Opinion ID: 2831391
Heading Depth: 2
Heading Rank: 2

Heading: Key’s Use of the Surface

Text: The owner of the dominant mineral estate in a tract has the right to go upon the surface of that land to produce and remove the minerals, and also the incidental rights necessary for that production and removal. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248-49 (Tex. 2013). The mineral lessee’s incidental rights include the right to use as much of the surface as is reasonably necessary to produce the minerals. Id. at 249. Key argues that because its production from a tract pooled with others is legally treated as production from each tract within the unit, it has the right to use the surface of any of the units’ pooled tracts in its production activities. We agree.
Mineral lessees of multiple tracts may pool some or all of the tracts by combining them into a single unit, provided pooling is authorized by the leases. Se. Pipe Line Co. v. Tichacek, 997 S.W.2d 166, 170 (Tex. 1999). The policy of Texas is to encourage the recovery of minerals, and the Legislature has made waste in the production of oil and gas unlawful. See R.R. Comm’n of Tex. v. 5 Manziel, 361 S.W.2d 560, 569-70 (Tex. 1962); see also TEX . NAT . RES. CODE § 85.045. Pooling is one method to prevent waste. See TEX . NAT . RES. CODE § 102.011 (providing that the Railroad Commission may establish a pooled unit in certain circumstances to prevent waste). Both the Curbo/Rosenbaum and Richardson leases permit pooling.2 The Curbo/Rosenbaum lease provides that Key has “the right and power to pool or combine the acreage covered by this lease. . . with any other land, lease, or leases in the immediate vicinity thereof.” The primary legal consequence of pooling is that “production and operations anywhere on the pooled unit are treated as if they have taken place on each tract within the unit.” Tichacek, 997 S.W.2d at 170 (citing Southland Royalty Co. v. Humble Oil & Ref. Co., 249 S.W.2d 914, 916 (Tex. 1952)).
The court of appeals first considered whether Key had the contractual right to use the road across the Hegars’ property by virtue of its lease and pooling agreement. 403 S.W.3d at 325. The court concluded that the Hegars were not bound by the lease or the pooling agreement because those documents were not executed at the time the mineral and surface estates were first severed and, therefore, they were not within the Hegars’ chain of title. Id. at 326. The court further considered Key’s implied surface rights and concluded that those rights did not allow Key to use the road across the Hegar tract. Id. at 333. As related to the title documents, Key argues that the law does not require recording a mineral lease in a surface purchaser’s chain of title. However, we need not decide whether the lease 2 The Richardson lease is not in the record, but the declaration of pooled unit states that both leases grant the right to pool. The Hegars do not argue that the Richardson lease does not grant the right to pool or that the pooling was in bad faith. 6 was required to be in the Hegars’ chain of title in order to bind them. As we explain below, Key’s owners, as the mineral owners, and Key, as the mineral lessee, have implied property rights to use the Hegars’ surface.
Applying the “primary legal consequence” of pooling to this case—that production anywhere on a pooled unit is treated as production on every tract in the unit—we conclude that once pooling occurred, the pooled parts of the Richardson and Hegar Tracts no longer maintained separate identities insofar as where production from the pooled interests was located. So the legal consequence of production from the pooled part of the Richardson Tract is that it is also production from the pooled part of the Hegar Tract, and the Hegars do not contend that Key did not have the right to use the road to produce minerals from their acreage. Because production from the pooled part of the Richardson Tract was legally also production from the pooled part of the Hegar tract, Key had the right to use the road to access the pooled part of the Richardson tract. See Prop. Owners of Leisure Land v. Woolf & Magee, Inc., 786 S.W.2d 757, 760 (Tex. App.—Tyler 1990, no writ) (holding that an implied surface easement of reasonable usage extended to the surface of tracts that had been pooled with a tract contained a producing well). The court of appeals recognized that a mineral lessee’s implied surface easement extends to the surface of the entire pooled area. 403 S.W.3d at 325. But the court concluded, and the Hegars argue, that Key did not have an implied right to use the Hegars’ surface to produce minerals only from another tract, which the evidence showed and the trial court found was the situation here. Id. at 331. The court of appeals concluded that Key’s surface easement was only implicated when Key 7 used the road to produce oil from beneath the Hegar Tract. Id. This conclusion conflicts with the legal consequence of pooling that production anywhere on the pooled unit and operations incidental to that production are regarded as taking place on each pooled tract.3 Tichacek, 997 S.W.2d at 170. The Hegars argue that their position is supported by Robinson v. Robbins Petroleum Corp., in which this Court held that a surface tract may not be used for production on adjacent tracts without the surface owner’s consent. 