” w asde f i ned as“ dr i l l i ng, 2 t es t i ng, co m pl et i ng, r ew or ki ng, r ec om pl et i ng, de epe ni ng, p l uggi ng ba ckor
r epa i r i ng a w el l . . . i n an end ea vor t o obt ai n pr oduc t i on of oi l , ga s, s ul phuror ot herm i ner al s . . . w het herornoti n payi ng qu a n titie s .” The l ease f urt her p ro v i d e d th a t i f th e w e l l w a s n o t a c tu a l l yp ro d u c i n g b yth e e n d o f th e p ri m a ry term o r at an yti m e the rea fter, the w e l l co u l d b e sh u t in for u p to n i n e ty
c o n se c u ti v e d a y s, an d the l e a se w o u l d n o t term i n a te i f, b ythe en d o f t h e n i n e ty days, r oyal t i es ( cal l ed “shut

- i n r oyal t i es”) w er e pai d t o t he l essor s. 3 O n Decem ber 16, 200 2, t he part i esex ec ut ed an agr ee m entt o e xt end t he p r i m ary t erm of t he l ea se on t he l an d on w hi ch t he w el l w as l oc ate d . T h is agr ee m ents t at ed t hatt he l ea sew oul d be i n f or ce unt i l A ugus t1, 2003 , “ and as l ong t her eaf t er as oi l , gas or ot her m i ner al s ar e pr odu ced f [ r o] m t he [ l eased l and ] . . . , an d a s l ong a s ope r a ti o n s aspr os ec ut ed unde rt he t er m s oft he Lease. ”4

PRI I be gan ope r at i onson t he w el l on J ul y 30, 2003 . I n August2003 , t he
w el l w as aci d per f or at ed, a t echni qu e u s e d to st i m ul at e pr odu ct i on of a gas
w e l l . I n O c to b e r 2 0 0 3 , P R I I an d A F E ten d e red p a y m e n t of sh u t- i n roy a l ti e s to A rm e n tro u t, G i rv i n , M o rri s , a n d N e l m s , w h o rej e c te d th e p a y m e n ts . A ppe l l ee s su bs equ ent l y br oughts ui tag ai ns t A p p e l l antA FE s ee ki ng a decl ar at or y j udg m ent t hat t he m i ner al l eases t hey had execut ed w i t h A FE had
ex p ir ed. Theyal so sought t o qui ett i t l e t o t he l and cov er ed by t he l eases. A ppel l ee Bi r ds FortLake, Lt d. , succes s o r-in

- i nt er estt o t he ot herA ppel l ees,
cur r ent l y ow ns t he l ands cover ed by t he l eases; A ppel l antExpl o O i l i nt er vened because i thad acqui r ed f r om A FE an i nt er est i n t he w el l cover ed by t he l eases. A ppel l ees obt ai ned a part i al sum m ar y j udg m ent t hat t he 1 99 7 l ease had ended on i t s ow n t er m s, butt he part i es w entt o t r i al overt he 2 00 2 l ease. A tt r i al , t he part i esco nt es t e d t he i ss ue ofan d pr oduc ed con f l i ct i ng t e s t im o n yo n w h e t h e rt h e w e ll c o u ld p r o d u c e n a t u r a l g a s a tt h e t im e t h e s h u t -in
r oyal t i es w er e pai d. A ppel l ant s cont ended t hatt he l ease w as ext ended w hen
s h u t -in ro y a lt ie s w e r e p a id if t h e w e ll w a s c a p a b le a tt h a tt im e o fp r o d u c in g in anyqua nt i t y. The t r i al cou rtt huss ubm i t t ed t hi s que st i on t o t he j ur y: “ D o yo u f i nd t hati n O ct ob e r , 2003 , t he A r m ent r outN o. 2 W el l w asnotca pab l e o f pr oduc i ng ga s? ” The t r i al co urti ns t r uct ed t he j ur y t hata w el l i s notca pab l e o f p rod u c i n g g a s i f th e w e l l n e e d s fu rt h e r w o rk, r e p a i rs, or eq u i p m e n t i n o rde r t oUniro yal G oodr i ch T i re Co. v. Marti

