In a decision closely watched by the industry, a Texas appellate court recently held that when minerals are severed from the surface, the surface owner retains the right to “control the subterranean structures” from which oil and gas may be produced. In Lightning Oil Co. v. Anadarko E&P Onshore LLC, Lightning obtained an oil and gas lease covering a severed mineral estate underlying Tract A. Anadarko, which had a lease on an adjacent tract, Tract B, obtained the permission from the surface owner of Tract A to place a drilling rig on Tract A and drill through Tract A’s subsurface to locate a lateral that opened and bottomed on Tract B. Lightning sued Anadarko for subsurface trespass, asserting that as the leaseholder of the mineral estate underlying Tract A, Lightning had the right to exclude others from drilling through Tract A. The court rejected Lightning’s claim, finding that “Lightning does not own or control the earth surrounding any hydrocarbon molecules that may lie within the boundaries of the [severed mineral estate].” Therefore, with permission from the surface owner, Anadarko was entitled to penetrate (but not produce from) Tract A to directionally reach its leasehold estate on Tract B.
Click here to read the decision.