Amarex, Inc. v. Baker

• Decision Date: 21 December 1982
• Docket Number: No. 59262,59262
• Parties: AMAREX, INC., Petitioner, v. The Honorable Hamp BAKER, Norma Eagleton, and James B. Townsend, Corporation Commissioners of the State of Oklahoma, and The Oklahoma Corporation Commission, Respondents.
• Court: Oklahoma Supreme Court

Page 1040

655 P.2d 1040

1982 OK 155

AMAREX, INC., Petitioner, v. The Honorable Hamp BAKER, Norma Eagleton, and James B Townsend, Corporation Commissioners of the State of Oklahoma, and The Oklahoma Corporation Commission, Respondents.

No. 59262.

Supreme Court of Oklahoma.

Dec. 21, 1982.

As Corrected Jan. 12, 1983.

Appeal from Order of the Oklahoma Corporation Commission dismissing application before it to redetermine and apportion drilling costs of initial well being drilled under a previous Commission Order establishing a pooling, drilling, and spacing unit in a common source of production in described lands in Roger Mills County, Oklahoma.

REVERSED AND REMANDED TO THE OKLAHOMA CORPORATION COMMISSION FOR FURTHER PROCEEDINGS.

Daniel L. Evans, Evans, Carnell & DeVore, Oklahoma City, for petitioner.

M. Keywood Deese, Conservation Atty., Gretchen Hoover, Asst. Conservation Atty., Oklahoma Corp. Com'n, Oklahoma City, for respondents, Corp. Com'n.

James M. Gaitis, Emery, McCandless, Gaitis, Bruehl & Gerstandt, Oklahoma City, David T. Burleson, El Paso, Tex., for El Paso Natural Gas Co. and El Paso Exploration Co.

LAVENDER, Justice:

These proceedings were initiated by Petitioner by application to this Court to assume original jurisdiction and petition for writ of mandamus mandating the Oklahoma Corporation Commission or its Commissioners to accept jurisdiction of Cause CD No. 99111 and No. 91429 before the Corporation Commission to set said causes for hearing on the merits and to render a decision thereon.

The allegations of the facts set forth in Petitioner's application are not in dispute and, insofar as pertinent, are as follows:

On March 25, 1981, the Corporation Commission entered its findings and order in Cause CD No. 91429 finding and determining that certain formations within a described tract of land in Roger Mills County, Oklahoma, were heretofore determined to be a 640-acre drilling and spacing unit for the common sources of supply; that Petitioner is an owner of the right to drill said unit and to develop and produce said common sources of supply; that Petitioner has not agreed with other such interest owners to pool and develop the drilling and spacing unit common sources of supply as a unit.

The Commission extended to interest owners other than Petitioner the option to participate "in the development of the unit and common sources of supply" by agreeing to pay their proportionate part of the actual cost of the wells. Petitioner was designated "operator of the well, unit, and common sources of supply covered hereby ...." The order further provides:

"That Operator shall commence operations for the drilling or other operations with respect to the well covered hereby within 180 days from the date of this Order and shall diligently prosecute the same to completion in a reasonably prudent manner, or this Order shall be of no force and effect, except as to the payment of bonus." (Emphasis added.)

No specific location for the initial well on the unit was specified in the order.

After other interest owners opted to participate in the development of the unit and common sources of supply, Petitioner began timely drilling operations for the drilling of a well.

After drilling 416.25 feet from the surface, Petitioner encountered difficulties in that the surface casing broke off in the borehole. After futile attempts to save the hole, Petitioner determined it could not be economically done. Thereupon, it skidded the rig six feet from the initial borehole and recommenced drilling operations. After drilling to a depth of approximately 12,500 feet at an approximate total cost of $2,000,000, other participating interest owners claimed their election to participate in the unit does not extend to the second borehole.

On September 14, 1982, Petitioner filed Cause No. 99111 before the Commission, seeking a determination by the Commission that "the costs attributable to the presently drilling unit well ... are proper well costs," and to "[a]djust the operating costs due to the loss of a hole, and determine what of these additional costs should be proportionately borne by the participating parties."

On November 1, 1982, the Commission entered its order dismissing Cause No. 99111 on the following grounds: (a) the application is an impermissible collateral attack on a prior Commission Order, prohibited by 52 O.S.1981, § 111; (b) the Commission cannot interpret or construe its own orders; and (c) the Order in Cause 91429 "on its face provides specifically for one well and does not, as many Commission orders do, provide for the drilling of any additional, replacement, or twin well."

Pending the determination of the cause before this Court, Petitioner is faced with the dilemma of setting approximately $800,000 worth of production casing and continuing drilling operations in the face of the risk of having to assume and pay the withdrawing participating interest owners' share of the cost, or incurring $11,500 per day idle rig costs while awaiting a determination by this Court.

In Melton v. City of Durant, Okl., 521 P.2d 1372 (1374) (1974), we held:

"Title 12, O.S.1971 § 1452, provides that the writ of mandamus '... may not be issued in any case where there is a plain and adequate remedy in the ordinary course of the law ....' Thus, it has been held that mandamus will not lie to review the decisions of an administrative official or board where an effective remedy on judicial review may be had by appeal." (Citations omitted.)

We have further held in Southwestern Natural Gas Co. v. Vernor, 178 Okl. 344, 62 P.2d 1262 (1936) (Syllabus by the Court):

"Where the remedy of appeal is available to a litigant, such remedy will not be declared inadequate merely because of inconvenience, expense, or delay. Halliburton v. Williams, 166 Okl. 248, 27 P.2d 360."

In accord, State ex rel. Crawford v. Corporation Commission, 184 Okl. 127, 85 P.2d 288 (1938).

A well-defined statutory scheme for appeal from Commission orders is afforded by 52 O.S.1981, § 111.

Petitioner's application to this Court to assume original jurisdiction and to issue a writ of mandamus is therefore denied.

We will next consider (as petitioner requested at oral argument) whether the record in the case before us is such as will support an appeal to this Court from the Order entered by the Commission in Cause No. 99111.

The minimum prerequisites for lodging an appeal in the Supreme Court of a decision of the Corporation Commission rendered in the exercise of its regulatory powers under the Oil and Gas Conservation Act are set forth in Rule 1.86 of the Rules of Appellate Procedure as being, "by filing a petition in error within thirty (30) days from the date of the decision sought to be reviewed is rendered, and the record shall be ready for transmission to this court not later than sixty (60) days from the date of the decision sought to be reviewed."

The fact that the application filed by Petitioner was titled "Application to Assume Original Jurisdiction and Petition for Writ of Mandamus" is not determinative of the true nature of the pleading. The nature of a pleading filed in a cause is determined by the subject matter thereof, and by the relief the Court is authorized to grant under it, and not by the title given it by the pleader. Ginn v. Knight, 106 Okl. 4, 232 P. 936 (1925).

Petitioner's application substantially complies with all of the requirements prerequisite to its being treated as a petition in error.

The next issue before this Court on appeal, when refined to its essence, is simply whether the Commission had jurisdiction and power to determine whether the wording in its order in Cause No. 91429: "That Operator shall commence operations for the drilling or other operations with respect to the well covered hereby ... and shall diligently prosecute the same to completion in a reasonably prudent manner, ..." (emphasis added), when taken in context with the other provisions of the Order, contemplated the possible loss of the initial borehole and a recommencement of drilling six feet from the initial borehole at the surface.

The continuing jurisdiction of the Commission to determine and re-determine provisions for the payment of development and operation costs in connection with the development of the spacing and drilling unit is no longer subject to question. Title 52 O.S.1981, § 87.1(e) expressly provides: "Such pooling order of the Commission shall make definite provisions for the payment of cost of the development and operation, which shall be limited to the actual expenditures required for such purpose not in excess of what are reasonable, including a reasonable charge for supervision. In the event of any dispute relative to such costs, the Commission shall determine the proper costs after due notice to interested parties and a hearing thereon." In Crest Resources v. Corporation Commission, Okl., 617 P.2d 215 (218) (1980), we said:

"The costs' estimate in the prior pooling order constituted but a projection of reasonable expenses to be charged. It did not represent a Commission-fixed limit of liability to be borne. The cost figure always remains subject to adjustment. Until the project's completion, the amount of projected costs-approved as reasonable lacks the legal attributes of finality. In the event of a cost overrun, if a dispute does arise as to the reasonableness of the expenditures to be charged, the Commission retains primary jurisdiction to adjudicate finally the liability attachable to the interest holders."

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