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    <TD class=3DTextSmall><A class=3DTextSmall=20
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      <BR><BR>
      <META content=3DWordPerfect name=3DGenerator>
      <P align=3Dcenter>NO. <A name=3DNO>07-05-0327-CV</A></P><BR =
WP=3D"BR1"><BR=20
      WP=3D"BR2">
      <P>
      <CENTER>IN THE COURT OF APPEALS</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>
      <CENTER>FOR THE SEVENTH DISTRICT OF TEXAS</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>
      <CENTER>AT AMARILLO</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>
      <CENTER>PANEL A</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>
      <CENTER>JUNE 14, 2007</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P><A name=3DDATE></A>
      <CENTER>_____________________</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2"><BR WP=3D"BR1"><BR =
WP=3D"BR2">
      <P align=3Dcenter><A name=3DAPP>PETRO PRO, LTD., L&amp;R ENERGY =
CORPORATION,=20
      NANCY WILSON BRISCOE, JUDITH BROCK SEITZ, AND CAROLYN ROGERS</A>,=20
      APPELLANTS</P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>
      <CENTER>V.</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>
      <CENTER>UPLAND RESOURCES, INC., KCS RESOURCES, INC., GREAT LAKES=20
      ENERGY</CENTER>
      <P></P>
      <P>
      <CENTER>PARTNERS, L.L.C., AND STEVE ZEMKOSKI, APPELLEES</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>
      <CENTER>_________________________________</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>
      <CENTER>FROM THE 31ST DISTRICT COURT OF ROBERTS COUNTY;</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>
      <CENTER>NO. 1893; HONORABLE STEVEN R. EMMERT, JUDGE</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>
      <CENTER>_______________________________</CENTER>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2"><BR WP=3D"BR1"><BR =
WP=3D"BR2">
      <P>Before CAMPBELL and HANCOCK and PIRTLE, JJ.</P>
      <P align=3Dcenter><STRONG>OPINION</STRONG></P>
      <P>This appeal concerns a dispute between assignors, assignees, =
and=20
      intervening royalty owners regarding the construction of two oil =
and gas=20
      wellbore assignments, wherein the assignments expressly limited =
the=20
      assigned interest to "rights in the wellbore" of a given well. =
Presenting=20
      similar issues, Appellants, Petro Pro, Ltd. and L&amp;R Energy=20
      Corporation, and Intervenors, Nancy Wilson Briscoe, Judith Brock =
Seitz,=20
      and Carolyn Rogers, appeal the denial of their respective motions =
for=20
      summary judgment and the grant of summary judgment in favor of =
appellees,=20
      Upland Resources, Inc., KCS Resources, Inc., Great Lakes Energy =
Partners,=20
      L.L.C., and Steve Zemkoski. By their issues, Appellants and =
Intervenors=20
      contend the trial court misconstrued the nature and scope of the =
assigned=20
      interest. Appellants also appeal the denial of their motion to =
have funds=20
      tendered into the court's registry. We reverse and render judgment =

      declaring the rights of the parties as to those issues before the =
trial=20
      court.<A=20
      =
href=3D"http://www.7thcoa.courts.state.tx.us/opinions/htmlopinion.asp?Opi=
nionId=3D11975#N_1_"><SUP>=20
      (1)</SUP></A></P>
      <P align=3Dcenter><STRONG>Background Facts </STRONG></P>
      <P align=3Dcenter><EM>Original Oil and Gas Leases</EM></P><BR =
WP=3D"BR1"><BR=20
      WP=3D"BR2">
      <P>The two assignments in question pertain to rights in the =
wellbore of=20
      the King "F" No. 2 gas well, located on a 704-acre pooled gas unit =
in=20
      Roberts County. The material facts surrounding the well are not =
disputed.=20
      In September 1992 and 1993, Upland Resources, Inc. (hereinafter=20
      individually referred to as "Upland Resources") entered into five =
oil,=20
      gas, and mineral leases involving separate tracts of land in =
Roberts=20
      County. In 1993, Medallion Production Company ("Medallion") =
acquired the=20
      leasehold and spud the King "F" No. 2 well on one of the leased =
tracts=20
      consisting of 500 acres. The tract covered multiple gas-producing=20
      formations, including the Brown Dolomite formation, located at =
depths of=20
      approximately 3,400 to 3,600 feet, and the Cleveland formation, =
located=20
      approximately 6,500 to 6,600 feet beneath the surface. The King =
"F" No. 2=20
      well was completed as a gas well in the Cleveland formation and =
produced=20
      gas in paying quantities. Several months after the well was =
completed,=20
      Medallion pooled the 500-acre tract with 204 acres from an =
adjacent tract=20
      to create an irregular shaped, 704-acre gas unit. The leasehold =
interest=20
      in the 704-acre unit was subsequently acquired by KCS Medallion =
Resources=20
      ("KCS") and MB Operating Co., Inc. ("MB"). Eventually, the =
leasehold area=20
      situated horizontally outside the 704-acre unit and vertically =
below 6,800=20
      feet was released. </P>
      <P>
      <CENTER><EM>"Wellbore Only" Assignments</EM></CENTER>
      <P></P>
      <P>In 1998, for reasons undisclosed in the record, KCS and MB =
decided that=20
      the King "F" No. 2 well was no longer economically viable. =
Consequently,=20
      in November of that year, KCS and MB sold their interests in the =
well at=20
      an auction of oil and gas properties. The winning bidder, L&amp;R =
Energy=20
      ("L&amp;R"), received the interests from KCS and MB via the two=20
      assignments in controversy. The assignments were identical in that =
they=20
      both conveyed the following:</P>
      <P>All of Seller's right, title and interest in and to the oil and =
gas=20
      leases described in Exhibit "A" attached hereto and made a part =
hereof=20
      ("Subject Leases") <EM>insofar and only insofar as said leases =
cover=20
      rights in the wellbore</EM> of the King "F" No. 2 Well.</P><BR=20
      WP=3D"BR1"><BR WP=3D"BR2">
      <P>(Emphasis added). Pursuant to the express terms of the =
assignments,=20
      L&amp;R's leasehold interest became effective on December 1, =
1998.</P>
      <P>
      <CENTER><EM>New Development Activity</EM></CENTER>
      <P></P>
      <P>Several years after the assignments, operators in the area =
began=20
      drilling and completing gas wells in the shallower Brown Dolomite=20
      formation. In May 2003, pursuant to a farmout agreement with KCS, =
Upland=20
      Resources entered the pooled gas unit and completed a horizontal =
gas well=20
      in the Brown Dolomite formation. The well, dubbed the Skeeterbee =
No. 1,=20
      traversed within 600 feet of the King "F" No. 2 well. By June =
2004, Upland=20
      Resources had completed two more gas wells within the 704-acre =
pooled gas=20
      unit, the horizontal Skeeterbee No. 2 and the vertical Skeeterbee =
No. 3.=20
      Both those wells were completed in the Brown Dolomite formation. =
</P>
      <P>Meanwhile, in April 2004, L&amp;R assigned its interest in the =
King "F"=20
      No. 2 well to Petro Pro Ltd. (hereinafter individually referred to =
as=20
      "Petro Pro"). Concerned with Upland Resource's drilling =
activities, Petro=20
      Pro sent a letter to Upland Resources and KCS requesting that both =
parties=20
      clarify their respective interests in the pooled gas unit. Both =
parties=20
      promptly responded with letters stating their belief that Petro =
Pro did=20
      not acquire any leasehold interest outside the confines of the =
King "F"=20
      No. 2 wellbore. Petro Pro replied with a letter stating claims for =