nez , 977 S . W . 2d 328, 334 ( Tex. 4 1 9 9 8 ), cert. denied, 5 2 6 U .S . 1 0 4 0 (1 9 9 9 ); R o b e rt W . C a l v e rt, “No Evidence” and “ I ns uffic ie n t Evi

den ce ” Poi

nts of Er ror, 38 T EX . L . R EV . 361, 362– 63 (1 9 6 0 ). 5 pr oduc e g as . The j ur y s enta not e t o t he t r i al j udgeas ki ng, “ [ M ] us t t he gasbe abl e t o f l ow i n or dert o be consi der ed ‘ pr odu ci bl e’ ?” The j udg e t hen subm i t t ed t hi s suppl em ent al i nst r uct i on: “I n r esponse t o you rquest i on, you ar e i nst r uct ed t hati n or der f or a gas w el l t o be ‘ ca pab l e o fpr oduc i ng ga s’ ; t he gasm us tbe abl e t o f l ow . ” Th e j ur y f oun d t hat t he w el l w as not capabl e ofpr odu ci ng gas, and t he t r i al courtent er ed f i nal j udg m entf orA ppel l ees. A NA LYS IS In A p p e lla n t s ’ f ir s tis s u e , t h e ya r g u e t h a tt h e e v id e n c e is le g a lly i n s u fficie n t to s u p p o rt th e j u ry ’sfi n d i n g th a t w h e n s h u t-i n ro y a l ti e s w e re t ender ed, t he w el l w as not capabl e of pr odu ci ng gas. W e m ay sust ai n a l egal
su f f i ci enc y c hal l eng e o nl y w hen ( 1) t he r ec or d di sc l os esa com pl et e a bs enc e o f evi dence of a vi t al f act ; (2 ) t he courti s bar r ed by r ul es ofl aw orofevi dence f r om gi vi ng w ei ghtt o t he onl y e vi den ceof f er ed t o pr o v e a vi t al f ac t ; ( 3) t he evi den ceof f er ed t o pr ove a vi t al f ac t i s no m or e t han a m er e s ci nt i l l a; or( 4) t he evi den cees t abl i sh esco ncl us i vel y t he oppos i t e of a vi t al f ac t . I n de t er m i ni ng 4

w het her t her e i s l egal l y suf f i ci entevi dence t o suppo rtt he f i ndi ng un derr evi ew , w e m ustconsi derevi dence f avor abl e t o t he f i ndi ng i fa r easonabl e f act - f i nderCity of Kel ler v. W i l so n , 1 6 8 S .W .3 d 8 0 2 , 8 0 7 , 8 2 7 (T e x . 2 0 0 5 ). 5 Cont’ l Coff ee Prods. Co. v. Cazarez , 9 3 7 S .W .2 d 4 4 4 , 4 5 0 (T e x . 1 9 9 6 ); 6 Leitch v. Hor

nsby , 9 3 5 S .W .2 d 1 1 4 , 1 1 8 (T e x . 1 9 9 6 ). See F ox v. Thores on , 3 9 8 S . W . 2 d 8 8 , 9 1 ( T e x . 1 9 6 6 ) ( “ A ‘ p r i ma r yt e r m’ 7 i s . . . t he per i od, t ypi ca l l y f i ve ort en yea r s, dur i ng w hi ch a l ea sem ay be ke pt al i ve by a l essee by vi rt ue ofdr i l l i ng op er at i ons ort he paym entofr ent al s, even t hou gh t her e i s no pr odu ct i on i n payi ng qu ant i t i es. ”) See Anada r

ko Petroleum Cor

p. v. Thomps on , 94 S. W . 3d 550, 554 ( Tex. 8 2 0 0 2 ) (“ [A ] t y p ic a l h a b e n d u m c la u s e s t a t e s t h a tt h e le a s e la s t s f o ra re la t iv e ly shortf i xed t er m ofyear s ( pr i m ar y t er m ) and t hen ‘ as l ong t her eaf t er as oi l , gas orot herm i ner al i s pr odu ced’ ( secondar y t er m ) . ”) See F ox , 39 8 S . W . 2d at91 ( “A pr i m ar y t er m i s al so a per i od of t i m e at 9 t he end ofw hi ch t he e s ta t e g r ant ed w i l l t er m i nat e b utw hi ch es t at e m ay be e x te n d e d b ys o m e o th e r p ro v i s i o n , u s u a l l yo n e fo r p ro d u c ti o n .” ); see al so Hydro c a r

