## In the Court of Appeals Second Appellate District of Texas

at Fort Worth

___________________________ No. 02

- 20

- 00054

- CV

___________________________

On Appeal from the 67th District Court Tarrant County, Texas Tri al Court No. 067

- 286059

- 16

Before Birdwell, Wallach, and Walker, JJ. Memor andum Opinion by Justice Walker 

### T OTAL 

### E NERGIES 

### E&P USA, I NC



### . , Appellant

V



### . D ALLAS 

### /F ORT 

### W ORTH 

### I NTERNATIONAL 

### A IRPO RT 

### B OARD 

### , C ITY OF 

### D A LLAS 

### , AND 

### C ITY OF 

### F ORT 

### W ORTH 

### , Appellees2 MEMORANDUM OPINION
While th is case involv es a complicated factual and procedural history, the question before us is a simple one : C an the contractua l o bligation here to drill

“ fourtee n new wells ” be satisfied by drilling vertical as op posed to horizontal wells?
Because w e hold that it can under the contract ’s plain la nguage , we reverse the trial

court ’ s judgment and render the judgme nt that the tri a l co urt should have rendered

. I. BACKGROUND In 2006, a ppellee Dallas/Fort Worth International Airport Board , appellee City of Dallas, appellee City of Fort Worth ( collectively, DFW) , and C hesapeake
Ex ploration, L.L.C. entered into an o il and gas lease under which Chesapeake was granted the exclusive right to explore, drill, and produce oil and gas on DFW ’ s land

. 1
The lease contained a section entitled “ Co ntinuo us Developm e nt ” ( section 10) t hat
addressed reason able development and retained acreage , allowing C hesap eake to, at
the end of the lease te rm, retain acreage around each producing we ll and release the

rema inder or r etai n all lease d acreage by continuously developing t he leasehold

. The lease dictated different sized retained acreage based on whether the drilled well was vertical or horizontal. A horizontal well wa s defined as a well “ that meets the
definition of a ‘ hori zontal drainhole well ’ under State wide Rule 86 of the Railroad
Commission of Texas. ” A vertical well was sim ply d efined as “ a well that is not a

1 Chesapeak e was severed from this appeal after entering bankruptcy and being ordered by the bankr uptcy co urt to voluntarily dis mis s its appeal.3

ho riz ontal well. ” Paragraph 10(b) of section 10 requ i red Ches apeake to maintain “ a minimum of five (5) rigs ” on the leas ehold to continue the lease beyond the primary

term.
Years later , DFW, Chesapeake, and appellant TotalEnergies E&P USA, Inc

. ( Total) 2 ratif

ied a lease amendment that alter ed paragraph 10(b ) to allow Total and Chesapeake to mai ntain the lease provided they drilled “ fourteen new wells ” o ver a

two

- year period (the d rilling commitment)

. The other paragraphs of section 10 , inclu di ng the differentiation between horizontal and verti cal wells , were not amended.
The original lease remained in full force and effect e x c ep t to the extent that the
amendment was contrary to an original lease te rm
. In 201 5 , after a “ drama tic drop in gas prices , ” Chesapeake an d Total set out to determine whether vertical or horizontal wells would be economically feasible to fu lf ill
the drilling c ommitment in paragraph 10(b)

. Ches ape ake determined that neither
ho rizon tal nor vertical wells would be profit a ble

. In other words, “ a reasonable and prudent operator would not have drilled a well on the airport within current pricing ”
at the time. Total re ached a similar conclusion that t here was “ no economic justificati o n ” to dri ll any wells

. But because verti cal wells would lose less money than
horizontal ones , Ches apeake informed DFW that it would drill vertical wells to fulfill

2 Total was a 19.33 % working

- interest assignee of Ch es apea ke ’ s interest in the lease.4

the drilling commitment , even though ve rtical well s ha d never before been drilled on the leasehold

. DFW filed suit seeking, amo ng other things, a declaration that the drilling
commitment requ ired horizontal wells

. A ft er a ll claims, except the declaratory

judgm ent action, w ere settled by the partie s , DFW and Tot al filed cros s

- motio ns for
traditi onal summary judgme nt
. DFW asserted th at it was entitled to judgment as a
matter of law on its claim because the lease either require d horizontal wells or could

not have be en s atis fied by vertical wells; Total argued that the drilling commitment
could have be en satisfied by vertical wells as a matter of law

. The trial court granted
DFW ’ s summary

- judgment motion , denied Total ’ s cross

- motion , and declar ed that the drilling commit ment “ require [ d] the drilling of hori zontal wells ” and “ [could not]
be satis fied by the drilling of vertical wells. ” Total appeals.

