Hastings Oil Co. v. Texas Co.

• Decision Date: 15 November 1950
• Docket Number: No. A-2623,A-2623
• Citation: 149 Tex. 416,234 S.W.2d 389
• Parties: HASTINGS OIL CO. et al. v. TEXAS CO. et al.
• Court: Texas Supreme Court

Page 389

234 S.W.2d 389

149 Tex. 416

HASTINGS OIL CO. et al. v. TEXAS CO. et al.

No. A-2623.

Supreme Court of Texas.

Nov. 15, 1950.

Rehearing Denied Dec. 20, 1950.

J. E. Davant, Bay City, Masterson & Pope (Alex Pope, Jr.), Angleton, for petitioners.

Rucks, Enlow & Kee, Angleton, Wm. E. Loose and David D. Pollan, Houston, for respondents.

BREWSTER, Justice.

This is an injunction suit filed by The Texas Company et al., respondents, against Hastings Oil Company et al., petitioners. A trial court order granting a temporary injunction was affirmed by the Court of Civil Appeals. 227 S.W.2d 317.

Petitioners and respondents own oil and gas leases on adjoining tracts of land, petitioners' being known as the Mays and respondents' as the Phillips. Both tracts lie on the north flank of the West Columbia salt dome, for which reason the subsurface oil formations slope from the apex of the dome downward in a northerly direction. The Mays tract lies northwest of the Phillips; and there are wells on the Phillips producing oil from the Marginulina and Frio formations.

Respondent The Texas Company formerly owned a lease on the Mays tract and from July, 1947, to May, 1948, drilled three non-producing wells thereon. These wells were known as The Texas Company's Mays No. 1, No. 2, and No. 3, and were drilled to a depth of 9646 feet, 9296 feet and 9068 feet, respectively. Respondents allege that they were drilled as nearly vertical as practicable.

In Mays No. 1 the Marginulina sand was found at 5816 feet, but it was only 4 feet thick; the Frio sand was struck at 6812 feet, but it was only 6 feet thick. This thinness of the formations and the insufficient saturation of cores taken therefrom did not justify any reasonable belief that oil could be produced in paying quantities.

So, on August 19, 1948, The Texas Company duly released its lease on the Mays tract. On February 17, 1949, the owners of the tract executed an oil and gas lease on it to one Williams, which by mesne assignments became the property of Petitioner Hastings Oil Company.

Respondents allege that on June 1, 1949, petitioners went onto this lease with a drilling rig, entered the surface casing which The Texas Company had placed in the Mays No. 1 at 1156 feet and, somewhere above a string of 7-inch casing which it had also set in the well at 1706 feet, 'side-tracked' The Texas Company well hole and continued to drill an oil well to a total depth of about 6840 feet. By trial amendment, respondents allege that an an approximate depth of 1400 feet petitioners 'directionally deviated said bore hole from the vertical by twice running a spudding bit oriented on the drill pipe in a pre-determined direction and by twice placing a whip-stock in the bore hole at approximately the aforesaid depth oriented on the drill pipe and faced in the same direction as the spudding bit had been oriented, and thereby directionally deviated the hole from the vertical in a southerly direction, up-dip on the sub-surface formations at an angle of 4 to 6 , and continued the drilling of the hole at said angle and in said direction for approximately 36 feet'; that, therefore, when the hole encountered the Marginulina and Frio sands it had so deviated southeasterly from the vertical that it was in the subsurface of the Phillips tract approximately 250 feet southeast of the line between the Phillips and Mays tract; that this amounted to a trespass.

Respondents allege, upon information and belief, that petitioners are planning or endeavoring to perforate their 7-inch casing in the Frio sand, between 6750 and 6758 feet and, if oil in paying quantities is found, to complete the well and produce the oil therefrom; that, if it is not so found, they will plug back to the Marginulina sand and attempt to produce oil from it; and that, unless restrained they will 'actually bring said well into production' and take oil from the sub-surface of the Phillips tract.

Then they make the allegations which raise the principal question in this case. They say that 'while the available and pertinent sub-surface data reasonably indicates that the well hole so drilled by defendants, as aforesaid, has entered within the sub-surface of the Phillips tract, as aforesaid, that fact cannot be determined with definiteness and certainty except from a directional survey of the hole conducted by an expert'; that their information and belief is that petitioners made no deviational survey while drilling the well and no directional survey when it was completed; that petitioners had refused respondents' request to have a directional survey made at respondents' expense.

