Browning Oil Company, Inc. and Marathon Oil Company, Appellants v. Jimmie M. Luecke and Leona M. Luecke, Appellees, 38 S.W.3d 625

Summary

Appellee lessors executed oil and gases leases with pooling provisions subject to anti-dilution. Years after the leases were executed, appellant lessees drilled horizontal wells which pooled appellees' existing units with non-appellee acreage beyond the authority of the leases. Appellees sued for breach. The trial court ruled that appellants had breached the leases, and the jury awarded damages based on all production from both wells. The court affirmed that appellants had breached anti-dilution provisions, and that breach rendered the pooled units invalid. The traditional rule of capture, which applied to vertical wells, was held not to apply to horizontal wells because differing geophysical characteristics altered recovery efficiency. Appellants were not entitled to receive royalties on oil and gas recovered from others' land simply because the penetration points of the horizontal wells were on their land. The trial court's jury charge was defective for failing to guide the jury to ...