Alexander v. Holt

• Decision Date: 25 November 1959
• Docket Number: No. 9127,9127
• Citation: 116 So.2d 532
• Parties: Frank ALEXANDER, Plaintiff-Appellant, v. J. E. HOLT et al., Defendant-Appellee.
• Court: Court of Appeal of Louisiana — District of US

Page 532

116 So.2d 532

Frank ALEXANDER, Plaintiff-Appellant, v. J. E. HOLT et al., Defendant-Appellee.

No. 9127.

Court of Appeal of Louisiana, Second Circuit.

Nov. 25, 1959.

Rehearing Denied Dec. 22, 1959.

Ellis & Ellis, Rayville, for appellant.

Oliver & Fudickar, Monroe, Warren Hunt, Rayville, for appellee.

AYRES, Judge.

This is a contest for ownership of the minerals in the NE 1/4 of the NW 1/4 of Sec. 31, T. 17 N., R. 9 E., Richland Parish, Louisiana, less 4.44 acres in the NW Corner.

Defendants claim ownership by virtue of a deed, whereby defendant Holt sold to plaintiff Alexander the aforesaid tract of land, dated October 25, 1943, wherein Holt reserved unto himself, his heirs and assigns, the whole of the minerals underlying said land. In opposition to defendants' claim, plaintiff contends there has been no user of the aforesaid mineral servitude within a period of 10 years; there has been no drilling, exploration or development whatsoever upon said land for the recovery of oil, gas or other minerals for a period of time in excess of 10 years; and that, as a consequence, the mineral reservation made by Holt has expired and prescribed.

The defendants contend, however, that, by virtue of a unitization agreement voluntarily entered into by most, but not all, of the mineral holders in the Delhi Field, which has the approval of the Commissioner of Conservation, as evidenced by Order 96--G, they have been receiving royalties attributable to the minerals underlying the aforesaid property. To this, plaintiff counters with the assertion that the aforesaid arrangement was a voluntary conventional agreement among those who executed and signed the same--not binding on other parties--and that the order of the commissioner was one of a mere permissive approval insufficient to constitute an integration or forced pooling of the properties involved; that, accordingly, a mineral holder's voluntary act, in the absence of a user thereof by drilling, exploration, or production from said tract, was insufficient to either suspend or interrupt the running of prescription against the mineral servitude.

The Delhi Oil Field covers an area of approximately 12 1/2 miles in length by a maximum width of 2 1/2 miles. By virtue of the Commissioner's Order 96, 40-acre spacing or drilling units were established for the field. During development, production was had from the 40 acres lying north and adjacent to plaintiff's land. November 25, 1947, Order 96--A--16 was issued whereby 4.44 acres, triangular in shape, in the northwest corner of plaintiff's land was added to, or tacked onto and made a part of, the adjacent producing unit to the north. This acreage is not involved, as plaintiff concedes that since its inclusion in a producing unit prescription has not accrued. Childs v. Washington, 229 La. 869, 87 So.2d 111; Jumonville Pipe & Machinery Co., Inc., v. Federal Land Bank of New Orleans, 230 La. 41, 87 So.2d 721.

In the aforesaid cases, it was held that the tacking on, or inclusion, of acreage from one tract to an adjacent producing unit by an order of the Commissioner of Conservation had the effect of interrupting liberative prescription only as to the acreage included in such producing unit. It is therefore conceded that the inclusion of the 4.44 acres in the adjacent producing unit did not have the effect of interrupting or suspending the tolling of prescription as to the acreage outside the producing unit. Defendants, however, urge, as an exception to the otherwise applicable rule of liberative prescription, the provisions of the aforesaid Order 96--G of the Conservation Department which, it is contended, have the effect of interrupting the tolling of prescription as to the 35.56 acres located outside the drilling unit.

A drilling unit, as contemplated by the statute, Act 157 of 1940, LSA-R.S. 30:1 et seq., means the maximum area which may be efficiently and economically drained by one well, which shall be deemed to constitute a developed area as long as a well is located thereon which is capable of producing oil or gas in paying quantities. Such a unit, or units, shall be established for each pool (LSA-R.S. 30:8, subd. B). However, in the event two, or more, separately-owned tracts of land are included within a drilling unit, which has been established by the commissioner, the owners are authorized to enter into conventional agreements to pool their interests and to develop their lands as a single drilling unit. But, should such owners be unable to agree upon such pooling, the commissioner is empowered to force pool such tracts and to require their development as a unit. This is commonly referred to as 'integration' or 'forced pooling.' LSA-R.S. 30:9, subd. A, 24 Tulane Law Review, p. 158.

Where forced pooling is directed by an order of the commissioner, the owners of separate mineral tracts under an established drilling unit must pool their interests for the purposes of development, and a well drilled thereon is considered as having been drilled upon each of the separately-owned mineral tracts within the unit. The owners of such minerals share pro rata in production from the unit in the proportion that their mineral acreage bears to the total unit area. Furthermore, the drilling of the well within such drilling unit has the effect of interrupting the running, or tolling, of liberative prescription as to each individual tract of minerals located in the unit, becuase, in the interest of avoiding waste, each unit is ordinarily limited to one well for developmental purposes. This has been held a valid exercise of the State's police power through the aforesaid general conservation law, the provisions of which control in any contract affected thereby. Robinson v. Horton, 197 La. 919, 2 So.2d 647; Childs v. Washington, supra.

Therefore, if the effect of the Commissioner's Order 96--G was to integrate or force pool the entire area comprising the Delhi Oil Field, which was dated December 2, 1952, effective as of February 1, 1953, and as amended February 16, 1953, the tolling of the 10-year liberative prescription, as to the minerals under plaintiff's tract of 35.56 acres, would have been interrupted or suspended prior to the expiration of 10 years from the date of the reservation and creation of said mineral servitude which, otherwise, would have prescribed October 25, 1953.

As stated, plaintiff contends there was no forced pooling or integration intended or contemplated by the commissioner's order. For a determination of the question thus presented, reference should be made to the title and the appropriate provisions of Order 96--G. The title is an

'Order authorizing a program of pressure maintenance under certain unitization agreements, approving such agreements, and approving and authorizing the unitization provided therein, as to the parties thereto, all pertaining to a certain zone underlying the Delhi Field, Richland, Franklin, and Madison Parishes, Louisiana.'

The 'unit area' was defined as that area of the Delhi Field in the aforesaid parishes described as the 'unit area' in the unitization agreement, and as such area as may be enlarged or reduced in accordance with the provisions of the agreement.

In the unitization agreement, a detailed description of the property in the unit area was listed as comprising 238 tracts and as shown by a map, or plat, of the area and dimensions hereinabove set forth as for the Delhi Oil Field. The purpose of the agreement was to offset a decline in reservoir pressure and to institute a program of secondary recovery by means of a system of water injection into certain zones of production. The commissioner's order granted approval to the agreements for unitization of the area and for the unitization of all separate ownerships in the unitization zone underlying the unit area where the owners who have executed or ratified the agreements, or should thereafter execute or ratify the same, approved and authorized a program of pressure maintenance contemplated in the agreements and specifically provided, in the amendments thereto, that

'Nothing...