      trespass and conversion and demanding that Appellees vacate the =
leasehold=20
      and cease production from the Skeeterbee wells. </P>
      <P><EM>
      <CENTER>Suit Filed</EM></CENTER>
      <P></P>
      <P>Finally, in September 2004, citing Upland Resources and KCS's =
refusal=20
      to resolve the dispute, Petro Pro and L&amp;R (hereinafter =
collectively=20
      referred to as "Petro") filed the underlying suit against Upland, =
KCS, and=20
      other interested parties, Great Lakes Energy Partners, L.L.C., and =
Steve=20
      Zemkoski (hereinafter collectively referred to as "Upland") for =
trespass,=20
      bad faith trespass, conversion, and money had and received. Petro =
claimed=20
      they owned the exclusive right to produce gas from the entire =
704-acre=20
      pooled gas unit, from the surface to a depth of 6,800 feet. Petro =
also=20
      sought a declaratory judgment declaring the <SPAN=20
      style=3D"FONT-FAMILY: Arial">property rights and ownership =
interests=20
      acquired by the respective parties by virtue of the =
assignments</SPAN> and=20
      an accounting of all proceeds from the sale of gas produced from =
the=20
      Skeeterbee wells. Petro also filed a motion requesting that any =
production=20
      revenue from the Skeeterbee wells be placed into the court's =
registry=20
      until the dispute was resolved. Upland initially responded to the=20
      allegations by filing a general denial. Upon learning of the =
pending=20
      dispute between Petro and Upland, the royalty interest owners in =
the=20
      704-acre pooled gas unit, Nancy Wilson Briscoe, Judith Brock =
Seitz, and=20
      Carolyn Rogers (hereinafter collectively referred to as =
"Intervenors")=20
      filed a plea of intervention seeking damages for the alleged =
breach of=20
      implied covenants and for tortious interference with existing =
contracts.=20
      Intervenors contended that Petro's lawsuit and wrongful claims of=20
      ownership prevented Upland from fully developing the lease and =
protecting=20
      the lease from drainage from adjacent wells. </P>
      <P><EM>
      <CENTER>Competing Motions for Summary Judgment</EM></CENTER>
      <P></P>
      <P>On February 1, 2005, Upland filed a motion for summary judgment =

      contending that Petro's rights were limited to the right to =
produce gas=20
      from the Cleveland formation only and the right to "enhance" that=20
      production. Upland further contended that Petro's rights were =
restricted=20
      to the physical confines of the King "F" No. 2 well only, without =
the=20
      right to deepen the well to other zones or horizons, or the right =
to=20
      perforate the wellbore casing for the purpose of producing any =
other zone=20
      or horizon lying between the surface and the presently producing =
section=20
      of the Cleveland formation. Subsequently, Intervenors filed a =
motion for=20
      partial summary judgment contending Petro had the right to produce =
from=20
      any formation subject to governmental regulations, which limited =
the=20
      horizontal extent of Petro's rights to forty acres surrounding the =
King=20
      "F" No. 2 wellbore. Finally, Petro filed their own motion for =
summary=20
      judgment restating their position that they were the exclusive =
owners of=20
      any portion of leasehold estate that could "reasonably be reached =
and=20
      produced" through the King "F" No. 2 wellbore.</P>
      <P>
      <CENTER><EM>The Trial Court's Judgment</EM></CENTER>
      <P></P>
      <P>Following hearings on the parties' competing motions for =
summary=20
      judgment, the trial court ruled that the King "F" No. 2 wellbore=20
      assignments were unambiguous and granted Upland Resources's motion =
for=20
      summary judgment.<SPAN style=3D"FONT-FAMILY: Arial"> The judgment =
further=20
      stated that "[j]udgment is entered in favor of [Upland =
Resources]."=20
      </SPAN>The court denied Petro and Intervenors' motions for summary =

