“Imminent” = friend
“Might” = not friend
“Likely” = friend
“Could” = not friend
“Irreparable” = friend
“Money damages” = not friend
In Lightning Oil Company v. Anadarko E&P Offshore, LLC, the surface and 1/6 of the minerals of the Chaparral Wildlife Management Area is owned by the Texas Parks and Wildlife Department. 5/6th of the minerals is owned by the Light family. Adjacent is the Cutlass Lease, owned by their company, Lightning.
Anadarko planned to drill into its CWMA lease from locations on the surface of the adjacent Briscoe Cochina East Ranch and negotiated a surface use and subsurface easement agreement, which allowed Anadarko to drill five horizontal wells on each of 13 to 14 drillpads. The wellbores would cross through Lightning’s mineral estate to reach Anadarko’s lease. Lightning objected and staked its own location at the same surface location as Anadarko.
Lightning sued Anadarko for trespass and tortious interference with contract. The trial court denied a temporary injunction and Lightning appealed.
According to Lightning, the question was (1) would Anadarko’s plan to drill through Lightning’s mineral estate constitute a trespass, (2) does a third party surface owner with no interest in the mineral estate have the right to consent to such drilling activity and (3) was Lightning entitled to enjoin Anadarko’s drilling plan. Issues 1 and 2 were not on the table in this injunction appeal.
The main disputed issue: Did Lightning prove that it would suffer an imminent and irreparable injury if Anadarko were permitted to proceed with its plan to drill through the Lightning mineral estate. Here are the rules:
- The injury must be probable and imminent. This is not satisfied by evidence indicating that the harm or injury is merely possible or feared.
- The commission of the act must be more than speculative and the injury that flows from the act must be more than conjectural. If the injury can be compensated in money damages, injunctions are typically not authorized.
- On the other hand, money damages are generally inadequate to compensate for the loss of property deemed to be legally unique or irreplaceable.
- Leaky casing from an Anadarko well could harm the value of the Lightning mineral estate. But a loss could be quantified and compensated based on reserve estimates for Lightning’s other wells in the area.
- Anadarko’s drilling plans would place a “tremendous burden” on Lightning to drill offset wells to prevent drainage of its minerals, costing “millions of dollars”. But even if Anadarko would have drilled from a different location and not enter the mineral estate, Lightning would have the same offset obligations.
- Anadarko’s activity would “probably disrupt our drilling program” because the pipes would be in the way of Lightning’s wells. But the wellbore for the Cutlass No. 3 would never encounter any portion of Anadarko’s wellbores because of the 330-foot field rules.
- An Anadarko casing leak or blowout is probably not going to happen, and the Cutlass No. 3 could be drilled without any problem from Anadarko’s proposed wells. The difficulty in avoiding a collision with one of Anadarko’s wellbores would increase Lightning’s cost to drill offset wells.
The Predictable Result
There was a potential for injury and increased costs, but Lightning could not show that those injuries were not susceptible to quantification and compensation. Lightning failed to prove that any injury to its mineral estate was probably imminent and irreparable pending trial on the merits. Denial of temporary injunction affirmed.
Today’s musical interlude has nothing to do with the topic.
Why the Pearl Harbor pic? To remember, but also to remind that the injunction is the surprise attack, rather than the war of attrition that characterizes much litigation. As the Japanese learned four years and millions of dead people later, the risk of this approach is if you don’t prevail early, you are likely not to prevail at all.