b o n Mgmt. , I

n c . v. T ra cker E

xp lo ra ti o n, Inc. , 861 S. W . 2d 427, 432 ( Tex. A pp. — A m ar i l l o 1993, no w r i t ) ( “I ti s t he r ul e t hata l ea sem a y b e ke pt al i ve aft ert he pr i m ary t er m onl y by pr oduc t i on i n pay i ng qua nt i t i es , or a s avi ngs 6 c o u l d an d d i sre g a rd e v i d e n c e co n tr a ry to th e fi n d i n g u n l e ss a re a so n a b l e fac tf i nde rco ul d not . Anyt hi ng m or e t han a sc i nt i l l a o fev i den cei s l ega l l y s uf f i ci ent 5 t o s upportt he f i ndi ng. 6 A ty p i c a l g a s l e a s e ru n s fo r a s e t p e ri o d o f ti m e — th e p ri m a ry term
— d u ri n g w h i c h the l e ss e e c o n d u c ts th e n e c e ss a ry o p e rati o n s to co m p l e te
a p r o d u c in g , a n d h o p e f u llyp r o f it a b le , w e ll. A tt h e e n d o f t h e p r im a r yt e r m , if 7 t he w el l i s pr odu ci ng ga s , t hen t he l ease t ypi cal l y ext ends i ndefi ni t el y f oras l ong a s t he w el l co nt i nue s t o pr oduc e. I ft he w el l i s notpr oduc i ng ga s att he 8
e n d o ft h e p r im a r y t e r m , t h e le a s e w ill u s u a llye n d a u t o m a t ic a lly . T o a v o id 9cl aus e, s uch asa sh ut - i n ga s w el l cl aus e, dr i l l i n g o p e rat i onscl aus e, or

c o n ti n u o u s o p e ra ti o n s c l a u s e .” ). S e eH ydroca r

bon , 861 S . W . 2d at432 ( not i ng t hat“ f ora w el l t o be 10 m ai nt ai ned by t he pay m entofs hut

- i n r oya l t i es , i t m us t be ca pab l e ofpr oduc i ng g a s . . . a t th eti m e i t i s s h u t-i n ” ); se ealso K i dd v. Hogg e tt, 331 S. W . 2d 515, 5 1 9 ( T e x . C i v . A p p .— S a n A n to n io 1 9 5 9 , w ri t r e f’ d n .r .e.) ( “S h u t- i n roy a l ty pay m ent s exc us e p r oduc t i on onl y i ft he w el l i s ac t ual l y c apa bl e o fpr oduc i ng g a s i n p a y i n g q u a n ti ti e s .” ). Garci a v. Ki ng , 13 9 T e x . 5 7 8, 582, 164 S. W . 2d 509, 511 ( 1942) 11 ( hol di ng t hat , w her e a l ease t er m w as f ort en year s and “as l ong t her eaf t eras oi l , ga s, an d ot herm i ner al s i s pr oduc ed f r om sa i d l and he r eun der , ” “p r oduc ed” m e a n t “ p ro d u c e d i n p a y i n g q u a n ti ti e s ” ). S e e, e .g ., Reid, 32 3 S . W . 2d at11 3 ( hol di ng, i n const r ui ng si m i l arl ease 12 p r o v is io n , t h a td r illin g o r r e w o r k in g o p e r a t io n s w o u ld k e e p t h e le a s e in f o r c e if 7 f or f ei t ur e oft he l ease, m ostgas l eases al l ow f ort he l ease t o be ext ended even i ft he w e l l i s notpr oduc i ng ga s i fs hut

- i n r oya l t i esar e p ai d and t h e w e ll is
a c t u a llyc a p a b le o f p r o d u c in g g a s . In o t h e rw o r d s , iff u rt h e rw o r ko n t h e w e ll 10 i s r equ i r ed bef or e t he w el l w i l l be ca pab l e o fpr oduc i ng gas , t hen ev en pay i ng
s hut