501 S.W.2d 865 (Tex. 1973). In Robinson, R.O. Robinson owned an eighty-acre surface estate subject to the Wagoner mineral lease. Id. at 866. The Wagoner lease included adjacent tracts that had been leased to Robbins Petroleum when the tracts were all owned by the same owners. Id. Sometime after Robinson purchased his surface estate, three waterflood units that did not include the Wagoner Lease were formed. Id. The well operator began using a former oil well on the Robinson Tract to produce salt water that it then used in the three waterflood units that were not part of the Wagoner Lease. Id. This Court held that “Robinson, as owner of the surface, is entitled to protection from uses thereof, without his consent, for the benefit of owners outside of and beyond premises and terms of the Wagoner lease.” Id. at 868. The Hegars assert that Robinson prohibits a mineral lessee from using one surface to aid operations on another tract. But Robinson is distinguishable from the situation here. The minerals under Robinson’s surface had not been, and could not be, pooled with tracts where the water was being used. Id. at 867 (“Robinson’s complaint is against the lower court holding that the operator has the right to take salt water . . . without his consent and without compensation for benefits flowing 3 The legal consequences of pooling may be challenged by means of a claim that the lessee pooled in bad faith. See, e.g., Tichacek, 997 S.W .2d at 168-69; see also Elliott v. Davis, 553 S.W .2d 223, 224 (Tex. Civ. App.— Amarillo 1977, writ ref’d n.r.e.). The Hegars have not asserted such a claim. 8 to premises not covered by or authorized to be pooled by the Wagoner lease.” (emphasis added)). And Robinson himself recognized that the lack of pooling was significant, arguing in the court of appeals that he had authority to control use of the water subject to a lessee’s water use to assist with production under his tract or “underlying tracts pooled therewith.” Robinson v. Robbins Petroleum Corp., 487 S.W.2d 794, 797 (Tex. App.—Tyler 1972), rev’d 501 S.W.2d 865 (Tex. 1973). Robinson does not control here. Based on a statement in Robinson, the Hegars also argue that because Key’s owners never owned a portion of the Hegars’ surface estate, their title to the minerals did not empower them to broaden the burdens on the Hegars’ surface to benefit adjacent tracts. The statement on which they rely is as follows: Robinson took his surface title subject to the Wagoner lease and the implied right of the mineral owner to make reasonable use of the surface to produce certain minerals from the land covered by the Wagoner lease. Nothing in the Wagoner lease or the reservation contained in Robinson’s deed authorized the mineral owner to increase the burden on the surface estate for the benefit of additional lands. Robinson, 501 S.W.2d at 867-68. But the Hegars took their surface title subject to the mineral lease assigned by Key’s owners to Key. See Day & Co. v. Texland Petroleum, Inc., 786 S.W.2d 667, 669 (Tex. 1990) (holding that the right to lease—the executive right—is a right of the mineral estate and is an interest in property, not a product of contract); 1 Ernest E. Smith & Jacqueline Lang Weaver, TEXAS LAW OF OIL AND GAS § 2.1[A][2] (“[T]he owner of a severed surface estate has no right to . . . participate in executing oil and gas leases.”). And unlike the lease in Robinson, the lease to Key authorized it to pool the acreage with other tracts, which it did and which provision gave rise to Key’s right to use the road. 9 Further, because they owned part of the minerals under the Hegar tract, Key’s owners had the right to use the surface of the tract to develop and remove minerals from it, including the right of ingress and egress to do so. See Lesley v. Veterans Land Bd., 352 S.W.3d 479, 481 n.1 (Tex. 2011). They also had the right to pool. Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419, 422-23 (Tex. 2008). Thus Key, through its mineral lease, also had the right of ingress and egress, Ball v. Dillard, 602 S.W.2d 521, 523 (Tex. 1980), and the right to pool. Tichacek, 997 S.W.2d at 170. The right of ingress and egress includes the right to ingress and egress over the surface of any pooled acreage for the purpose of producing minerals from any part of the pooled acreage. Accordingly, Key’s owners did not increase the burdens on the surface estate by leasing their mineral interest to Key, nor did Key increase the burdens by pooling the Richardson and Curbo/Rosenbaum tract minerals.