      judgment and Petro's motion to have funds from production tendered =
into=20
      the court's registry. The trial court also severed and abated =
Intervenors'=20
      damage claims against Petro. </P>
      <P><SPAN style=3D"FONT-FAMILY: Arial">As drafted, the trial =
court's judgment=20
      does not set forth a declaration of the interest and rights =
conveyed by=20
      the assignments.<A=20
      =
href=3D"http://www.7thcoa.courts.state.tx.us/opinions/htmlopinion.asp?Opi=
nionId=3D11975#N_2_"><SUP>=20
      (2)</SUP></A> From the four corners of the judgment, we are left =
to=20
      speculate as to exactly what the trial court determined the rights =
of the=20
      parties under the assignments to be. A properly drafted =
declaratory=20
      judgment should terminate the uncertainty or controversy giving =
rise to=20
      suit by declaring the rights of the parties as to those matters =
upon which=20
      the parties joined issue. <EM>Calvert v. Employees Ret. Sys. of =
Tex.,=20
      </EM>648 S.W.2d 418, 419-20 (Tex.App.-Austin 1983, writ ref'd =
n.r.e.).=20
      <EM>See generally </EM>Robert W. Calvert, <EM>Declaratory =
Judgments in=20
      Texas - Mandatory or Discretionary?, </EM>14 St.Mary's L.J. 1 =
(1982).=20
      Notwithstanding the fact that the parties may have drafted the =
judgment=20
      and submitted it to the trial court "approved as to form," the =
failure of=20
      the judgment to specifically declare those rights was error. =
</SPAN></P>
      <P>In a situation where all parties have moved for summary =
judgment and=20
      one motion is granted and the others are denied, the appellate =
court=20
      should review all parties summary judgment evidence and determine =
all=20
      questions presented. <EM>Bradley v. State ex rel. White</EM>, 990 =
S.W.2d=20
      245, 247 (Tex. 1999). <EM>See also </EM><SPAN=20
      style=3D"FONT-FAMILY: Arial">Tex. R. App. P. 43.2(c). The =
reviewing court=20
      should then render the judgment that the trial court should have =
rendered.=20
      <EM>Bradley, </EM>990 S.W.2d at 247. The questions presented in =
this case=20
      are, what interest is conveyed by the assignments, and what are =
the rights=20
      of the parties? Therefore, this Court will construe the =
assignments in=20
      question and declare the interests conveyed and rights of the =
parties as=20
      to those matters upon which the parties have joined issue.</SPAN> =
By this=20
      appeal, Petro and Intervenors urge us to adopt their respective=20
      interpretations of the wellbore assignments and contend they are =
entitled=20
      to judgment as a matter of law. Upland Resources, meanwhile, =
maintains=20
      that the trial court correctly construed the assignments in their =
favor.=20
      As previously stated, the trial court's construction is not =
readily=20
      apparent from the face of the judgment. Because a declaration of =
the=20
      property rights and ownership interests of the parties is a matter =
of law=20
      where the instrument is unambiguous, we will examine the =
assignment=20
      language to determine the actual interest conveyed. In doing so, =
we begin=20
      by determining the applicability of some established canons of =
contract=20
      construction.</P>
      <P align=3Dcenter><STRONG>Applicability of Canons of Contract=20
      Construction</STRONG></P>
      <P>The goal when construing an unambiguous agreement is to =
determine and=20
      give effect to the parties' intent as expressed within the "four =
corners"=20
      of the instrument. <EM>See</EM> <EM>Gulf Ins. Co. v. Burns Motors, =

      Inc.</EM>, 22 S.W.3d 417, 423 (Tex. 2000); <EM>Luckel v. =
White</EM>, 819=20
      S.W.2d 459, 461-63 (Tex. 1991). Such intent is garnered from the =
language=20
      used in the writing when read as a whole. <EM>Cross Timbers Oil =
Co. v.=20
      Exxon Corp.</EM>, 22 S.W.3d 24, 26 (Tex.App.-Amarillo 2000, no =
pet.).=20
      Stated differently, we must analyze the entire instrument to =
understand=20
      and harmonize all parts of the instrument so as to give effect to =
all of=20
      its provisions. <EM>Luckel, </EM>819 S.W.2d at 462; <EM>Questa =
Energy=20
      Corp. v. Vantage Point Energy, Inc.</EM>, 887 S.W.2d 217, 221=20
      (Tex.App.-Amarillo 1994, writ denied). Construction of an =
unambiguous=20
      instrument is a question of law to be resolved by the court. =
<EM>Luckel,=20
      </EM>819 S.W.2d at 461. We afford the words contained in the =
agreement=20
      their plain, ordinary, and generally accepted meanings, unless the =

      instrument requires otherwise. <EM>E.g., Cross Timbers</EM>, 22 =
S.W.3d at=20
      27-28; <EM>Sun Operating Ltd. Partnership v. Holt</EM>, 984 S.W.2d =
277,=20
      285 (Tex.App.-Amarillo 1998, pet. denied).</P>
      <P>By their brief, Petro contends that the absence of express =
limiting=20
      language means that Upland intended to assign their leasehold =
interest in=20
      the entire 704-acre pooled gas unit, including the right to extend =
one or=20
      more horizontal drainholes from the King "F" No. 2 wellbore into =
other=20
      productive areas of the lease. Similarly, Petro insists that the=20
      conveyance of "[a]ll of Seller's right, title and interest" in the =
leases=20
      gives them title to all the oil, gas, and minerals beneath the =
leasehold=20
      regardless of where it is located. Petro contends that this =
interpretation=20
      is consistent with the various canons of construction that pertain =
to=20
      conveyances of real property, namely the canon to "construe in =
favor of=20
      the grantee" and the canon of "conveyance of the greatest estate," =
which=20
      they claim is embodied in =A7 5.001(a) of the Property Code.<A=20
      =
href=3D"http://www.7thcoa.courts.state.tx.us/opinions/htmlopinion.asp?Opi=
nionId=3D11975#N_3_"><SUP>=20
      (3)</SUP></A> Furthermore, Petro urges us to consider Upland's =
actions=20
      with respect to other assignments, which are unrelated to the =
present case=20
      but contain similar language.</P>
      <P>At the opposite extreme, Upland contends that the assignments =
should be=20
      construed in light of the facts as they existed at the time of =
conveyance,=20
      thereby restricting Petro's rights to the production of gas from =
the=20
      existing wellbore and the Cleveland formation only. While =
Intervenors=20
      agree that operations should be confined to the existing wellbore, =
they=20
      claim that Petro's rights should be construed in such a way that =
they are=20
      limited, in accordance with Railroad Commission well density =
rules, to an=20
      undetermined forty surface acres surrounding the wellbore. =
Intervenors=20
      further contend that the assignments should be construed so as to =
allow=20
      Petro the right to plug back the wellbore and recomplete the well =
in the=20
      Brown Dolomite formation.</P>
      <P>If, after application of the canons of contract construction, =
an=20
      agreement is susceptible of only one reasonable meaning, the =
contract is=20
      unambiguous. The construction of a written, unambiguous instrument =
is a=20
      question of law for the court. <EM>See</EM> <EM>OTC Petroleum =
Corp. v.=20
      Brock Exploration Corp.</EM>, 835 S.W.2d 792, 794 =
(Tex.App.-Amarillo 1992,=20
      writ denied). In such instance, the courts will give effect to the =

