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Permalink Reply by Harold5011 on December 31, 2008 at 17:15

You are correct in that the well is the designated unit well. This is a directional drill where the surface location is not on the land covered by the servitude, but the well bore passes under the servitude. The unit includes a portion of the servitude. Does the existence of a well bore under a servitude have the same effect as if the surface location was on the servitude (i.e. would the well bore passing through or bottom holing under a sertifude interrupt prescription as to the portion of the servitude thats outside the unit)?

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Permalink Reply by Harold5011 on January 1, 2009 at 7:12

The act creating the servitude does not include the language that would allow operations or production from an offsite unit well to interrupt the running of prescription as to the entirety of the servitude.

Apparently "on land" in §37 is referiing only to the surface location --- and by surface location I mean "christmas tree". A well bore just passing subsurface through a servitude during a directional drill, even if it is perf'd under the servitude (or even throughout the servitude, if horizontal), would not be considered "on land" in regard to Article 37. Do I now understand this correctly? Does anyone know of any Louisiana cases where the courts address the meaning of "on land" in reference to directional or horizontal wells? Its just that I think judges would have all sorts of divergent ideas as to the meaning of "on land" in regard to directional and horizontal wellbores.

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Permalink Reply by Two Dogs, Pirate on January 1, 2009 at 8:42

KB, it is my understanding that with a voluntary unit you have to have a lease if the drill pipe goes under the property. I would think that this would be the case with all units. I ain't no lawyer so take this as just my thought.

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Permalink Reply by Two Dogs, Pirate on January 1, 2009 at 8:58

KB, I haven't read the whole thread just a little of it. Too many chili, cheese and onion hot dogs for lunch. Guess I should have ate the ham, black eyed pease and cabbage.

Permalink Reply by Harold5011 on January 1, 2009 at 9:00

Two dogs, in the situation I'm working on, as to the existing unit, all surface & mineral owners are leased. Its a compulsary unit. There are no subsurface trespass problems. At the moment, I'm only concerned about the continued existence of the portion of a mineral servitude that extends outside of the compulsary unit.

Permalink Reply by Harold5011 on January 1, 2009 at 9:10

"Harold, read the lease. It may have language re: effect of drilling on portion of unitized surface on portions of leased tracts not in the unit."

Yeh - the lease language does worry me, because all the leases contain identical language - to the effect that a well drilled anywhere in the unit is the same as if a well had been drilled on every tract of the unit. But I'm not sure if that language controls in regard to 31:75.

I've also found similar language to this in VUAs in other projects, and had this issue briefed. Its a difficult issue in and buy itself without a lot of precedent - and the were different recommendations depending on whether the VUA is pre or post code.

Permalink Reply by Dion Warr, CPL on January 1, 2009 at 13:55

Harold:

The parties to the instrument creating the servitude are the only ones who can contract to allow for operations or production affecting part of the burden tract to maintain the servitude as to the entire, as provided in 31:75. Lessor and lessee cannot change the contract between these original parties.

As far as the servitude question, as far as I know and IMHO (though a professed not-attorney), if the wellbore is perforated within the confines of the burden tract in a good-faith attempt to establish production from same (irrespective of the surface location of the well), same would constitute use of the mineral servitude (and thus interrupt prescription). Conversely, the mere presence of a surface location (with no intent to exercise a good-faith attempt at production of minerals from said tract) would not serve to interrupt prescription of a mineral servitude.

Several years back, one of my clients drilled a directional well (from an approved exceptional location) with the express intent of bottomholing on an adjacent tract which was subject to an existing mineral servitude. Our title examiner held to this rationale.

It seems like a similar rationale extends to lateral wells (with each of the burden tracts through which the wellbore passes and is perforated would be held as if the well had been drilled on each burden tract. To continue, the non-perforated vertical wellbore would not constitute any part of a good-faith attempt to produce.

I am unaware of any litigation on this particular point; my belief would be that the opinion would be addressed as to the intent to use the mineral servitude in an attempt to produce minerals (as a mineral servitude) as opposed to simply boring under the ground to produce minerals from somewhere else (which would be IMO a definition of use of the subsurface).

Understand this is largely SWAG on my part. Echo KB: consult an attorney if this is an important and material issue to your property and/or your mineral rights.

