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Springer Ranch, Ltd. v. Jones

Texas Court of Appeals
421 S.W.3d 273 (Tex. App. 2013)


Facts

Alice Burkholder owned 8,545 acres of land in Texas. Burkholder signed an oil-and-gas lease on the entire property. The surface estate was subdivided into three tracts, with Springer Ranch, Ltd. (Springer) (plaintiff) owning an undivided interest in one tract and Rosalie Matthews Sullivan (defendant) owning an undivided interest in another tract. In 1993, the three subdivision owners, including Springer and Sullivan, entered into a contract providing that all royalties under the Burkholder lease would be “paid to the owner of the surface estate on which [the producing well was] situated.” The contract covered six vertical wells, two on each of the three tracts, that were in existence at the time of the contract’s execution. Approximately 20 years after the execution of the contract, a horizontal well was drilled. The wellhead was on Springer’s surface estate, but the well’s drainhole ran horizontally underground and into the area underneath Sullivan’s surface estate. Sullivan demanded a portion of the royalty payments resulting from this well from the well’s operator. Springer argued that according to the terms of the contract, Springer was entitled to all royalties resulting from the minerals produced from the new well. Springer brought suit against Sullivan, seeking a declaratory judgment to this effect. The trial court found that the terms of the contract required that royalties be paid based on the location of the productive portions of the well. Springer appealed.

Rule of Law

Issue

Holding and Reasoning (Chapa, J.)

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