Woolley v. the Corp.. Comm'n of State

• Decision Date: 25 October 2011
• Docket Number: No. 108,686.,108,686.
• Citation: 2011 OK CIV APP 90,261 P.3d 1181
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma
• Parties: Ann Drummond WOOLLEY; Ann Drummond Woolley, Trustee of the Walter Woolley, Jr. Revocable Trust Dated 6/9/88; and Ann Drummond Woolley, Trustee of the Ann Drummond Woolley Trust u/t/a Dated 11/30/98; Five Woolley, L.L.C.; and 7c Land & Minerals Company, Appellants,v.The CORPORATION COMMISSION OF the STATE of Oklahoma, Composed of the Honorable Bob Anthony, Chairman, The Honorable Jeff Cloud, Vice Chairman; and The Honorable Dana L. Murphy, Commissioner; and Pontotoc Production Company, Inc., Appellees.

261 P.3d 1181

2011 OK CIV APP 90

Ann Drummond WOOLLEY; Ann Drummond Woolley, Trustee of the Walter Woolley, Jr. Revocable Trust Dated 6/9/88; and Ann Drummond Woolley, Trustee of the Ann Drummond Woolley Trust u/t/a Dated 11/30/98; Five Woolley, L.L.C.; and 7c Land & Minerals Company, Appellants,

v.The CORPORATION COMMISSION OF the STATE of Oklahoma, Composed of the Honorable Bob Anthony, Chairman, The Honorable Jeff Cloud, Vice Chairman; and The Honorable Dana L. Murphy, Commissioner; and Pontotoc Production Company, Inc., Appellees.

No. 108,686.

Court of Civil Appeals of Oklahoma, Division No. 1.

April 29, 2011.Certiorari Denied June 27, 2011.As Corrected Oct. 25, 2011.

Released for Publication by Order of the Court

of Civil Appeals of Oklahoma, Division No. 1.

Appeal from the Corporation Commission of the State of Oklahoma.AFFIRMED IN PART, REVERSED IN PART AND REMANDED.Gregory L. Mahaffey, Raven V. McNeal–Noumane, Mahaffey & Gore, P.C., Oklahoma City, OK, for Appellants.Michele Craig, Deputy General Counsel, Oklahoma City, OK, for Appellee, Oklahoma Corporation Commission.Richard K. Books, Eric L. Huddleston, Elias, Books, Brown & Nelson, P.C., Oklahoma City, OK, for Appellee, Pontotoc Production, Company, Inc.CAROL M. HANSEN, Judge.

¶ 1 Appellants, Ann Drummond Woolley and affiliated entities (collectively Woolley), seek review of an order of the Oklahoma Corporation Commission (Commission) granting the application of Appellee, Pontotoc Production Company, Inc. (Pontotoc), to pool the McAlester and Hunton common sources of supply underlying a drilling and spacing unit (Unit) consisting of the southeast quarter of the northeast quarter of Section 23, Township 2 North, Range 7 East, Pontotoc County, Oklahoma. Woolley challenges the order to the extent the Commission (1) refused to dismiss the application to pool the Hunton common source of supply, (2) allocated costs between the McAlester and Hunton common sources of supply, and (3) refused to allow Woolley to participate in force-pooled acreage obtained in two previous pooling orders where Woolley was not named as a party as a result of a title error. We affirm as to the first two issues, and reverse and remand as to the third issue.

¶ 2 Woolley owns both leasehold and mineral interests in the Unit. In May 2008, Pontotoc completed drilling the Woolley # 1–23 Well (Well) in the west half of the Unit. It drilled to a depth of 4,100 feet to test the Hunton but found it dry; it then completed the Well at 1,631 feet in the McAlester. The Commission entered the first pooling order for the Unit on July 21, 2008, pooling both the McAlester and Hunton common sources of supply. Pontotoc did not name Woolley as a respondent in the first pooling because its title information did not reflect Woolley owned interests in the Unit. The Commission entered the second pooling order in March 2009, adding World Export Services as a respondent after Pontotoc's new title opinion showed it owned 11.39% of the Unit. World Export Services' successor elected to participate in the Unit.

¶ 3 Pontotoc filed the third application for pooling naming Woolley as respondent after receiving a revised title opinion showing Woolley owned an interest Pontotoc previously believed it owned. Woolley protested the application and moved to dismiss the application as to the Hunton. The parties tried the issues before an administrative law judge (ALJ) on October 7, 2009. The ALJ's report recommended (1) granting the application, (2) denying the motion to dismiss the Hunton formation, (3) adopting the cost allocation method proposed by Pontotoc, and (4) granting Woolley's request to share in force-pooled acreage.

¶ 4 Both sides appealed the report of the ALJ. An appellate referee, after hearing oral argument and reviewing the record, recommended the ALJ's report be affirmed but modified to allow Woolley to make a casing point election based upon Pontotoc's lack of objection. In discussing the sharing of force-pooled acreage, the appellate referee reasoned the right to share in force-pooled acreage was an equitable right that flowed from the pooling order, and the late pooling of Woolley's interest was a change in conditions or knowledge of conditions that allowed modification of the pooling order. She concluded Woolley's request upon pooling should be considered the initial request for sharing of force-pooled acreage.

¶ 5 The Commission adopted the recommendations of the appellate referee, except as to the sharing of force-pooled acreage. Its order stated, [Woolley's] request to share in force pooled acreage covered by prior Orders of this Commission is denied because Protestants were not a party to the original pooling. However, Protestants are allowed to share in any force pooled acreage available from subsequent wells. [Woolley's] Motion to Dismiss the Hunton common source of supply is denied.

Woolley appeals from this order.

¶ 6 The Oklahoma Constitution, Art. IX, § 20, sets forth the standard of review for orders of the Corporation Commission:

[R]eview of appealable orders of the Corporation Commission shall be judicial only, and in all appeals involving an asserted violation of any right of the parties under the Constitution of the United States or the Constitution of the State of Oklahoma, the Court shall exercise its own independent judgment as to both the law and the facts. In all other appeals from orders of the Corporation Commission the review by the Supreme Court shall not extend further than to determine whether the Commission has regularly pursued...