      objective intention of the parties as expressed or as is apparent =
in the=20
      writing, since the parties generally intend every clause to have =
some=20
      effect and in some measure to evidence their agreement. =
<EM>Id.</EM> Also,=20
      extrinsic evidence of other assignments is irrelevant to the =
parties'=20
      intentions in the present case. <EM>See Neel v. Alpar Resources,=20
      Inc.</EM>, 797 S.W.2d 361, 363-66 (Tex.App.-Amarillo 1990, no =
writ)=20
      (explaining that an unambiguous instrument will be enforced as =
written and=20
      without consideration of other instruments).</P>
      <P>When construing agreements, an agreement which is worded in =
such a=20
      fashion that it can be given a certain or definite legal meaning =
is not=20
      ambiguous and will be enforced as written. <EM>HECI Exploration =
Co. v.=20
      Neel</EM>, 982 S.W.2d 881, 888-89 (Tex. 1998). Here, none of the =
parties=20
      allege that the assignments are ambiguous, and we agree that they =
are not.=20
      Therefore, we restrict our analysis to the plain language of the=20
      assignments to determine the nature and scope of the assigned =
interest.=20
      <EM>See Yzaguirre v. KCS Resources, Inc.</EM>, 53 S.W.3d 368, =
372-73 (Tex.=20
      2001).</P><BR WP=3D"BR1"><BR WP=3D"BR2"><BR WP=3D"BR1"><BR =
WP=3D"BR2">
      <P align=3Dcenter><STRONG>Nature and Scope of the Assigned =
Interest=20
      </STRONG></P>
      <P>As recited above, the assignment language describes the =
assigned=20
      interest as "[a]ll of Seller's right, title and interest in and to =
the oil=20
      and gas leases . . . insofar and only insofar as said leases cover =
rights=20
      in the wellbore of the King "F" No. 2 Well." While the parties =
agree that=20
      this language unambiguously assigns leasehold rights in the King =
"F" No. 2=20
      wellbore, their interpretations regarding the nature and extent of =
the=20
      estate conveyed differ greatly. </P>
      <P>An oil and gas lease conveys an interest in real property, as =
does the=20
      assignment of all or a portion thereof. <EM>Cherokee Water Co. v.=20
      Forderhause, </EM>641 S.W.2d 522, 525 (Tex. 1982); <EM>ExxonMobil =
Corp. v.=20
      Valence Operating Co.,</EM> 174 S.W.3d 303 (Tex.App.-Houston=20
      [1<SUP>st</SUP> Dist.] 2005, pet. denied). A lessee under an oil =
and gas=20
      lease owns a determinable fee in the oil and gas in place. =
<EM>Cherokee=20
      Water Co.</EM>, 641 S.W.2d at 525. In this case, the estate =
conveyed was=20
      part of the leasehold estate created by the underlying oil and gas =
leases.=20
      Therefore, the assignments assigned to Petro a determinable fee =
interest=20
      in the oil and gas in place. </P>
      <P><SPAN style=3D"FONT-FAMILY: Arial">Like the phrase "subject =
to," the=20
      phrase "insofar and only insofar" constitutes a limitation of the =
grant.=20
      <EM>See, e.g., Walker v. Foss</EM>, 930 S.W.2d 701, 707 =
(Tex.App.-San=20
      Antonio 1996, no writ) (stating that the principal function of =
such a=20
      limitation is protecting the grantor against a claimed breach of=20
      warranty). It neither conveys an interest to the assignee, nor =
does it=20
      reserve or retain an interest in favor of the assignor. It merely =
limits=20
      the extent of the interest granted. <EM>Id. at </EM>706-07. =
Consequently,=20
      it does not serve to limit the "rights" conveyed to Petro, nor =
does it=20
      reserve to Upland any exclusive rights.</SPAN> Therefore, the =
assignee, in=20
      this case Petro, received all of the rights appurtenant to the =
estate=20
      conveyed. So, what was the estate conveyed and what are the rights =

