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Davis Oil Company v. Steamboat Petroleum Corporation

Supreme Court of Louisiana
583 So. 2d 1139 (La. 1991)


Facts

Davis Oil Company (Davis) (plaintiff) and Steamboat Petroleum Corporation (Steamboat) (defendant) were lessees in oil and gas leases on adjacent tracts of land. Davis petitioned the commissioner of conservation (Commissioner) with a proposed unitization plan that did not include portions of Steamboat’s leasehold. Steamboat opposed Davis’s petition and filed a counterproposal with the Commissioner. The Commissioner issued an order establishing a forced unitization that included a portion of Steamboat’s leasehold. The order appointed Davis as operator of the unit. Davis drilled two dry holes on the unit. Davis had offered Steamboat the chance to participate in the drilling, but Steamboat declined. Davis billed Steamboat for a portion of the drilling costs, but Steamboat refused to pay. Davis brought suit against Steamboat, seeking payment. The trial court found that Steamboat was not liable for the costs. The court of appeal reversed. Steamboat appealed.

Rule of Law

Issue

Holding and Reasoning (Dennis, J.)

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