Beren v. Harper Oil Co., 47752
| Decision Date | 05 August 1975 |
| Docket Number | No. 47752,No. 1,47752,1 |
| Citation | 546 P.2d 1356,1975 OK CIV APP 49 |
| Parties | Sheldon K. BEREN et al., Appellants, v. HARPER OIL COMPANY, a corporation, et al., Appellees |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
Watson, McKenzie & Dunlevy, H. B. Watson, Jr., John C. Moricoli, Jr., Oklahoma City, for appellants.
C. Harold Thweatt, Oklahoma City, for appellee Champlin Petroleum Co.
Richard E. Terry, Chicago, Ill., and Coleman H. Hayes, Oklahoma City, for appellees Harper Oil Co. and Viersen & Cochran, a partnership composed of Sam K. Viersen and Sam K. Viersen, Jr.
An appeal by Sheldon K. Beren, Robert M. Beren and Okmar Oil Company, a partnership composed of Adolph Beren, H. H. Beren and I. H. Beren, Appellants, from a judgment for Harper Oil Company, a corporation, Champlin Petroleum Company, a corporation, and Viersen & Cochran, a partnership composed of Sam K. Viersen and Sam K. Viersen, Jr., Appellees.
The appellants (Okmar Oil Company) co-owned 25% Working interest in an oil and gas drilling and spacing unit. Okmar's action was for an accounting and cash money judgment. Judgment was rendered for the defendants, Harper Oil Company (Harper), Viersen & Cochran, a partnership composed of Sam K. Viersen and Sam K. Viersen, Jr. (Viersen & Cochran), Champlin Oil & Refining Company (now Champlin Petroleum Company, Champlin) Sinclair Oil & Gas Company (now Atlantic Richfield Oil Company by virtue of merger) and Shell Oil Company, who were the co-owners of oil and gas drilling rights created by oil and gas leases covering lands within a 640-acre drilling and spacing unit created by an order of the Corporation Commission, No. 41,933, establishing 640-acre drilling and spacing units for the production of gas and gas condensate from the Mississippian formation underlying Section 25, Township 22 North, Range 8 West, Garfield County, Oklahoma, entered into an operating agreement for the mutual development of the unit acreage.
Under the operating agreement, each party reserved the right to market its respective portion of the unit production.
Pursuant to said operating agreement, the parties owned interests in the following proportions:
Harper Oil Company 12.5%
Viersen & Cochran 12.5%
Champlin Oil & Refining Co. 25 %
Sinclair Oil & Gas Co. 25 %
Shell Oil Company (Okmar) 25 %
A unit gas well was completed (Hodgen Unit #1 well--August 9, 1964). Harper, Viersen & Cochran and Champlin sold their gas to Arkansas Louisiana Gas Company (Arkla). Sinclair and Shell sold their gas to Oklahoma Natural Gas Company (ONG). Because of the gas commitment to different purchasers, a so-called 'split connection' was created at the well. In other words, there were two gas purchasers connected to the well rather than one.
Under the terms of the operating agreement, at paragraph 13 hereinafter set forth, each set of selling parties had the right to sell gas, and each of the two gas purchasers had the right to take gas from the well for the account of their respective sellers.
'Each party shall execute all division orders and contracts of sale pertaining to its interest in production from the Unit Area, and shall be entitled to receive payment direct from the purchaser or purchasers thereof for its share of all production.
The takes from the well by the gas purchasers were consensual. No volume limitation was imposed upon either purchaser, it apparently having been assumed by the sellers that in the course of events the volumes as between the gas purchasers would equalize.
Okmar by purchase on May 19, 1966, acquired the rights of Shell Oil Company, subject to the operating agreement and subject to the split stream arrangement.
Because of high line pressure, ONG did not take all the gas that was attributable to the interest of its sellers. This failure to take resulted in a substantial 'imbalance' among the owners of the gas production.
The parties are in agreement as to the interest of 25% That is owned by Okmar, and that Okmar has paid its proportionate part of the operating expense of the unit; that reporting has been made periodically by Harper, et al. to Okmar as to the amount of gas that Okmar is underproduced, and the amount that Harper, et al. is overproduced.
In 1971, Okmar cancelled the gas sales contract to ONG, and thereafter their percentage of the gas was contracted to Arkla. Okmar has been receiving its pro-rata share since 1971.
The parties entered into no arrangement to 'balance' among themselves any inequalities which might result from gas deliveries to the respective purchasers that were not proportionate to the ownership of the sellers in the well and the gas produced therefrom. The question of 'balancing' was left open.
In Wolfe v. Texas Co., 10 Cir., 83 F.2d 425, the court held:
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