II. PROPRIETY OF SUM MARY JUDGMENT
A. S TANDARD AND S COPE OF R EVI EW The standard of review for a traditional summary judgment is well established.
Se e Tex. R. Civ. P. 166a(c). We review the judgment de novo

. Cantey Hanger, LLP v. Byrd , 467 S.W.3d 477, 4 81 (Tex. 2015). We t ak e as true all evidence favorable t o the

no nmovant and ind ulg e all reason able inferences and re solv e any doubts in the

nonmovant ’ s favor

. Id. A traditional motion for summary judgment may be granted only when the m ovant establishes t hat there are no genu ine issues of material fact and
that it is e ntitled to judgment as a matte r of law. See Tex. R. Civ. P. 166a(c); Mann5

Frankfort Stein & Lipp Advisors, Inc. v. F ielding , 289 S.W.3d 844, 848 (Tex. 2009). A plaintiff moving for summary j udgment on its cause of action must conclusively prove
al l elemen t s as a matter of law. See Ho ly Cross Church of God in Christ v. Wolf , 44 S.W.3d 562, 566 (Tex. 2001 ). When both sides move for summary ju dgment and the tr ial

cou rt gran ts one motion but de nies the other, we ar e to review both si de s ’ summary

judg ment evi dence, determine all questions presente d, and render the judgment that
the trial court should have rendered. S. Crushed Concrete, LLC v. City of Hous ton , 398 S.W.3d 676, 678 (Tex. 2013); Hol y Cross , 44 S.W.3d at 5 66

. B
. C ONTRACT C ON STRUCTION
In c ons tr uin g a contract , including a n oil and gas lease , we examine the enti r e agreement in an effort to harmonize and give effect t o all provision s of the contract
so that none wi ll be meaningless. Se e Tittizer v. Union G a s C or p. , 171 S.W.3d 857, 860 (Tex. 2005); NP Anderson Cotton Exch., L.P. v. Potter , 230 S.W.3d 457, 463 (Tex. App.

— F ort Worth 2007, no pet.). O ur primary objective is to “ ascertain and give effect to the partie s ’ intent ” as expres se d in the contract

. URI, Inc. v. Kleberg C ounty , 543 S.W.3 d 755, 76 3 (Tex. 2018). B ecause we “ presume parties intend what the words of the contract say , ” we look to “ [ o ] bjective ma nifest ations of intent, ” and not

to what the parties l ater allege they “ i nte nded to say but did not. ” Id

. ; Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd ’ s L ondon , 327 S.W.3d 118, 12 6

– 2 7 (Tex. 2010); see

a lso First Bank v. Brumitt

, 519 S.W.3d 95, 11 0 (Tex. 2017) ( prohibiting reliance on

extr insic evide nce to make contract “ say what it una mbiguous ly does not say ” ). And6

we give unambiguous co ntrac t language i t s “ pla in, ordinary, and generally accepted meaning ” unless the agreement directs otherwise. URI , 543 S.W.3d at 764 ; see also Endeavor Energy Res., L.P. v. Energen Res . Corp. , 615 S.W.3d 144, 148 (Tex. 2020) ( “ T he
most im portant consideration in interpreting a l ease is the a greement ’ s plain, grammatical language. ” )

. Here, neither side argues that the term “ wells ” contained in
the lease is ambiguous, and we agree that i t is not. Beca use the lease is not ambiguous on this point , neither the tr ial court no r th is c ourt can cons ider the parties ’ interpretation or extraneo us eviden ce to determine the m eaning of the term in
section 10

. See URI

, 543 S.W.3d at 764

– 65.

C. A P PLICATION Total argues th at the lease ’ s language neither restricts nor exclude s any direction, type, or cha racteristic of the r equired wells in the dri lling commitment and points to the lease provisions in section 10 applica ble to hori zo n tal and vertical wells to argue that bot h were inclu ded in the term “ wells

. ” DFW counters that because t he
leas e hold is located in the Barnett Shale , efficient p roduction is acco mplished only through horizontal wells , which would have been the parties ’ understanding when executing the lease a nd its amendment

. Although the lease does no t define “w ell, ” its commonl y accepted meani ng is
“a shaft or hole bored o r sunk in the earth through which the presence of minerals may be dete cted and their production obtained. ” K othman n v. Boley , 308 S.W.2d 1, 3 (Tex. 1957); accord Well

, Black ’s Law D ictionary (1 1 th ed. 201 9 ) (d efining well as “ [a]7

hol e or shaft sunk into the earth to obtain a fluid, such as water, oil, or natural gas ”).
The l ease does, however, def ine horizontal well and vertical well. Further, an
examination of the lease r eveals that “well, ” when it appears in the l ease as a noun, is
used in thr ee general ways : (1) as modified by the word “ horizontal , ” as in “ h or i zontal
wells ” ; (2 ) as modified by the word “ vertical, ” as in “ vertical wells ” ; and (3 ) standing alone, as in “ th e wells. ” For e xample, in a p ortion of sect ion 10 , i .e., paragraph 10(f) , all three uses o f t h e n o u n “ w e l l ” 3 appear : (f) As used in the L ease the term “ horizontal well ” means on e that meets the def inition of a “ horizontal drainh ole we ll ” under Statewide R

ule 86 of the Railroad Commission of Te xas, and a “ vertical well ” is a wel l that is not
a horizontal well