- i n r oya l t i esw i l l notpr eve ntt he t er m i nat i on oft he l ea se . The t e rm

“ c a p a b le o fp r o d u c t io n ” h a s b e e n h e ld t o m e a n c a p a b leo fp r o d u c in g g a s in p a y i n g q u a n ti ti e s w h e re th e l e a s e d o e sn o t d e fi n e th e te rm . 11 The F ebr uary 1 , 2 0 02, l ea se , asam end ed, ati ss ue i n t hi s ca seha d a pr i m ar y t er m t hat expi r ed on A ugu st 1, 20 03 , butt he l ease coul d be conti nued in f orce f or up t o ni ne t y co ns ec uti ve da ys w i t ho ut ac t ua l prod uc t i o n if ope r at i onsw er e b ei ng c o n d u c te d o n t he l and ori ft he w el l w asca pab l e o f 12th e o p e rati o n s w e re p ros e c u ted i n g o o d fai th a n d w i th d u e d i l i g e n c e an d w i th

n o c e s s a ti o n o f m o re th a n s i x tyc o n s e c u ti v e d a y s ); but see Ri dge O i l Co. , I nc. , 148 S. W . 3d at158- 160 ( di sc us si ng c as esco ns t r ui ng s i m i l arl ea sepr ovi si ons a n d d e te rm i n i n g w h a t s o rt o f o p e ra ti o n s w i l l s e rv e to k e e p th e l e a s e i n fo rc e ). 8 p r o d u c in g a n d w a s s h u tin f o rn o m o r e t h a n n in e t y d a y s . T h e w e ll w a s s h u tin
on A ugu st 5, 20 03 , and shut

