West Virginia court to consider rights of surface owner

A key issue in the case of Richard L. Cain v. XTO Energy Inc. and Waco Oil & Gas Co. Inc., No. 1:11-cv-00111, (N.D. W. Va., July 22, 2011), is whether a severance deed gives natural gas companies the right to drill horizontal wells on a landowner’s property in order to extract oil and gas from a shared pool of oil and gas estates. Because the resolution of this question could have far-reaching legal and economic implications for West Virginia’s oil and gas industry and because there is no clear controlling West Virginia precedent, on March 28, 2013, the federal judge hearing the case has certified this question to the West Virginia Supreme Court of Appeals.

View a copy of the Order.

Richard L. Cain filed his lawsuit to block XTO Energy, Inc. and Waco Oil & Gas Co. Inc. from putting horizontal wells on his property to access and develop nearby shale resources that do not lie beneath his land. Cain concedes that XTO is entitled to the oil and gas beneath his property by way of a 1907 severance deed, but argues that XTO’s activities are beyond those in usage and custom of the natural gas industry at the time of the 1907 deed. He also claims that the planned horizontal wells would take up the “best” of his surface land, leaving him with steep hillsides and that he would not be sufficiently compensated for the burden of the wells being on his land rather than on the land of the residents living above the neighboring mineral deposits. Cain had sought to certify additional questions relating to damages to the West Virginia Supreme Court of Appeals, but the federal judge found that these damages questions were not yet ripe for disposition.

This post was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.