of commencement of gas storage operations.
proof and, in the absence of controverting evidence to the contrary, may bind the Aggrieved Party (as in the last of the three West cases). This rule of evidence will be key in determining if commingling was committed and what the measure of damages will be. It is also instructive for any Aggrieved Party – the Aggrieved Party must present expert testimony (evidence) that controverts that of the Commingler. Otherwise, the uncontroverted evidence presented by the Commingler may be found to be binding on the Aggrieved Party.
Significant to this case, the appellate court looked at the evidence presented by Exxon on the calculation of recoverable gas reserves and total possible in place gas reserves. Key in its analysis was the fact that the Wests elected not to present any expert witnesses of their own. “ However, where the nature of the subject matter of the experts’ testimony is such that the trier of facts must be guided solely by the opinion of experts in that scientific field, the opinions given by the expert witnesses may be regarded as conclusive, if otherwise credible and free from contradiction and inconsistency”. Exxon Corp. v. West , 543 S.W.2d 667, 672 (Tex.Civ.App. - 1976) emphasis added The appellate court then went on to analyze the evidence presented by Exxon. It acknowledged that the trial court, as the trier of fact, did not accept Exxon’s maximum recoverable gas calculations since they could not be made, in the trial court’s opinion, with reasonable certainty. The case then turned on a stipulation by Exxon that it would pay royalties on the maximum amount of gas in the reservoir as of the commencement date of injection of storage gas. Exxon argued that even if had not met its burden of proof regarding the establishment of the total amount of recoverable gas in the reservoir as of the commencement date of gas storage, it did meet its burden of proof by proving with reasonable certainty the maximum amount of gas which could have been in the reservoir as of the gas storage commencement date. The court found that absolute accuracy in determining the amount of producible gas/native gas in place was not required. Rather, the evidentiary rule adopted by the court was reasonable certainty even if the exact volume of reserves could not be determined. Additionally, since none of the Exxon scientific evidence was controverted, the court found that the Exxon total in-place reserve calculations (prior to gas injection operations) offered by its experts was binding on the trial court. The West Trilogy Cases added a new element to shifting the burden of proof from the Commingler to the Aggrieved Party. If the Commingler can show, with reasonable certainty, the aliquot share of production that the Aggrieved Party is entitled to, it has met its burden of
Underlying Causes of Action
It appears that the West Trilogy Cases were premised on Exxon’s breach of the oil and gas lease covering the lands under which the gas storage formation was located. Specifically, the formation into which the gas was being injected still held gas that was being produced as primary production by Exxon. The Wests alleged a breach of contract by Exxon for improperly paying royalty under their oil and gas lease by combining native and injected gas and refusing to tender royalty on all production since it was alleged that the percentage of native and stored gas could not be determined.
The examples set forth above, and indeed most modern day commingling cases, can be premised upon:
1. an antecedent underlying tort cause of action (conversion, trespass, negligence or, fraud); or
2. three statutory causes of action: Texas Division Order Statute (Article 91.401 et seq, Title 3, Texas Natural Resources Code); Texas Theft Liability Act (Texas Civil Practice and Remedies Code, Title 6, Chapter 134); or suit under TEX. NAT.RES.CODE ANN. § 85.321 or
3. breach of contract; or
4. unlawful drainage by the Commingler due to one or more violations of the spacing rules of the Texas Railroad Commission or the drilling of an illegal, deviated wellbore or 5. improper accounting by the operator under an oil and gas lease or joint operating agreement.
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G r o w t h T h r o u g h E d u c a t i o n - J u l y / A u g u s t / S e p t e m b e r 2 0 2 0
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