Opinion ID: 1224637
Heading Depth: 2
Heading Rank: 2

Heading: Well 42-7

Text: Paragraph three of the settlement agreement obligates MEI to pay to R & R ... $250,000 ... from gross revenues arising from geothermal energy sales specifically and exclusively derived from Well 42-7. It is undisputed that MEI is currently using Well 42-7 as an injection well, [9] and R & R asserts that MEI is obligated to compensate it for that use. The trial court disagreed and ruled that the settlement agreement did not obligate MEI to make royalty payments in connection with this use. The question is once again one of contract interpretation, which we review for correctness. Employing this standard, we find that the trial court's interpretation of the settlement agreement was correct. It is uncontested that there have been no geothermal energy sales ... derived from Well 42-7. The settlement agreement does not require MEI to pay for simply using Well 42-7; it requires only that MEI pay a percentage of any revenue derived from steam produced by the well itself. If the settlement agreement employed the word use or one similar thereto, R & R might have a legitimate claim. However, because the agreement entitles R & R to only a percentage of geothermal energy sales from Well 42-7 and Well 42-7 has never produced any geothermal energy, R & R is not entitled to compensation. Our interpretation is supported by the fact that R & R's rate of compensation, if it were entitled to any, would be based upon the amount of steam actually sold from the well. The settlement agreement provides that the amount paid shall be one and one-half percent (1.5%) of the difference between gross revenues to MEI from geothermal energy sales from Well 42-7 and federal royalty payments related to said well. MEI correctly argues that if we were to award compensation to R & R for the use of the well for reinjection purposes, we would have absolutely no basis for determining the amount MEI is required to pay. Thus we would be required to divine a formula on our own and would thereby add a term to the parties' agreement that they did not include themselves. We refuse to engage in such a practice. Therefore, we hold that according to the plain and clear language of the contract itself, MEI is not required to compensate R & R for using Well 42-7 for reinjection purposes. The trial court properly granted summary judgment on this issue as well.