- i n r oyal t i es w er e t ender ed t o A ppel l ees i n O ct ober 2 0 0 3 . A p p e l l a n ts c o n ten d tha t th e F e b rua ry 1 , 2 0 0 2 , l e a se req u i red ca p a b i l i ty
o fp r o d u c t io n b u tn o tin p a y in g q u a n t it ie s , t h a t “ c a p a b le o f p r o d u c t io n ” in t h is
case m eans t hat“gas w i l l f l ow w hen [ t he w el l ’ s] sw i t ch i s t ur ned on , ” and t hat t he r ec or d c onc l us i vel y e st abl i sh est ha t th e w el l w asca pab l e o fpr oduc t i on
w h e n th e s h u t-i n ro y a l ti e s w e re p a i d . A tt r ia l, A p p e lle e s e lic it e d t e s t im o n yf r o m s e v e r a l s o u r c e s t h a ta g a s w e ll i n th e B a rn e tt S h a l e w i l l n o t p ro d u c e w i th o u t a fra c tu re s ti m u l a ti o n (“f ra c ” ), a di f f er e n t p r o c e d u r e t h a n a c i d p e r f o r a t i o n , a n d t h a t t h e we l l a t i s s u e had not been “f r aced” by t he end of t he pr i m ar y t er m . Th e j ur y coul d have deter m i ned th a t A p p e l l a n ts d i d n o t su c c e ss fu l l yrefu te th i s a l le g a ti o n o f sc i e n ti fi c fac t. A ppel l ant s el i ci t ed som e f avor abl e t est i m ony fr om San f or d D vor i n, w ho w as an
o ffi c e r an d p ri n c i p a l o f A F E d u ri n g th e rel e v a n t t i m e p e ri o d , i s s ti l l affi l i a ted w i th A FE, a n d r e t a i n e d a n i n t e r e s t i n t h e we l l a t t h e t i me o f t r i a l . Dv o r i n t est i f i ed th a t th e o n l yw a yto g e t a k n o w n q u a n ti tyo f g a s fro m th e w e l l w a s to p e rfo rm
a fra c tu re s ti m u l a ti o n o f th e s h a l e ; h e m a d e a s i m i l a r s ta te m e n t i n a le tte r,S eeR a ilr o a d C o m m is s io n o f T e x a s , O il a n d G a s D iv is io n , G lo s s a r yo fO il 13 and G a s Ter m s, ht t p: // w w w . r r c. st at e. t x. us/di vi si ons/ og/ gl ossary. ht m l ( l ast vi si t ed M ar . 5, 20 08 ) ( def i ni ng “M cF” as “ [ o] ne t hou sand cubi c f eetofnat ur al g a s m e a s u re d a t s ta n d a rd p re s s u re a n d te m p e ra tu re c o n d i ti o n s ” ). 9 a d m it t e d in t o e v i d e n c e , t h a tw a s w r it t e n a f t e rt h e w e ll h a d h a d a n a c id
s t im u la t io n p e r f o r m e d o n it . H e f u rt h e rt e s t if ie d t h a tw it h re s p e c tt o t h is w e ll, he w oul d have had t o hi r e a servi ce com pany, f r ac t he w el l , and do m echani cal
w or k on i t t o get t he w el l t o pr odu ce, al l of w hi ch had t o be don e aft erO ct ober 2 0 0 3 . A ppe l l ee s’ exp ert , N i ck St ei ns ber ger , t es t i f i ed t hat i n A ugus t 200 3, t he
w el l w as aci d per f or at ed and sw ab t est ed and w oul d not f l ow on i t s ow n af t er t hatan d t hatt he w el l w as at t hat poi nt i nca pab l e o fpr oduc i ng. Al t hough he di d t estif y t hatt he oper at orr eportshow ed t hatsom e gas f l ow ed i n A ugu st 200 3, i n t he con t ext of hi s t es t i m ony, i t i s cl ea r t hat hi s t es t i m ony w ast hathe b e lie v e d t h a tt h e g a s w a s C O 2 , n o t n a t u r a l g a s . E v e n w it h o u tc o n s id e r in g h is t es t i m ony as t o t he con t ent of t he gas f r om t he w el l , he r ei t er at est hr ougho ut h i s te s ti m o n yh i s b e l i e f th a t th e w e l l c o u l d n o t p ro d u c e w i th o u t b e i n g “ fra c e d .” H e s t at ed t hatal l Bar nettShal e w e l l s ar e f r ac t ur e s t i m ul at ed. Al t hough A ppe l l ant s’ br i efs t at est hatSt ei ns ber gert es t i f i ed t hata f r ac t ur e s t i m ul at i on
w a s o n l yre q u i re d fo r opti m al pr oduc t i on, i n f ac tSt ei ns ber gert es t i f i ed t hatt he
w e l l w a s n o t c a p a b l e o f p ro d u c i n g a s i n g l e M c F o f g a s w i th o u t a fra c tu re 13S ee Tur ner v. K TRK

Televi si on, I nc. , 38 S. W . 3d 103, 120 ( Te x. 2000 ) 14 (re v i e w i n g c o u rt m u s t d e fe r to th e c re d i b i l i ty d e te rm i n a ti o n s o f th e tri e r o f fa c t); A l l state Tex. Ll