      appurtenant thereto?</P>
      <P>
      <CENTER><EM>Estate Conveyed</CENTER></EM>
      <P></P>
      <P><EM></EM>To settle this dispute and define the estate conveyed, =
we must=20
      first determine the depth (vertical rights) and area (horizontal =
rights)=20
      covered by the assignments. <EM>See </EM>Lawrence P. Terrell, =
<EM>Limited=20
      Assignments-Who Gets What?,</EM> 35 Rocky Mtn. Min. L. Inst. 17, =
=A7 17.02=20
      (1989) (explaining that careful consideration of these two =
elements is=20
      essential to defining the interests transferred and retained). =
<EM>See=20
      also </EM>Kurt M. Peterson, <EM>Wellbores: Shedding Light on a=20
      Transactional Black Hole,</EM> 48 Rocky Mtn. Min. L. Inst. 13,=20
      =A713.08[3][d] (2002). <EM></EM>This information, in turn, will =
allow us to=20
      define the extent of assignees' leasehold rights in the King "F" =
No. 2=20
      wellbore.</P>
      <P>
      <CENTER><EM>Vertical Limit of Assignment</EM></CENTER>
      <P></P>
      <P>Regarding this issue, Upland contends that the "plain, =
grammatical=20
      meaning" of the words used in the assignments limits the assigned =
interest=20
      to the horizon that was open in the wellbore on the date of the=20
      assignments. In other words, Upland claims Petro's rights are =
strictly=20
      limited to the Cleveland formation. But adopting this stance would =
be=20
      inserting language into the assignments that does not exist. =
Furthermore,=20
      it would require a determination of the facts, outside the four =
corners of=20
      the assignment, to ascertain the extent of the interest =
transferred.=20
      Contrary to Upland's contention, the assignments are completely =
devoid of=20
      language limiting Petro's leasehold interest to the Cleveland =
formation.=20
      Without such limiting language, we find no support for Upland's =
contention=20
      and agree with Petro and Intervenors' contention that the =
assignment=20
      language does not limit wellbore operations to a specific depth or =

      formation. Therefore, we hold that the vertical limit of the =
assignments=20
      is defined by the depth of the wellbore as assigned.</P>
      <P>
      <CENTER><EM>Horizontal Limit of Assignment</EM></CENTER>
      <P></P>
      <P>Similarly, there is a lack of support for Petro's claim that =
they=20
      acquired horizontal rights coextensive with the 704-acre pooled =
gas unit=20
      and Intervenors' claim that Petro acquired leasehold rights in =
forty=20
      surface acres surrounding the King "F" No. 2 wellbore. Just as the =

      assignment language does not restrict Petro's operations to a =
specific=20
      vertical producing interval, it also does not expressly or =
impliedly=20
      convey leasehold rights in any horizontal surface acreage. <EM>Cf. =

      </EM>David E. Pierce, <EM>An Analytical Approach to Drafting=20
      Assignments,</EM> 44 Sw. L.J<EM>. </EM>943, 955 (1990) (explaining =
that,=20
      presumably, the assignee is entitled to the production allocated =
to the=20
      [lease] well even though he owns none of the required leasehold =
acreage).=20
      </P>
      <P>On the issue of the horizontal extent of the estate conveyed,=20
      Intervenors cite the language in the assignments stating that the =
assigned=20
      interests are "subject to . . . governmental regulations." Relying =
on this=20
      "governmental regulations clause," Intervenors contend that, =
pursuant to=20
      Railroad Commission Rule 38, when Petro acquired rights in the =
King "F"=20
      No. 2 wellbore, they also acquired rights in the minimum amount of =
surface=20
      acreage needed to obtain a plug back permit for recompletion in =
the Brown=20
      Dolomite formation. <EM>See </EM>16 Tex. Admin. Code =A7=A7 3.5., =
3.38. (2007)=20
      (Tex. R.R. Comm'n, Application To Drill, Deepen, Reenter, or Plug =
Back;=20
      Well Densities). We disagree. </P>
      <P>As Intervenors acknowledge, the Railroad Commission is a =
regulatory=20
      agency and lacks the authority to determine ownership of land or =
property=20
      rights. <EM>See, e.g.,</EM> <EM>Amarillo Oil Co. v. Energy-Agri =
Products,=20
      Inc.</EM>, 794 S.W.2d 20, 26 (Tex. 1990). The government =
regulations=20
      clause does not provide for additional leasehold rights contingent =
upon=20
      the assignee seeking to commence certain wellbore operations. =
Simply put,=20
      there is nothing in the assignments that suggests that, because =
the=20
      assigned interest is subject to governmental regulation, the =
nature and=20
      scope of the interest assigned may vary. For this reason, we find=20
      Intervenors position to be inconsistent with the plain language of =
the=20
      assignments.</P>
      <P>Because the assignments are limited to "rights in the wellbore" =
we must=20
      determine what the parties intended by that term. The assignments =
do not=20
      describe the King "F" No. 2 wellbore or even define the term =
"wellbore,"=20
      therefore, we must turn to its generally accepted meaning. A =
wellbore,=20
      sometimes called a borehole, is the hole in the ground created by =
the=20
      process of drilling or boring a well. 8 Patrick H. Martin &amp; =
Bruce M.=20
      Kramer, <EM>Williams &amp; Meyers Oil and Gas Law, Manual of =
Terms,</EM>=20
      107, 1207 (9th ed. 1998). A well, meanwhile, is defined as the =
"orifice in=20
      the ground made by drilling, boring or any other manner, from =
which any=20
      petroleum or gas is obtained or obtainable . . . ." <EM>Id.</EM> =
at 1205.=20
      When read in context with the assignment language, these =
definitions=20
      indicate that Petro's leasehold rights extend horizontally only to =
the=20
      area of the hole identified as the King<EM> </EM>"F" No. 2 well =
and, by=20
      implication, such surface area adjacent thereto as is reasonably =
necessary=20
      to operate the well.</P>
      <P>
      <CENTER><EM>Rights Appurtenant</EM></CENTER>
      <P></P>
      <P>Consistent with the horizontal and vertical limitations of =
Petro's=20
      interest, the assignments also conveyed all rights appurtenant to =
the=20
      underlying oil and gas leases. One of those rights was the right =
to=20
      develop the leased premises for the purpose of "exploring, =
drilling,=20
      mining, operating for and producing oil, gas and other minerals." =
To that=20
      extent, Petro's interest was not limited to production of gas from =
the=20
      Cleveland formation. Therefore, subject to governmental =
regulations, the=20
      assignments in question granted Petro the right to rework the King =
"F" No.=20
      2 well so as to produce from any formation that might possibly be =
reached=20
      from the existing wellbore. This right to develop, however, does =
not=20
      extend beyond the present confines of the wellbore. In other =
words, Petro=20
      does not have the right to extend the present well beyond its =
current=20
      depth, nor does it have the right to drill horizontally beyond the =

