Opinion ID: 151845
Heading Depth: 2
Heading Rank: 1

Heading: The Leases, Lessors, & Lessees

Text: In 1996, Moose Oil & Gas Company (Moose O&G) acquired oil, gas and mineral leases in Lavaca County, Texas. Moose O&G assigned some of its lease interests to a group of investors (the Moose Assignees), including appellant herein O. Lee Tawes, III (Tawes). Collectively, these lands will be referred to as the Baker Lease. Also in 1996, American Exploration Company acquired from Leon Barnes and Doris Barnes (appellee herein individually and as executrix of the estate of Leon Barnes, deceased) an oil, gas and mineral lease (the Barnes Lease). The Barnes Lease covered 345.5 acres of property adjacent to the Baker Lease. Ultimately, American Exploration Company's interest in this lease was passed to Louis Dreyfus Natural Gas Corporation, which interest in turn later passed to Dominion Oklahoma Texas Exploration and Production, Inc. (collectively Dominion). In July 1998, Moose O&G, the Moose Assignees, Dominion and Seisgen Exploration Inc. (Seisgen) pooled their interests in the oil, gas and mineral leases discussed above. [1] Of the 640 total acres in the pooled unit, the Barnes lease constituted 54% of the land. Each of these parties agreed to be bound by the terms of a Working Interest Unit Agreement (WIUA) and an attached Joint Operating Agreement (JOA). Dominion later acquired Seisgen's interest. The WIUA designated Dominion as the operator of any wells that would be drilled on the pooled unit. Dominion drilled and operated wells on the pooled unit. Moose O&G proposed to drill two additional wells that would have their surface location on the Baker Lease, but would directionally extend to bottom out under the Barnes Lease. The contracts allowed Dominion to not participate in the drilling of these wells if it chose to go non-consent. For a certain non-consent period under the contract, Dominion would not receive any revenues from production, nor would it incur liabilities in drilling and maintaining the wells. Dominion elected to go non-consent on the proposed wells. Moose O&G decided to and did drill and operate these two wells (designated Baker-Barnes Nos. 1 & 2) anyway. Moose O&G and the Moose Assignees, including Tawes, were Consenting Parties under the WIUA and JOA. At all herein relevant times, Moose O&G was the operator of the Baker-Barnes Nos. 1 & 2 wells.