oyds v. Mas on , 1 2 3 S .W .3 d 6 9 0 , 7 0 3 ( T e x . A p p .— F o rtW o rt h 200 3, no pet . ) ( “W i t h com pet i ng con t ent i ons su pport ed by exp ert w i t nes se s on b o th s i d e s , th e b u rd e n fe l l o n th e j u ryto d e te rm i n e w h i c h c o n te n ti o n w a s m o re c re d i b l e .” ). 10 s t im u la t io n . H e t e s t if ie d t h a t p r io r t o t h e N o v e m b e r 2 0 , 2 0 0 4 , f r a c jo b , t h e w e ll
w a s n o t ca p a b l e o f pro d u c i n g , th a t t h e w e ll s ti l l co u l d n o t pro d u c e a m o n th aft er t hat f r ac , and on A ugus t 5 and i n l at e Oct obe ran d Novem ber2003 , t he
w e l l c o u l d n o t b e tu rn e d o n a n d b e g i n to fl o w . F u rt h e r , in a le t t e rf r o m J u n e 2 0 0 4 , C a r lo s S a n d o v a l, p r e s id e n to fE x p lo O i l , st at ed t hatt he gaspur cha seco nt r ac ton t he w el l r equ i r ed gass am pl esan d vol um e t es t s f r om t he w el l an d t hat“ obvi ous l y”t he pur cha se rco ul d ha ve
n e it h e r u n t il t h e w e ll w a s “ f r a c e d .” T h e ju r o r s m a yh a v e re a s o n a b lyt a k e n t h is
s e n t e n c e t o m e a n t h a t , in S a n d o v a l’s o p in io n a t le a s t , t h e w e ll w a s n o tc a p a b le ofpr oduc i ng a s l at e a s June2004 be ca us e t he w el l ha d notbe en “f r ac ed”an d th e w e l l th e re fo re w a sn o t c a p a b l e o f p ro d u c i n g w h e n s h u t-i n ro y a l ti e s w e re t end er ed. Furt her , t he j ur y coul d have det er m i ned t hat t he t est i m ony an d evi dence pr oduc ed by Ap p e l l a n ts w a s notasr el i abl e a s t hatf r om A ppe l l ee s, ori n a ny
e v e n t w a s n o t an y m o re d e fi n i ti v e . R a n d yM o sley , A p p e l l a n ts’ ex p e rt , 14 t es t i f i ed t hatt her e w asno m et er i ng dev i ce on t he w el l w hen i tw ass huti n a ndS ee Tur ner, 3 8 S .W .3 d a t 1 2 0 ; A l l state Tex. Ll

oyds , 12 3 S . W . 3d at 15 703. 11 t h a tt h e e s t im a t e s h e g a v e a tt r ia l a s t o t h e p r o d u c t io n c a p a b ilit yo ft h e w e ll
w er e not based on any m easur em ent of gas pr odu ced at t he t i m e t he w el l w as
s hu ti n. He f urt he r t e s t i f i e d t ha t w he n he vi s i t e d t he w e l l s i t e i n Augu s t2006 , aft era f r ac j o b ha d be en com pl et ed, heha d no i nf or m at i on t o i den t i f y t he
c o m p o n e n ts o f th e g a s th e w e l l p ro d u c e d o n th a t d a te . A s f ort he r el i abi l i t y of M os l ey’ s t es t i m ony, St ei ns ber ger t es t i f i ed t hathe ha d c om pl et ed “p r oba bl y a bouta t hous and w el l s i n t he l as tt en yea r s”i n t he B a r n e t t S h a l e . M o sley , o n the o th e r ha n d , tes ti fi e d h e h a d ex p e ri e n c e w i th
com pl et i ng and over seei ng onl y one gas w el l i n t he B ar net tSh al e. A nd on t hat
w el l , hedi d notde si gn t he f r ac j ob, and eve n t hat w el l w asf r ac t ur e s t i m ul at ed. St ei ns ber gert es t i f i ed t hathe ha s aut hor ed num er ouspa per s abo utt he
com pl et i on t echno l ogy i n t he Barnett S hal e, i n hi s bel i efm or e t han any one el se on t he t opi c, som e of w hi ch w er e f ort he Jour nal of Petroleum Technol

ogy , an aut hor i t at i ve j our nal i n t he f i el d. M os l ey, on t he ot herha nd, t es t i f i ed t hathe hasnotw r i t t en a n y a rti c l eson t he Bar nettShal e. The j ur y c oul d ha ve d e term i n e d tha t S tei n sb e rge r’ s e x p e rt i se m a d e h i s te sti m o n ym o re c red i b l e w i th
r espectt o gas w el l s i n t he B ar net tSh al e. 1512

