Opinion ID: 525226
Heading Depth: 2
Heading Rank: 2

Heading: The Unitization Agreement

Text: 12 The Carrigans' predecessors in interest to the property ratified the Unitization Agreement in 1953, approximately nineteen years after the original leases were executed. The Agreement grants to the Unit Operator the exclusive right to explore for and produce oil, gas and other minerals on the lands which constitute the Unit as defined by the Agreement. Executors of the Agreement include the Unit Operator, the royalty owners and the working interest owners. Royalty owner is defined in Article I of the Agreement to include: any owner who, subject to a working interest owner's 10 right to search for and produce unitized substances, owns land, mineral rights, royalties, overriding royalties, payments out of production, reversionary interests, net profits interests or other similar rights in and to the unitized substances that may be produced and saved from the unit area.... 13 By construing the unambiguous terms of this definition, we can address the threshold argument propounded by the Carrigans. That argument asserts that the Carrigans' predecessors in interest signed the Unitization Agreement in their capacities as owners of royalty interests in the property, rather than as surface owners and that those predecessors therefore did not abrogate any surface rights they may have had under the original leases. The Carrigans' assertion that their predecessors in interest signed the instrument as royalty owners is correct; however, royalty owner, is, as quoted supra, defined in the Agreement to include an owner of land. The Texas courts have broadly construed the word land when it is used in a deed. It is defined to include the surface of the earth and everything over and under it. Averyt v. Grande, Inc., 717 S.W.2d 891, 894 (Tex.1986); see also Sharp v. Fowler, 151 Tex. 490, 252 S.W.2d 153, 154 (1952); Holloway's Unknown Heirs v. Whatley, 133 Tex. 608, 131 S.W.2d 89 (1939). Thus, when the drafters of the Unitization Agreement chose to include land among those interests a royalty owner might possess, they included the ownership of a surface estate as a possible interest. Therefore, they defined royalty owner in a way that included the Carrigans' predecessors in title to the full extent of their interests in the property. That is, because all of the potential interests listed are expressly defined as subject to a working interest owner's right to search for and produce unitized substances, the inclusion of land ownership in the list clearly contemplates the combination of interests the Carrigans' predecessors owned--i.e., the surface estate, a royalty interest, and a reversionary interest in the mineral estate of the property--which amounts to every interest in the property except for that held by the working interest owner. Therefore, while the Carrigans' predecessors may have signed the Agreement as royalty owners, that term is explicitly defined by the Agreement to be inclusive of all of the interests they owned at the time. The Carrigans' argument to the contrary then fails by the terms of the Agreement. 11 14 Because the Carrigans' predecessors in interest signed the Unitization Agreement in their capacities as owners of land, they may have, by signing that agreement, abrogated some of the rights in the surface they had held under the earlier leases. The Agreement contains a provision that [it] shall amend and modify all existing leases ... to the extent that the provisions of such existing leases ... are in conflict with the provisions of this agreement. The Agreement does not address the issue of the lessors' right to require the operator to bury its pipelines. 15 We have previously held that a clause in a mineral lease providing the lessor with the right to require the burial of pipelines to be in the nature of a limitation on the mineral owner's surface rights ... [which] would remain forever with the surface estate in the absence of certain circumstances, among which [are] express detachment or abrogation.... Manges v. Gulf Oil Corp., 394 F.2d 487, 488 (5th Cir.1968) (applying Texas law and relying on Mobil Oil Corp. v. Brennan, 385 F.2d 951 (5th Cir.1967)). Therefore, the issue presented is whether the terms of the Unitization Agreement conflict with the original leases so as to abrogate the lessors' right to require pipeline burial even in the absence of an explicit clause abrogating that right. As we discuss below, we conclude that the broad grant of right of way over the property to the Unit Operator in the Agreement conflicts with the pipeline burial clause in the original leases, and that clause therefore does not survive the execution of the Unitization Agreement. 16 A description of the surface use contemplated by the Agreement is found in Article IX, paragraph 20: