Beard Drilling, Inc. v. Steeger

• Court: Texas Civil Court of Appeals
• Writing for the Court: COLEMAN; Since the case was tried on an erroneous interpretation of the contract and considering the provision of the contract absolving the owner of liability while tests were being conducted if the loss or damage results from either the negligence
• Citation: Beard Drilling, Inc. v. Steeger, 361 S.W.2d 888 (Tex. Ct. App. 1962)
• Decision Date: 01 November 1962
• Docket Number: No. 13980,13980
• Parties: BEARD DRILLING, INC., Appellant, v. W. J. STEEGER et al., Appellees.

Page 888

361 S.W.2d 888

BEARD DRILLING, INC., Appellant, v. W. J. STEEGER et al., Appellees.

No. 13980.

Court of Civil Appeals of Texas, Houston.

Nov. 1, 1962.

Rehearing Denied Nov. 29, 1962.

Spafford, Ledbetter, Freedman, Hamlin & Gay, Donald G. Gay and Roy C. Letbetter, Dallas, of counsel, for appellant.

Finis E. Cowan, Houston, Baker, Botts, Shepherd & Coates, Houston, of counsel, for appellees.

COLEMAN, Justice.

This suit was filed by appellant, Beard Drilling, Inc., to recover the value of oil well drilling equipment from appellees, W. J. Steeger, M. M. Kinley, Atlas Pipe, Inc., and C. L. McMahon, Inc. Appellees filed a cross-action seeking to recover from appellant the expense incurred by them in controlling a gas well which blew out and caught fire, destroying appellant's drilling equipment. The trial court rendered judgment for appellees based on appellant's failure to drill the well to completion as required by the written contract between the parties.

Both parties pled causes of action based on certain provisions of the contract and on allegations of negligence. Appellees filed a motion for summary judgment which was sustained as to that portion of appellant's cause of action based on contract. The cause proceeded to trial before a jury on the negligence issues. The jury found that neither appellant nor appellees were guilty of acts of negligence proximately causing damage to the other party.

Appellant has grouped its points of error. The first group complains that the District Court of Harris County erred in entering the interlocutory summary judgment, in refusing to allow a trial amendment based on the contract, and in refusing to admit certain testimony.

The contract between the parties reads as follows:

ROTARY DRILLING CONTRACT

'THIS AGREEMENT between W. J. Steeger whose address is 1702 Esperson Bldg. Houston, Texas, herein called owner, and Beard Drlg, Inc. whose address is 1401 Majestic Bldg. San Antonio, Texas herein called contractor, (all referred to by singular masculine pronouns whether corporations firms or individuals) WITNESSETH:

'1. OBLIGATIONS. Contractor agrees to drill, core, test, survey, and finally complete and equip, or plug and abandon, a test well for oil and gas at the time and place, to the depth, and in the manner provided herein and in the specifications below, and owner agrees to pay contractor therefor the price set out in said specifications.

'2. EQUIPMENT AND LABOR.

'a. FURNISHED BY OWNER: Owner, at his expense, shall furnish the services and materials required of him in said specifications and in addition thereto, all casing (both surface and production), tubing, wellhead connections, separators, flow lines, and other completion equipment installed in or upon said well and location, and all required services and equipment of third persons for drill stem tests, side wall cores, casing perforations, electrical logs, cementing (including surface and production casing and squeeze jobs), and all cement so required.

'b. FURNISHED BY CONTRACTOR: Contractor, at his expense, shall furnish what is required of him in said specifications, and also an adequate rotary drilling rig, including blowout preventer, and all other machinery, tools, equipment, materials, services, and labor necessary or proper to the performance of said work, except those to be supplied by owner as set forth above or in said specifications.

'3. PERFORMANCE. All such work shall be performed by contractor diligently, in a good and workmanlike manner, and in compliance with all applicable governmental rules and regulations. Contractor shall be entitled to no compensation for any partial performance hereof, or upon any basis other than full and complete performance.

'4. OWNER'S PREROGATIVES, ACCESS, AND NOTICE. The size and amount of casing (both surface and production) to be set, and the time, place, manner, and extent of all cementing, coring, testing, electric logging, perforating, squeezing, and completing said well shall be determined by owner and conducted accordingly. Owner and his nomineees shall have access to the derrick floor and premises at all times, shall be furnished complete samples and full information at the times and places directed by him, and shall be notified and afforded reasonable opportunity to be present and to observe all coring and testing.

'5. RISK AND INSURANCE. Except as otherwise provided in said specifications, all work hereunder shall be conducted at contractor's sole risk, and shall be covered by public liability and workman's compensation insurance, to be carried and paid for by contractor, in amounts and with companies acceptable to and approved by owner.

'6. OWNER'S OPTIONS ON CONTRACTOR'S DEFAULT. If contractor shall fail or be unable to complete this contract (which shall be established by any cessation of work for as much as five days unless ordered by owner), owner, in addition to all other rights and remedies hereunder, may at his option, either take over and use contractor's drilling rig and other equipment, free of cost, and continue the unfinished work, or remove such drilling rig and equipment, and employ another contractor to continue the work. In either such event all costs and expenses so incurred by owner shall be deducted from any payment to contractor.

'8. CONSTRUCTION AND VENUE. Contractor acts hereunder as, and shall be held to be, an independent contractor, and not owner's agent or employee. Time is of the essence hereof. Venue hereunder is fixed by agreement in the county of owner's above address.

'copies hereof are signed this 2 day of February 1959.

/s/ W. J. Steeger

OWNER

/s/ Joe Beard

President CONTRACTOR'

SPECIFICATIONS

'A. TIME, DEPTH, HOLE, AND LOCATION:

B. SERVICES TO BE FURNISHED AND PAID FOR BY OWNER OR CONTRACTOR AS FOLLOWS:

C. EQUIPMENT AND MATERIALS TO BE FURNISHED AND PAID FOR BY OWNER OR CONTRACTOR AS FOLLOWS:

D. CONTRACT PRICE:

1. FOOTAGE: For the depth actually drilled, exclusive of all footage cored, contractor shall be paid $2.60 per lineal foot.

2. DAY TIME:

a. Rates: The day rates to be paid contractor by owner, when applicable, in addition to the footage payment above provided, shall be:

No. 1. While drill stem in use $xxxxx per hour: 22.90

No. 2. While drill stem not in use: $_____ per hour. 20.00

No. 3. While idle, waiting on orders: $18.00 per hour, provided that Rate No. 3 shall not apply for more than 24 hours

b. Payable When: The above day rates shall be paid for all time consumed in:

(1) Coring: #1

(2) Reaming core hole: #1

(3) Drill stem tests: #1

(4) Electric logging: #2

(5) Perforating casing: #2

(6) Squeezing: #1

(7) Swabbing or otherwise completing the well after cement has set: #2

(8) Plugging the well on abandonment: #1

(9) Pulling and racking casing on owner's instructions: #2

(10) Other delays or interruptions ordered by owner, provided that no charge shall be made for the time required to run and cement casing (both surface and production), run tubing, set and cement screen or liner, install valves, wellhead connections, or flow lines, nor for the time necessary for cement to set, not to exceed 24 hours on surface casing, 0 hours after each squeeze job, and 48 hours on production casing. & completion after plug is down in oil string

E. RISK:

The operations enumerated in subdivisions (1) to (9) inclusive of paragraph 'D-2-b' immediately above, shall be conducted at owners risk and expense, provided however, that owner shall never be liable for contractor's negligence or want of skill or diligence, or for failure of contractor's equipment.

48 hours free time allowed before oil string is run

Gulf Coast Clause shall apply

When the second well in the Torch Field is drilled this contract shall apply except the footage price shall be $2.40 per *'

The foregoing specifications are approved:

/s/ W. J. Steeger

for OWNER

/s/ Joe Beard

for CONTRACTOR' Appellant began operations under this contract. Appellees wrote appellant a letter dated March 13, 1959, containing the following paragraph:

'3. 2524 feet, run correlation log, if in 1st Olmos Sand, run open hold D S T, if water free test run, start coring. Measure out of hole last trip before 2524 is reached as it is important that you stop at 2524.'

On May 17, 1959, Mr. Lewis arrived at the well when the depth reached was about 2500 feet. He together with the president of appellant Corporation, Joe Beard, left the site of call the electric logging truck. Before leaving they informed the driller that when he got to 2524 feet he was to circulate the mud and come out of the hole in order to be in a position to run the electric log. The driller followed these instructions by continuing to drill until the required depth was reached. The mud was then circulated for 45 minutes and the process of 'pulling out of the hole' was started when Mr. Lewis and Mr. Beard returned. Just as they were getting out of the car, the well blew out and caught on fire. Most of appellant's drilling equipment at the well site was destroyed. Appellees assumed control of the well and expended a large sum of money in putting out the fire and stopping the flow of gas.

The trial court, in granting appellees' motion for summary judgment, ordered:

'And the Court having duly considered the motion and having heard argument in support of and in opposition thereto, and having considered all of the depositions on file herein and the affidavits on file herein, finds and concludes as a matter of law that in this particular contract the term 'electric logging' does not include the process of withdrawing drill-pipe from the hole before electric logging, and that as a matter of law based on the pleadings, the undisputed evidence from the depositions and the affidavits, that the Plaintiff is not entitled to recover from the Defendants without a showing of negligence on the part of the Defendants, and that the paragraph 'E' does not afford the Plaintiff a right to...