rustler’s, the entire herd would be sold and all monies from such sale would be awarded to A as damages.
of oil and gas which has been commingled by the Commingler; and the Aggrieved Party, after hearing and believing the false statement(s), either acts or fails to act based on the assumptions made after hearing the information to his detriment.) 5. Trespass (entry by the Commingler onto the property of the Aggrieved Party without permission of the Aggrieved Party and unlawful/ illegal production of oil and gas without the Aggrieved Party’s consent or authorization.) 6. Suit under the Texas Division Order Statute (Article 91.401 et seq, Title 3, Texas Natural Resources Code) 7. Suit under the Texas Theft Liability Act (Texas Civil Practice and Remedies Code, Title 6, Chapter 134) 8. Breach of contract (A breach of contract {can be an underlying oil and gas lease, operating agreement, etc.} only requires that there be an existing contract, which the Aggrieved Party acknowledges and performs under and which the Commingler breaches, thereby damaging the Aggrieved Party.) 9. Suit under TEX.NAT.RES.CODE ANN. § 85.321 (When a mineral, royalty or working interest owner is damaged by a violation of the conservation laws of this state or a Railroad Commission rule or order, section 85.321 of the Texas Natural Resources Code expressly provides for a damage suit against the offending operator) Suit for an accounting (failure to properly meter, measure or account to the mineral, royalty or working interest owner for oil and gas produced under an oil and gas lease or joint operating agreement) Examples of Commingling - Commingling of oil and gas owned by different parties can occur under several general factual situations. In the author’s opinion, all of the following examples, except Example A, could involve the bringing of a lawsuit sounding in one or more the above 10.
The same logic applies to cases which involve oil and gas commingling. Each molecule of oil and/or gas is exactly identical to all of the other molecules of oil and/or gas that a Commingler may wrongfully produce and fail to account to other mineral, royalty or working interest owners. As a rule of evidence, once commingling has been established, the Commingler has the burden of proof to demonstrate, with reasonable certainty, what share of the commingled mass of the oil and/or gas is his and what share belongs to the Aggrieved Party. The failure of the Commingler to meet that burden of proof results in the forfeiture of all of the Commingler’s interest in the value of the uniform mass to the Aggrieved Party.
Examples of Modern Oil and Gas Commingling
Potential Causes of Action Which May Be Brought by the Aggrieved Party (NOTE: the bringing of one of the herein identified causes of action does not necessarily preclude the bringing of additional causes of action under the same identical facts in the same case. This paper will not address any potential conflicts between any of the below identified causes of action.) 1. Conversion of oil and gas by the Commingler (Exercise of dominion and control over the Aggrieved Party’s oil and/or gas by the Commingler in an unlawful and unauthorized manner) 2. Unlawful drainage by the Commingler (Typically, drilling by the Commingler too close to Aggrieved Party’s lease line in violation of Texas Railroad Commission rules and regulations and illegally draining oil and/or gas from the Aggrieved Party’s lease OR the illegal drilling of a deviated wellbore across lease lines) 3. Negligence (including gross negligence) in metering/production practices by the Commingler to the detriment of the Aggrieved Party 4. Fraud (Fraud can occur when the Commingler makes purposeful, false, damaging statements to the Aggrieved Party concerning ownership
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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s
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