Their prayer is for a temporary restraining order 'preserving the status quo' and restraining petitioners from doing anything which would make a directional survey of the well more difficult or expensive and from completing the well for the production of oil or gas from either the Marginulina or Frio sands; for citation to petitioners to appear and show cause why a temporary injunction should not issue continuing in full force and effect the provisions of the temporary restraining order until final hearing and enjoining petitioners from interfering with the making of a directional survey of the well as ordered by the court; that on the hearing for temporary injunction the court appoint some one skilled in making such directional surveys and to 'report to the court definitely and with certainty the position of said well hole from the surface to the bottom with reference to the surface of said hole and with reference to the common boundary line between the said Mays tract and the Phillips tract' and if it be found from this report that the hole, either at the Frio or Marginulina sands, is within the subsurface of the Phillips tract, the temporary injunction be continued in force until final hearing; and that on final hearing, the petitioners be ordered to plug their well hole in so far as it is situated in the subsurface of the Phillips tract.

The trial court granted the temporary restraining order as prayed. After two or three extensions, the order was finally 'extended until the conclusion of the hearing of plaintiffs' application for an order of this court appointing and directing an expert to make and report to this court the results of a sub-surface directional survey of defendant Hastings Oil Company's Mays No. 1 well and for such ancillary temporary injunctive relief as may be necessary to accomplish such purpose.'

On July 22, 1949, the hearing was begun under petitioners' sworn answer, which, following a general denial, specifically denies (1) that available and pertinent subsurface data reasonably indicate that their well hold has entered the subsurface of the Phillips tract, (2) that a directional survey is the only method by which to determine definitely whether their well hole has entered the subsurface of the Phillips tract, (3) that their well hole has entered the subsurface of the Phillips tract, (4) that their well is located at a point 175 feet or less from the southeast line of the Mays tract, and (5) that The Texas Company's Mays No. 1 well was drilled in a true vertical direction. Affirmatively, petitioners ask that if an expert be appointed that he make a deviational rather than a directional survey and if it shows that there has been no trespass on respondents' lease that the expert be discharged; and, if the survey shows to petitioners' satisfaction that a trespass has been committed, that they be permitted to plug the well back to the point of trespass, thereby foreclosing the necessity of revealing to respondents any information that is made available by the survey.

After hearing the testimony the trial court found: (1) that 'there is probable cause to believe' that the bore hole of petitioners' well has so deviated from the vertical that, at the points where it encountered the Marginulina sand at 5716 feet and the Frio sand at 6750 feet, the hold is within the subsurface of the Phillips tract; (2) that 'there is probable cause to believe' that petitioners by permitting the bore hole of their well so to enter the subsurface of the Phillips tract have committed a trespass, and are committing a continuing trespass, upon the Phillips tract, but (3) that whether the well has actually entered the subsurface of the Phillips tract cannot be determined with certainty unless a directional survey of the well is made by an expert; (4) that a determination of that question of fact with certainty is essential to a just and proper decision of, and will be a conclusive determination of, the controversy at bar at the final trial on its merits; (5) that, therefore, applicable rules of equity entitle respondents to have such a survey made, reported to the court and made available to all parties, under conditions ordered by the court.

The conditions were that two designated concerns, the one qualified to make the survey and the other furnishing the man power, were to take over a drilling rig, equipment and supplies which petitioner, Hastings Oil Company, owns and has at the site of the well, make the survey and file with the clerk of the trial court two reports. One was the report of a directional survey showing degrees of deviation from the vertical and the direction of such deviations of the bore hole of petitioners' well. The surveyor was to keep no private record of this survey but was ordered to place all data respecting it in a sealed envelope and file the same with the clerk, who was to hold the report unopened subject to further orders of the court. The other report was to be filed with the clerk as a public document. It was to furnish all data with regard only to degrees and distances of deviation from the vertical of the bore hole of petitioners' well, 'but not the directions of such deviations', at depths of from 5716 to 5738 feet and from 6750 to 6800 feet. Respondents were required to deposit $2500 to cover cost of the surveys ...