Central Natural Resources, Inc. v. Davis Operating Co.

201 P.3d 680 (Kan. 2009)

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Central Natural Resources, Inc. v. Davis Operating Co.

Kansas Supreme Court
201 P.3d 680 (Kan. 2009)

SC

Facts

A landowner conveyed to Central Natural Resources, Inc.’s (Central) (plaintiff) predecessor in interest “all coal without reference to quality or quantity . . . together with the right to mine and remove same.” The coalification process produced coalbed methane gas (CBM) and other gases. Some of the CBM remained in the coal after it was processed. At the time of the conveyance, the general understanding of CBM was that it was a dangerous gas with no value. Subsequently, Davis Operating Co. and other oil and gas companies (defendants) obtained oil and gas leases from the landowner. The defendants drilled on the land and produced CBM. Central filed a quiet title action to assert its ownership of the produced CBM. Central argued that CBM was produced by the coalification process. According to Central, this meant that given CBM’s origins, it should be considered part of the coal estate. In addition, Central urged the court to adopt a rule that if a coal deed was the first mineral conveyance on a tract of land, the owner of the coal rights also obtained ownership of all other substances within the coal formation. The trial court granted the defendants’ motion for summary judgment. Central appealed.

Rule of Law

Issue

Holding and Reasoning (Johnson, J.)

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