. Th e land assig

ned to a well fo r the purposes of this section is referr ed to as a “ Retained Tract. ” A Retained T ract for a well may not exceed t he m inimum size required to obtain a dril li ng pe rmit under the well density ru les adopte d by the Railroad Commi s si on of Texas under the field rules for the field in which the well is completed , or if th ere are no field rules which apply to the well , then the R etained Tract sh all be limited to the s malle st size required to obtain a d rilling permit under the state wid e w ell density rules of the Rai lroad Commission of Texas. A Retained T ract for a vertical well producing from the Barnett Shale formation may not ex ceed forty (40) acres. If field rule s are e stablished later with well den sity provisions permitting a lesser number of ac res for obtainin g a drilling permit, a Retained Tract fo r a vertical well
ma y not excee d the minimum si z e p ermitt ed under such revised or amended field rules. A Retained Tr act f or a horizontal well may inclu de the minimum acreage specifie d for a vertical well plus the ad ditional acreage listed in the tables in R u le 86 and must co mply with the requirements of R ule 86 for minimum permitte d well density, and if the well is pr od ucing from the Barnett Shale format ion, the acreage assigned shall be b ased upon we ll density for v ertical wells being forty (40) acres or

3 “ We ll ” is a lso used several times in this pa ssage to refer to “ well density rules ” and “ well density p rovisions. ” In this parag raph, w ell

- de nsity r ules and provisions app ly to both horizontal wells and vertica l wells.8

less. The designati on of a Retained Tract shall n ot resu lt in the Land
co m pri sing less than eighty percent (80%) o f the n et mineral acres in the Retain ed Tract fo r the well to which the L and has been assigned. [E mph as e s added .]
In th is one paragraph, t he lease employ s the term “ well ” standing alone seven times,
th e ter m s “ horizontal well ” and “ horizontal drainhole well ” four times , and th e term

“ ver tical well ” five times , t hus demonstrati ng that when it stand s alone , “ well ” is a
gener ic, nonspecific ter m that can be modified by either “ horizontal ” or “ ver tical ” when necessary to d istingu ish between the two. The plain language of the lease,
there fore , show s that “well ” is a g eneric, nonspecific term that can be modified by the

terms “horizontal ” or “vert ical ” when necessary to speci fy one , as o pposed to th e other.
But in the language of the drilling co mm itment , only “ well ” is used. At no point d oes the paragraph indicate th at only horizontal wells could satisfy the
commitment or that vertical wells were excluded from the wells referred to

. And the
remain der of t he lease shows that the parties li mited the type of well when necessary. While we reco gniz e t hat vertical we lls had never been d rill ed on the leas ehold before and that the parties likely contemp lated horizontal wells, we cannot go beyond t he plain l anguage of the lease to construe it in line with DFW ’ s desired interpretatio n. See Brumitt

, 519 S.W.3d at 110

. Thus, the parties ’ intent as manifested by the plain language of the lease di d not limit the drilling commitment to horizontal wells. See , e.g . , XOG O perating, LLC v. Chesapeake Expl. Ltd. P ’ ship , 554 S.W.3d 607, 6 12

– 13 (Tex.9

2018); Sa mson Expl., LLC v. Bord ages , No. 09

- 20

- 00174

- CV, 2022 WL 120004, at *5 (Tex. App.

— Beaumont Jan. 13, 2022, no pet. h.). And we disagree with DFW that the i mpl ied c ovenant to reasonably develop
the leasehold requ ired horizontal wells or excluded vertical we lls. The lease provided that its language would not “ negate the usual implied covenants imposed upon a
less ee. ” But t h e lease also contained a n express provision regardin g continuous
dev elopment in section 10, s pec i fically the dril ling commitme nt in paragrap h 10(b)

. T he implied coven ant to reasonab l y develop cannot supersede the express provisions
of the leas e governing development , which did not limit the drilli ng commit ment to
vertical or horizontal wells. See Yz aguirre v. KCS Res., Inc. , 53 S.W.3d 368, 3 73 (Tex. 2001); HECI Expl. Co. v. Neel , 982 S.W.2d 881, 889 (Tex. 1998 ). In s hort, “ an oil and gas leas e imposes [implied] duties on the lessee that extend be yond the terms of the
lease itself if the lease is sil ent on certain subjects

. ” Yz aguirre , 53 S. W.3d at 373 ( emph asis added ). The parties ’ lease was not silent regarding reasonable de velopment.
III. CONCLUSION The plain language of the lease did not l imit the drilling commitment to
horizontal wells. Although the parties may have meant to so limit the drilling

com mitment, that was not reflected in the plain language of the lease. Total

est ablished i ts right to judgment as a matter of law based on the p lain language of the
lease and to a declaration that the dr illing commi tment can be s atisfied by dri ll ing
vertical wells. B a sed on this conclusion, we need not address Total ’ s evidentiary10

arguments. We sustain Total ’ s first issue, reverse the trial c ourt ’ s s ummary judgme nt in fav or of DFW, and render summary judgment in fav or of Total with a declaration that the drilling commitment may be fulfilled by drilling vertical w ells

. See Tex. R. App . P. 43. 2(c). /s/ Brian Walker
Brian Walker Justic e Delivered: March 2 4, 2022