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o p i n i o n o f his tes ti m o n y . T h e co u rt s u s tai n e d o bj e c ti o n s m u l ti p l e ti m e s to S te i n s b e rg e r’ste s t i m o n y a s b e i n g n o n re s p o n s i v e a n d i n s tru c te d h i m to “ [b ]e
r e s p o n s iv e t o t h e q u e s t io n ,” b u td u r in g M o s le y ’s t e s t im o n y , t h e c o u rtn o to n ly sust ai ned seve ra l obj ect i ons t o M osl ey’ s nonr esponsi veness butadm oni shed M o sleyh i m se l f: TH E C O U R T: A nd I ’ m goi ng t o i nst r uctyou, M r . M osl ey, t o answ er t he que st i on t hatyou ’ r e a sk ed. [M O S L E Y ]: A l l ri g h t. T H E C O U R T : If y o u ’re n o t c a p a b l e o f d o i n g th a t, i n th e fu tu re I’ m goi ng t o r ec es s t he t r i al unt i l t he m or ni ng. D o you unde r st and m y i ns t r uct i on? [ M O SLEY] : Yes, s i r , I do. TH E C O U R T: Th en st op gi vi ng no nr esponsi ve answ er s. [M O S L E Y ]: A l l ri g h t. TH E CO U RT: St op s pea ki ng ov e rt he i nt er r oga t or , an d s t op d i rec ti n g the i n terrog a to r w h e re to sta rth i s q u e sti o n at. O nl y t w o que st i onsl at er , A ppe l l ee s’ co uns el onc e a gai n obj ec t ed t o t he
nonr es pons i ven es s ofM os l ey’ s ans w er , atw hi ch poi ntt he cou rtex cus ed t he j ury so t hati tcoul d i nvi t e A ppel l ant s’ counsel to “ v is i tw i t h” hi s w i t ness, p re s u m a b l yto i n s tru c t h i m to b e re s p o n s i v e to A p p e l l e e s ’ q u e s ti o n s . T h e c o u rt
a l so ad m o n i sh e d M o sleyi n fr o n t of th e j u ry fo r m a k i n g an ex tr a n e o u s c o m m e n t,Gar za v. A lvi

ar, 3 9 5 S .W .2 d 8 2 1 , 8 2 3 (T e x . 1 9 6 5 ). 16 Ma r. O ver

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p . v. E llis , 9 7 1 S .W .2 d 4 0 2 , 4 0 6 -0 7 (T e x .), c ert. 17 denied, 5 2 5 U .S . 1 0 1 7 (1 9 9 8 ). 13 t el l i ng M os l ey, “ [ T] hat ’ s notca l l ed f or . ” The j ur y c oul d ha ve det er m i ned f r om M o s l e y ’sd e m e a n o r th a t h i s te s ti m o n yw a s n o t a s c re d i b l ea s S te i n s b e rg e r’s t es t i m ony and t hatA ppe l l ant s’ ev i den ceove r al l w as notascr edi bl e a s t hatof A ppel l ees. C onsi der i ng evi dence f avor abl e t o t he f i ndi ng i fa r easonabl e f act - f i nder
c o u ld a n d d is r e g a r d in g e v id e n c e c o n t r a r y t o t h e f in d in g u n le s s a re a s o n a b le f ac t - f i nde rco ul d not, w e h ol d t hatt he evi den ceatt r i al w asatl ea sts om e
e v id e n c e t h a tt h e w e ll w a s n o tc a p a b le o fp r o d u c in g a t t h e t im e t h a tt h e w e ll
w a s s h u tin a n d s h u t -in r o y a lt ie s w e r e p a id . T h e e v id e n c e w a s t h e r e f o r e le g a lly suf f i ci entt o suppo rtt he j ur y’ s f i ndi ng. W e over r ul e A ppel l ant s’ f i r sti ssue. In A p p e lla n t s ’ s e c o n d is s u e , t h e ya r g u e t h a tt h e e v id e n c e is f a c t u a lly i n s u f f i c i e n tt o s u p p o rtt h e ju r y ’s v e r d ic t . A n a s s e rt io n t h a tt h e e v id e n c e is f act ua ll y in suf f i ci entt o suppo rta f actf i ndi ng m eans t hatt he evi dence suppo rt i ng t he f i ndi ng i s s o w e a k o r th e evi dence t o t he contr ar y i s so
ove r w hel m i ng t hatt he ans w ers houl d bes etas i de and a new t r i al or der ed. 16 W e a r e re q u ir e d t o c o n s id e ra ll o ft h e e v id e n c e in t h e c a s e in m a k in g t h is det er m i nat i on, notj us tt he evi den cet hats upport s t he f i ndi ng. 1714