      confines of the existing wellbore.<SPAN=20
      style=3D"TEXT-DECORATION: underline"></SPAN></P>
      <P>Another one of the rights assigned was the right to produce. =
Subject to=20
      the duties imposed by the lease (<EM>e.g</EM>., the duty to pay =
the=20
      original lessor a royalty for oil or gas taken, the duty to pay =
for=20
      damages occasioned by its operations, and the duty to restore the =
surface=20
      upon abandonment of the well), Petro has the exclusive right to =
produce=20
      oil and gas from the King "F" No. 2 well. Conversely, because the=20
      assignments in question did not transfer Upland's determinable fee =

      interest in the oil and gas in place outside of the wellbore, =
Petro does=20
      not own an interest in the oil and gas in place outside the =
confines of=20
      the King "F" No. 2 well. For these reasons, completion of the =
Skeeterbee=20
      wells did not constitute a trespass onto property which Petro =
owned. For=20
      these same reasons, the production of gas from the Skeeterbee =
wells did=20
      not constitute conversion of property belonging to Petro. Because =
Petro=20
      does not have an ownership interest in the gas produced from the=20
      Skeeterbee wells, Petro is not entitled to a portion of the =
proceeds or to=20
      an accounting.</P>
      <P>To the extent that the leases embodied other rights not =
exclusive to=20
      the possession and use of the wellbore in question (<EM>e.g</EM>., =
the=20
      right to extend the lease by the payment of shut-in royalties), =
the=20
      assignment created a co-tenancy with the other lessees, with each =
party=20
      sharing those incorporeal appurtenant rights.</P>
      <P>The practical effect of this construction is that Petro owns =
the=20
      exclusive right to produce any oil, gas, or other minerals that =
may be=20
      produced from the King<EM> "</EM>F" No. 2 wellbore, consistent =
with the=20
      terms and conditions of the original leases. Subject to =
governmental=20
      regulations, Petro also owns the right to develop the wellbore and =
conduct=20
      any operations within the wellbore that would facilitate or =
enhance that=20
      development and production, including the right to produce from =
other=20
      formations. Upland retained the exclusive right, subject to the =
terms and=20
      conditions of the original leases and any applicable governmental=20
      regulations, to produce any oil, gas, or other minerals that may =
be=20
      extracted from the leased premises, other than through the =
King<EM>=20
      "</EM>F" No. 2 wellbore. Although this construction describes a =
relatively=20
      restrictive leasehold interest, it is consistent with the fact =
that, from=20
      an area standpoint, a wellbore assignment is the narrowest form of =
oil and=20
      gas assignment. Lawrence P. Terrell, <EM>Limited Assignments-Who =
Gets=20
      What?,</EM> 35 Rocky Mtn. Min. L. Inst. 17, =A7 17.02 (1989).</P>
      <P>Our learned colleague's dissenting opinion states, "Rather than =

      concluding the parties intended to grant Petro the right to =
recomplete the=20
      well to produce <EM>gas it does not own</EM>, we would construe =
the=20
      assignments' language in a manner consistent with our state's=20
      ownership-in-place theory." (<EM>emphasis added</EM>) While the =
concept of=20
      producing oil and gas that one does not own may seem =
<EM>unfair</EM>, it=20
      is hardly inconsistent with the ownership-in-place theory of =
mineral=20
      ownership. To the contrary, it is entirely consistent with over a =
hundred=20
      years of precedent pertaining to the corollary doctrine of the =
"rule of=20
      capture."<A=20
      =
href=3D"http://www.7thcoa.courts.state.tx.us/opinions/htmlopinion.asp?Opi=
nionId=3D11975#N_4_"><SUP>=20
      (4)</SUP></A> The rule of capture is a rule of non-liability that=20
      determines what remedies, if any, that an adjacent landowner has =
against=20
      his neighbor for production of migratory subsurface minerals =
belonging to=20
      the owner-in-place. Essentially, the rule provides that, absent =
malice or=20
      willful waste, landowners have the right to produce any migratory=20
      subsurface minerals that they can "capture" without being liable =
to their=20
      neighbor, even if in doing so they deprive their neighbor of their =

