Billeaud Planters Inc. v. Union Oil Co. of Cal.
| Decision Date | 11 September 1956 |
| Docket Number | Civ. A. No. 4860. |
| Citation | 144 F. Supp. 564 |
| Parties | BILLEAUD PLANTERS, Inc., et al., v. UNION OIL COMPANY OF CALIFORNIA. |
| Court | U.S. District Court — Western District of Louisiana |
Donald Labbe, Lafayette, La., for plaintiffs.
Cullen R. Liskow, Lake Charles, La., for defendant.
Plaintiffs seek damages for alleged drainage of gas from what is referred to as the "C" Sand. The alleged drainage took place between December, 1950 and February, 1954. The claim is based on an oil, gas and mineral lease dated March 4, 1944, granted by plaintiffs to G. L. Paret, and assigned by Paret to defendant on May 31, 1944. The original lease described the North Half of Section 32, Township 14 South, Range 5 East, and other land, but has been released except as to that 320 acres from which production has been had since 1950 and as to which plaintiffs complain of drainage.
Defendant first filed a Motion to Dismiss the Complaint for Failure to State a Claim. The motion was not presented in advance of the trial and was repeated as the first defense in answer. The answer presents a general denial and by special pleas defendant opposes plaintiffs' claims under the provision of the lease (Paragraph 12) requiring demand and delays. Defendant also contends that, in any event, plaintiffs have received or will receive their "fair share" of the gas that has been and will be produced in the field from the "C" Sand, and therefore have sustained no damage.
The case is here under the Court's diversity jurisdiction and is governed by Louisiana law. Damages have never been allowed a lessor for drainage in Louisiana, but it is generally accepted that in a proper case a claim for such damage can be validly made. It is both fair and accurate to say that the provision of the subject lease requiring demand and delays (Paragraph 12) has never been judicially interpreted insofar as it relates to drainage. The question as to what constitutes "a fair share" of the gas from a given field, insofar as it relates to damages for drainage, has never been directly passed on by a Louisiana court.
The case was tried to the Court, without a jury, and the facts are found to be these:
(1) Plaintiffs are residents and citizens of the State of Louisiana.
(2) Defendant, Union Oil Company of California, is a foreign corporation, authorized to do, and at all times pertinent to this action doing, business in the State of Louisiana.
(3) Plaintiffs in this case seek to recover damages for alleged drainage of gas (from what is referred to as the "C" Sand) between December, 1950, and February, 1954; the claim being based on oil, gas and mineral lease dated March 4, 1944, granted by Billeaud Planters, Inc., to G. L. Paret, and assigned to defendant on May 31, 1944. When the lease was granted, Billeaud Planters, Inc., was the owner of the fee title and all mineral interests in the land; the mineral rights of the other plaintiffs were acquired thereafter.
(4) The lease originally described the North Half of Section 32, Township 14 South, Range 5 East, and other land, but has been released except as to that 320 acres from which production has been had since 1950 and as to which plaintiffs complain of drainage.
(5) There exists no unitization agreement integrating plaintiffs' land with the land of any other property owner; there are no unitization agreements or state orders integrating the various sands in the field; there are no specific state orders controlling the operation of the field besides the orders relating to the allowable take of gas therefrom.
(6) Defendant has been operating the field on 320-acre spacings established by it and accepted by the property owners. Consequently, this litigation involves the private rights of the plaintiffs as owners of 7/8 ths of the mineral royalty and the rights and obligations of defendant.
(7) Defendant operates wells on various tracts in the Tigre Lagoon Field. It drilled a well on the Billeaud Tract (subsequently designated as Unit IX) in the year 1947 to a depth of 12,229 feet, traversing each of the three productive sands underlying the tract, namely, the "D" Sand, the "C" Sand and the "Planters" Sand.
(8) Thereafter, Union completed the Billeaud Well in the lowest sand (designated as the "D" Sand). Prior to December 1950 when pipeline production was begun in the field, Union had completed the following wells in the "C" Sand to a depth of approximately 11,500 feet:
(9) The Billeaud Well produced from the "D" Sand from December, 1950 until February, 1954. During that time the other wells hereinabove ennumerated produced from the "C" Sand, but not from the "D" Sand.
(10) There are no known faults which would interfere with drainage between Billeaud Well, Unit IX, and the wells described in Finding (8) hereof.
(11) Production from the three nearest adjoining wells ("C" Sand) during the period of time involved, December, 1950 to February, 1954, was as follows:
(12) The unit prices received by Union for the sale of condensate and gas from Tigre Lagoon Field from the beginning of production to February 22, 1954, were as follows:
Condensate
7- 1-48 - 8-31-48 $2.80 per barrel
11- 1-50 - 5-18-51 2.75 per barrel
5-19-51 - 6-14-53 2.90 per barrel
6-15-53 - 2-22-54 3.15 per barrel
Gas
Pressure
Base
15.025 11-1-50 - 3-31-51 7.647455¢ per MCF plus .2249¢
for dehydration Transco
16.7 4-1-51 - 4-30-51 8¢ per MCF plus .25¢ dehydration
from Transco
15.025 5-1-51 - 6-30-51 7.197605¢ per MCF plus .22494¢
for dehydration Transco
15.025 7-1-51 - 6-30-52 7.197605¢ per MCF plus .224925¢
for dehydration Transco
15.025 7-1-52 - 2-22-54 8.797150¢ per MCF Transco 15¢
per MCF Fuel Sale to Others
8.57225¢ per MCF Fuel Sale to
Union Oil Co
(13) The gross value of the withdrawals by Union from the wells enumerated in Finding (11), after payment of severance taxes, was as follows:
Broussard Well $624,302.40
Landry Well $685,244.64
Dugas Well $673,342.08
(14) During the same period of time, the total value of the gas and condensate withdrawn from the "D" Sand in the Billeaud Well, after payment of severance taxes, was $523,531.20.
(15) The distance between Dugas Well and the center line of Section 32 running East and West is 525,513 feet, and such fact was known to Union in December, 1950.
(16) An offset well to the Dugas Well in the "C" Sand on the Billeaud Tract would have produced substantially the same quantity of gas and condensate as was produced from the Dugas Well.
(17) The average royalty paid to the mineral owners of the three wells enumerated in Finding (13), for the period involved, was $85,662.84, and the 7/8 ths of the average royalty which plaintiffs would have been paid, had they had a well in the "C" Sand at this time, would have been $72,359.91.
(18) Upon basic information, such as bottom hole pressures, porosity, and other data computed by them from careful study of the electric logs, etc., Dr. Huner and Mr. Montgomery testified that there had occurred a drainage loss (from the Billeaud Tract) in the "C" Sand of 2,897 MMCF of gas and 72,425 barrels of condensate. This applied to the unit prices set forth in finding (12) reveals the drainage suffered by plaintiffs to be as follows:
Billeaud Planters, Inc. $20,020.32
Billeaud Heirs $26,694.12
(19) Dr. Huner and Mr. Montgomery were exceptionally well qualified experts and computed the drainage as reasonably and correctly as it could be computed. We believe that their estimate of damage is reasonably certain and is accepted by the Court.
(20) Paragraph 14 of the lease agreement reads as follows:
"In the event a well or wells producing oil in paying quantities should be brought in on adjacent lands not owned by the Lessor and within six hundred sixty (660) feet of said land, Lessee agrees to drill such offset wells as a reasonably prudent operator would drill under the same or similar circumstances."
(21) Paragraph 12 of the lease agreement reads as follows:
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