November 17, 2017 Articles

Texas Supreme Court Examines Pass-Through Drilling and Ownership Rights

The court set forth the mineral lessee’s bundle of rights and how those rights relate to those of the surface owner.

By Joshua Fuchs, Laurens Wilkes, Will Taylor, and Viddy Harris – November 17, 2017

In Lightning Oil Co. v. Anadarko E&P Onshore, LLC, 520 S.W.3d 39 (Tex. 2017), the Texas Supreme Court determined that Anadarko did not trespass or tortiously interfere with a mineral lease by drilling through a mineral estate it did not own to reach its adjacent lease. Such “pass-through” drilling frequently raises the question of whose permission is needed to drill these types of off-lease wells. In Lightning, the court held that the owner of the surface rights where Anadarko’s well was located - not the mineral lessee—could authorize the drilling activities.

In reaching its holding, the court set forth the mineral lessee’s bundle of rights and how those rights relate to those of the surface owner. The opinion provides some guidance both to upstream companies engaging in off-lease or pass-through drilling and mineral lessees seeking to protect their rights, in terms of when such drilling activities are permissible and under what circumstances. Parties wishing to reserve the right to exclude pass-through drilling may also consider using Lightning to evaluate what language in a deed would allow for control over not only the minerals, but also the non-mineral subsurface materials.

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