Carson v. The Railroad Commission Of Texas

669 S.W.2d 315 (1984)

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Nature of the Case

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Facts

Ps are owners of 13/64 of a 1/8 royalty interest in several contiguous tracts subject to a number of oil and gas leases. Two of these tracts are subject to a forced pooling order of D. Of the 97 interest owners in the pooled unit, Ps are the only ones who refused to ratify a voluntary pooling agreement proposed by BTA, the working interest owner. Ps' lease, covering tracts 5 and 7 of the pooled unit. BTA commenced drilling a well on Tract 7 on January 13, 1980 and completed it as a producer on July 3, 1980. Prior to this time, D had approved a proration unit of 642.39 acres. Sales commenced from the well in September of 1980. The well is located on one of the tracts in which Ps own a royalty interest. In November of 1980, BTA made a written proposal to all royalty interest owners in the 642.39 proration unit to share in production from the well on an acreage basis. This deal reduced Ps' interest in the gross production from the subject well by approximately two-thirds, while allowing owners of royalty interests who would not otherwise participate in production from the well (owners of royalty interests in non-drill site tracts) to share in these proceeds. Ps were the only royalty owners who refused to ratify the voluntary pooling unit. BTA filed an application with D to compel pooling. It was granted and Ps were forced to pool. P sued D to vacate the order. It was upheld and the court of appeals affirmed. Ps appealed.