A p p e ll a n t s d i d p r e s e n tt e s t im o n yc o n t r a r yt o t h e ju r y ’s v e r d ic t . D v o r in t e s t if i e d t h a tt h e r e w a s a q u a n t it yo fg a s in t h e w e ll in A u g u s t2 0 0 3 , t h a tit
w a s n o tt r u e t h a tt h e w e ll n e v e rp r o d u c e d , a n d t h a th eb e lie v e d t h a tt h e yc o u ld pr od uc e t hew e l l . M os l e y t e s t i f i e d t ha t he ha d de t e r m i ne d t ha to n Augu s t6, 20 03 , t he w el l w as capabl e ofpr odu ci ng and w as capabl e off l o w i ng gas
w i t houtad di t i ona l eq ui pm entorr epairs . He es t i m at ed t hatt he r at e o f pr oduc t i on w oul d be abo ut40 M cF a d ay. He f urt hert es t i f i ed t hatal t hough he di d n o t v i s i t t he w el l i n August2003 , t o s om e e xt entoneca n de t er m i ne t he phys i ca l co ndi t i on of t he w el l att hatt i m e b as ed on r ec or ds f r om t hatt i m e o f t he pr es su r e i n t he w el l . M os l ey al so t es t i f i ed t hatt he ac i d pe r f or at i on do ne on t he w el l w ass uf f i ci entpr es su r e t o br ea k t he f or m at i on a nd t hat i n hi s opi ni on, i ft he w e l l h a d bee n t ur ned on i n O ct obe r2003 , i tw oul d f l ow , an d t he pr odu c t i on w oul d be nat ur al gas, oratl easta com pon entofi tw oul d be. St ei ns ber gert es t i f i ed t hati fhe h a d g o ne t o t he w el l i n August2003 an d open ed t he val ve, g a s w oul d have f l ow ed and t hati n O ct oberorN ovem ber 200 3, t he w el l f l ow ed i nt er m i t t ent l y. Al t hough he t es t i f i ed t hat , i n hi s opi ni on,
a n yg a s w a s lik e lyC O 2 , t h e ju d g e in s t r u c t e d t h e ju r yt h a tt h e r e w a s n o a n a ly s is i n th e re c o rd o f w h e th e r th e g a s i n th e w e l l w a s C O 2 o r n a tu ra l g a s . Fi na l l y, a l t ho ug h t hew e l l o pe r a t or ’ s d a i l y op e r a t i on s r e po rt f or Augu s t3, 20 03 , r eport ed “no gas or ver y l i t t l e, ” t he r eport f r om A ugu st 5, 20 03 , st at ed15

th a t th e w e l l w a s fl o w i n g a n d th a t th e re w a s “ 2 4 0 l b s c a s i n g p re s s u re ” b e fo re t he w e l l wa s s h u t i n . T h e o p e r a t i o n s r e p o rt l i s t e d 3 3 0 p o u n d s o fca si ng pr essur e on A ugu st6, 20 03 , and 7 50 poun ds ofcasi ng p ressur e on O ct ober 27, 2003 . D es pi t e t he con f l i ct i ng t es t i m ony, as di sc us se d abo ve, t he j ur y’ s f i ndi ng i s nots o w ea k o rt he evi den ce t o t he con t r ary so ove r w hel m i ng t hatt he f i ndi ng
s h o u ld b e s e ta s id e . A s d is c u s s e d a b o v e , t h e ju r yc o u ld h a v e re a s o n a b ly det er m i ned t hatA ppel l ant s’ evi dence w a s notas cr edi bl e as A ppel l ees’
e v i d e n c e . W e th u s h o l d th a t th e e v i d e n c e w a s fa c tu a l l y s u fficie n t to s u p p o rt t he j ur y’ s f i ndi ng. W e over r ul e A ppel l ant s’ second i ssue. C ON C L U S I ON H a v i n g o v e rru l e d b o t h o f A p p e l l a n ts ’ i s s u e s , w e a ffir m th e tri a l c o u rt’s j u d g m e n t.

L E E AN N D AUP HI NOT J U S T I C E
PA N EL B: LI V I N G STO N , D A U PH I N O T, an d W A LKER, JJ. DEL I VERE D: M a r c h 6, 2008