      ownership interest in the actual minerals. <EM>See Sipriano v. =
Great=20
      Spring Waters of America, Inc., </EM>1 S.W.3d 75 (Tex. 1999) =
(discussing=20
      the correlative rights of adjacent landowners to produce =
groundwater).=20
      Even though the legal effect of this Court's interpretation is to =
allow=20
      Petro the right to produce gas that it does not own until it =
captures it,=20
      and merely because that result may seem to be inconsistent with =
what=20
      reasonable people would consider fair, that interpretation does =
give=20
      effect to the intent expressed within the "four corners" of the=20
      instrument. It has long been recognized that, absent exigent=20
      circumstances, even though the intent of the parties may seem =
illogical,=20
      the law will not protect you from an improvident bargain.<A=20
      =
href=3D"http://www.7thcoa.courts.state.tx.us/opinions/htmlopinion.asp?Opi=
nionId=3D11975#N_5_"><SUP>=20
      (5)</SUP></A></P>
      <P>
      <CENTER><STRONG>Conclusion</STRONG></CENTER>
      <P></P>
      <P><SPAN style=3D"FONT-FAMILY: Arial">In summary, we find that the =
trial=20
      court erred in rendering its declaration of the rights of the =
parties. To=20
      that extent, Intervenor's sole issue and Petro's issues one though =
three=20
      are subsumed within the disposition of Petro's fourth issue, which =
is=20
      sustained in part (as to the granting of summary judgment in favor =
of=20
      Upland's construction of the assignments) and overruled in part =
(as to the=20
      denying of Petro's Motion for Partial Summary Judgment and =
Intervenor's=20
      First Amended Motion for Partial Summary Judgment in favor of =
their=20
      respective construction of the assignments). </SPAN>Because we =
also find=20
      that Petro did not have title to the oil and gas in place outside =
of the=20
      King "F" No. 2 wellbore, we conclude that they would not be =
entitled to an=20
      accounting of future production from the Skeeterbee wells.<A=20
      =
href=3D"http://www.7thcoa.courts.state.tx.us/opinions/htmlopinion.asp?Opi=
nionId=3D11975#N_6_"><SUP>=20
      (6)</SUP></A> Because Petro would not be entitled to have funds =
from=20
      current production tendered into the court's registry, Petro's =
fifth issue=20
      regarding the same is also overruled.<SPAN=20
      style=3D"FONT-FAMILY: Arial"></SPAN></P>
      <P><SPAN style=3D"FONT-FAMILY: Arial">We reverse the judgment of =
the trial=20
      court and render judgment declaring that</SPAN> the wellbore =
assignments=20
      in question transfer to the assignee an estate that extends to the =

      physical limits of the wellbore, together with all of the =
appurtenant=20
      rights incident to the underlying lease. <SPAN=20
      style=3D"COLOR: red"></SPAN>Accordingly, the plain language of the =

      assignments conveys to Petro the oil, gas and other minerals in =
place=20
      within the confines of the King "F" No. 2 wellbore, together with =
those=20
      rights appurtenant to the original leases as may be necessary to =
the=20
      production of those minerals and to the full use and enjoyment of =
that=20
      wellbore, including, but not limited to the right to produce from =
any=20
      formation traversed by the wellbore. As a result, Petro did not =
acquire=20
      title to the gas in place outside of the King "F" No. 2 wellbore =
or the=20
      right to extend the existing wellbore into other areas of the =
lease. We=20
      further hold that Upland retains their respective interest in the=20
      remainder of the leasehold estate, and the rights appurtenant =
thereto.=20
      Petro's claims of trespass, bad faith trespass, conversion, and =
money had=20
      and received are dismissed and their request that monies from =
current=20
      production from the Skeeterbee wells be placed into the registry =
of the=20
      court is denied. </P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>Patrick A. Pirtle</P>
      <P>Justice</P>
      <P></P><BR WP=3D"BR1"><BR WP=3D"BR2">
      <P>Campbell, J., concurring and dissenting.=20
      <P><A name=3DN_1_>1. </A>Although, ultimately, we seek to declare =
the=20
      ownership interests and rights of the parties, we are constrained =
to=20
      declare only those interests and rights that were at issue before =
the=20
      trial court. The rights and duties set forth herein should not be=20
      construed as an exhaustive list of all of the rights and duties =
arising=20
      from the contract between the parties. Any attempt to set forth =
all of the=20
      rights and duties arising from the oil and gas leases at issue =
would be=20
      both foolish and advisory. Judicial authority does not embrace the =
giving=20
      of advisory opinions. <EM>Firemen's Ins. Co. of Newark, N.J. v.=20
      Burch,</EM> 442 S.W.2d 331, 333 (Tex. 1968).=20
      <P><A name=3DN_2_>2. </A>The judgment merely recites that the =
assignments in=20
      question are "unambiguous" and "grant[s] Defendant's motion for =
summary=20
      judgment and den[ies] Plaintiff's motion for summary judgment and=20
      Intervenors' motion for summary judgment . . . ."=20
      <P><A name=3DN_3_>3. </A>The canon of conveyance of the greatest =
estate=20
      provides that the instrument should be construed to confer to the =
grantee=20
      the largest estate that the terms of the instrument will permit. =
<EM>See=20
      generally </EM>Bruce M. Kramer, <EM>The Sisyphean Task of =
Interpreting=20
      Mineral Deeds and Leases: An Encyclopedia of Canons of =
Construction,</EM>=20
      24 Tex. Tech L. Rev. 1, 117-24. Section 5.001(a) states that "[a]n =
estate=20
      in land . . . is a fee simple unless the estate is limited by =
express=20
      words or unless a lesser estate is conveyed or devised by =
construction or=20
      operation of law." Tex. Prop. Code Ann. =A7 5.001(a) (Vernon =
2004). <EM>See=20
      also Ladd v. DuBose, </EM>344 S.W.2d 476, 480 (Tex.App.-Amarillo =
1961, no=20
      writ), <EM>citing Waters v. Ellis,</EM> 158 Tex. 342, 312 S.W.2d =
231, 234=20
      (1958).=20
      <P><A name=3DN_4_>4. </A>The Texas Supreme Court adopted the =
common-law rule=20
      of capture in 1904 in the case of <EM>Houston &amp; Texas Central =
Railway=20
      Co. v. East, </EM>98 Tex. 146, 81 S.W. 279 (1904).=20
      <P><A name=3DN_5_>5. </A><EM>High Plains Nat. Gas Co. v. Railroad =
Com'n of=20
      Tex., </EM>467 S.W.2d 532 (Tex.Civ.App.-Austin, 1971, <EM>writ =
ref'd=20
      n.r.e.); Carter v. Carter, </EM>5 Tex. 93, 1849 WL 4064 (Tex. =
1849).=20
      <P><A name=3DN_6_>6. </A>We express no opinion as to whether or =
not Petro=20
      may be entitled to an accounting of past production based upon any =
claim=20
      of damages which might have resulted from any tortious =
interference with=20
      their right of production for the reason that no such claims have =
been=20
      made.</P></TD></TR></TBODY></TABLE></BODY></HTML>