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Permalink Reply by Dion Warr, CPL on January 2, 2009 at 6:03

KB:

Per Mineral Code, if prescription is interrupted by good-faith operations on the burden tract, the servitude is maintained as to the entire of the servitude, not just a portion. Otherwise, one should just end up following the rules as to use of the servitude only within the unit, which would be no different than any other offsite well maintaining the servitude(s) of lands pooled therewith only insofar as said servitude lie within the unit or units.

If you accept that the perf within the portion of the wellbore which penetrates the burden tract constitutes use of the mineral servitude, I submit that you must conclude that the servitude has been maintained (prescription interrupted) as to the entire of the servitude. My reasoning hinges more upon the intent to use the mineral servitude, rather than a literal parsing of the mineral code (as to whether 'on' constitutes 'on' only, or 'in, on, or under'.

As to the servitude owner being a party to the lease? Absolutely, as this is the party you would wish to lease (the owner of the mineral rights). But the servitude owner cannot by himself modify the terms of the servitude; he must contract with the party with which the servitude was created (or his successor(s) in title) in order to create additional provisions as contemplated and allowed in 31:75 or elsewhere.

Permalink Reply by Dion Warr, CPL on January 2, 2009 at 7:39

Harold:

To the first point: no, I don't think that it does, if you consider the perf to be use of the mineral servitude by drilling a well on the burden tract.

To the second point: I don't believe that the presence of the surface location would be considered use of the minerals, because the intent in what was done was to produce from minerals located off of the tract where the surface located is situated. Thus my conclusion, would be: use of the subsurface, not use of the minerals, therefore: no interruption of prescription.

The example I cited to KB (and the group) actually contained such a situation (except that both parcels were at least partially located within the unit). The conclusion by the examiner was: as to the tract with the surface location (but without a perforated wellbore lying within or under the tract), the servitude on that tract was held only as to the portion of the servitude lying within the unit. As to the adjacent tract into which the wellbore had penetrated and the wellbore bottomholed and being perfed within its confines, the servitude on that tract was held as to the entire of the servitude by good-faith operations and/or production on the burden tract, even those portions of the servitude lying outside the unit.

Permalink Reply by Harold5011 on January 2, 2009 at 7:55

Anyther way of asking the question about the portion of the servitude that is outside of the unit --- does a well bore from an off-site unit well that passes through or is perf'd under the servitude divide the servitude between that portion that is inside the unit and that portion that's outside of the unit?

I've noticed that Royalty Owners Unitization Agreements for multi-well cycling or waterflood units (and in old gas sweep units in condensate reservoirs) frequently specifically address this situation, one way or the other. In these cases, the servitude's grantor and grantee often sign the same couterpart, apparently without much thought. Then, after the ROUA is signed, the Commissioner will come in and impose his own co-extensive compusary secondary recovery unit, to bind everyone or at least, the unsigned strays. The orders will sometimes state that they are subject to conventional agreements and sometimes not. I'm begnning to think that the only thing examining attorneys would agree on as to the continued existence of the portion of the servitude that's outside the unit, is that the problem would only be resolved by stipulation or that the exploration company needs to lease both the grantee and the grantor of the servitude and then place the proceeds in suspense. If the servitude and surface owners do not come to the table, the problem can only be solved by nine years of litigation with a 5/4 split.

Another question along these lines --- if a surface location to a directional drill is situated outside the unit, but is situated on the surface to a servitude that does not include any portion of the unit, does this surface location interrupt the running of prescription as to this undivided servitude?

Permalink Reply by Harold5011 on January 1, 2009 at 8:13

KB - Thank you for the information and guidance. I'm familiar with one subsurface trespass case (Nunez) and I do not think it helps in regard to interpreting the meaning of "on land" as per Article 37. I've come accross this servitude situation a number of times in regard to directional and horizontal wells (and even in situations where there's been considerable subsurface drift) and it just seems as this question should have been addressed by mineral lawyers frequently at seminars or in articles.

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Permalink Reply by BirdDawg, plain ole' idiot on December 31, 2008 at 12:43

Well, let me respond to this as best I can.
I think if they preforated my servitude on my off site well bore, then I think they are subject to conciquineses and repercussions. And another thing, they don't need to be trying to get my cornbread either.
And I am going to Super One Pharmacy RIGHT NOW to check and see if my perscription has been interrupted.
I hope not because this high blood pressure and acid reflux gives me hell.
But regardless my friends, I hope you all have a happy New Year.

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