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A.TextSmallJust:hover {
	FONT-WEIGHT: bold
}
.TextSmallWhite {
	FONT-WEIGHT: normal; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; COLOR: =
white; FONT-FAMILY: Arial Narrow
}
.TextWhite {
	FONT-WEIGHT: normal; FONT-SIZE: 10pt; COLOR: white; FONT-FAMILY: =
Tahoma, Arial, Helvetica, sans-serif
}
A.TextWhite {
=09
}
A.TextWhite:hover {
	FONT-WEIGHT: bold
}
.LinksSite {
	FONT-WEIGHT: normal; FONT-SIZE: 9pt; COLOR: #000099; FONT-FAMILY: Arial =
Narrow; TEXT-DECORATION: none
}
A.LinksSite {
=09
}
A.LinksSite:hover {
	FONT-WEIGHT: bold
}
.TextNotify {
	FONT-WEIGHT: normal; FONT-SIZE: 9pt; COLOR: #000099; FONT-FAMILY: Arial =
Narrow
}
.SiteMaster {
	FONT-WEIGHT: bold; FONT-SIZE: 14pt; COLOR: #000099; LINE-HEIGHT: =
normal; FONT-STYLE: normal; FONT-FAMILY: Tahoma, Arial, Helvetica, =
sans-serif; TEXT-DECORATION: underline
}
A.SiteMaster {
	LINE-HEIGHT: normal; TEXT-DECORATION: underline
}
A.SiteMaster:hover {
	COLOR: blue
}
.SiteMenu {
	FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000099; LINE-HEIGHT: =
normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; =
TEXT-DECORATION: none
}
A.SiteMenu {
	FONT-WEIGHT: bold; TEXT-DECORATION: none
}
A.SiteMenu:hover {
	COLOR: blue
}
.SiteBase {
	FONT-WEIGHT: bold; FONT-SIZE: 9pt; COLOR: #000099; LINE-HEIGHT: normal; =
FONT-STYLE: normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; =
TEXT-DECORATION: none
}
A.SiteBase {
	FONT-WEIGHT: bold; COLOR: maroon; FONT-FAMILY: Tahoma, Arial, =
Helvetica, sans-serif; TEXT-DECORATION: none
}
A.SiteBase:hover {
	COLOR: blue
}
.ErrorNormal {
	FONT-WEIGHT: normal; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; COLOR: red; =
FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif
}
.ErrorSmall {
	FONT-WEIGHT: normal; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; COLOR: red; =
FONT-FAMILY: Arial Narrow
}
.SystemMSG {
	FONT-WEIGHT: bold; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; COLOR: white; =
FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; BACKGROUND-COLOR: =
navy
}
.SystemErrorMSG {
	FONT-WEIGHT: bold; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; COLOR: white; =
FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; BACKGROUND-COLOR: red
}
.buttonUnused {
	PADDING-RIGHT: 1pt; PADDING-LEFT: 1pt; FONT-WEIGHT: normal; FONT-SIZE: =
9pt; PADDING-BOTTOM: 1pt; MARGIN: 1pt; COLOR: #fff5d7; PADDING-TOP: 1pt; =
BACKGROUND-COLOR: #576a9d; font-face: Tahoma, Arial, Helvetica, =
sans-serif
}
.buttonTanUnused {
	PADDING-RIGHT: 1pt; PADDING-LEFT: 1pt; FONT-WEIGHT: normal; FONT-SIZE: =
9pt; PADDING-BOTTOM: 1pt; MARGIN: 1pt; COLOR: #576a9d; PADDING-TOP: 1pt; =
BACKGROUND-COLOR: #fff5d7; font-face: Tahoma, Arial, Helvetica, =
sans-serif
}
.TextLargeBlue {
	FONT-WEIGHT: bold; FONT-SIZE: 12pt; COLOR: #000099; LINE-HEIGHT: =
normal; FONT-STYLE: normal; FONT-FAMILY: Tahoma, Arial, Helvetica, =
sans-serif; TEXT-ALIGN: left
}
.DocketHeaderTitle {
	FONT-WEIGHT: bold; FONT-SIZE: 14pt; COLOR: black; LINE-HEIGHT: normal; =
FONT-FAMILY: Tahoma, Arial, ' Helvetica', sans-serif; TEXT-ALIGN: center
}
.TextLargeBlack {
	FONT-WEIGHT: bold; FONT-SIZE: 11pt; COLOR: black; LINE-HEIGHT: normal; =
FONT-STYLE: normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; =
TEXT-ALIGN: left
}
.TextLargeBlackcenter {
	FONT-WEIGHT: bold; FONT-SIZE: 11pt; COLOR: black; LINE-HEIGHT: normal; =
FONT-STYLE: normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; =
TEXT-ALIGN: center
}
.TextBlue {
	FONT-WEIGHT: normal; FONT-SIZE: 10pt; COLOR: #000099; LINE-HEIGHT: =
normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif
}
A.TextBlue {
	FONT-WEIGHT: normal; FONT-SIZE: 10pt; COLOR: #000099; LINE-HEIGHT: =
normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; =
TEXT-DECORATION: none
}
.TextRed {
	FONT-WEIGHT: normal; FONT-SIZE: 12pt; COLOR: red; LINE-HEIGHT: normal; =
FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif
}
.TextHidenGray {
	FONT-SIZE: 0pt; COLOR: #ebebe1; LINE-HEIGHT: normal; FONT-FAMILY: =
Tahoma, Arial, Helvetica, sans-serif; TEXT-ALIGN: left
}
.Time {
	FONT-WEIGHT: bold; FONT-SIZE: 10px; COLOR: red; LINE-HEIGHT: 4em; =
FONT-FAMILY: Arial, Helvetica, sans-serif; TEXT-ALIGN: center
}

------=_NextPart_000_0034_01C8DDB9.74B7F400--
