About the author:
He serves on the board of WHAPL and the HBA Energy Law Section. Brad is Board Certified in Oil, Gas, and Mineral Law by the Texas Board of Legal Specialization and has been recognized as a top-rated energy and natural resources lawyer in Houston since 2018. Education • J.D., University of Houston Law Center, University of Houston • B.S., Texas State University Bar Admissions
Brad Gibbs Partner and Co-owner, Oliva Gibbs
bgibbs@oglawyers.com 713/229-0360
Brad advises clients on due diligence, complex mineral titles, pooling issues, lease analysis, joint operating agreements, surface use issues, renewables, litigation, and other upstream matters. He earned his J.D. from the University of Houston Law Center and his B.S, cum laude, from Texas State University.
New Mexico North Dakota Texas
Synopsis: The Texas Supreme Court’s decision in Cactus Water Services, LLC v. COG Operating, LLC confirms that produced water belongs to the operator absent an express reservation. The ruling clarifies ownership under standard oil and gas leases, distinguishes produced water from groundwater, and leaves open contractual opportunities for surface owners in future lease negotiations. Making a Splash in the Courts: The Cactus Decision
In a landmark decision, the Supreme Court of Texas held in Cactus Water Services, LLC v. COG Operating, LLC ( Cactus Water Servs., LLC v. COG Operating, LLC , No. 23-0676 (Tex. June 27, 2025) that produced water belongs to the operator. When presented with a case where both the operator and a third party who contracted with the surface owner claimed ownership of the produced water, the Court determined that under the typical deed or lease language conveying oil and gas rights, produced water is a part of the conveyance, even though not expressly addressed ( Id. at 29). However, the Court left open the possibility for surface owners to reserve ownership of produced water, potentially turning the tide in future lease negotiations ( Id.) . I. Background Between 2005 and 2014, COG Operating, LLC (“COG”), acquired four hydrocarbon leases from two different surface owners in the Permian Basin (collectively, the “Leases”) ( Id. at 4). The Leases granted the right to explore for, produce, and keep “oil and gas” or “oil, gas, and other hydrocarbons,” with variance in phrasing ( Id.) .
Operations were targeted in the Delaware Basin subregion of the Permian Basin. The principal method of production was through hydraulic fracturing, which involves injecting pressurized fluid, proppants, and chemicals into the rock to release trapped hydrocarbons ( Id. at 5-6). A portion of the injected fluid returns to the surface, with varying substances mixed in with the fracking fluid, from which COG separates the oil and gas ( Id. at 6). The remaining substance, known as produced water, is subsequently disposed of, as it can be harmful to human health and the environment in its current state ( Id. at 7). In 2019 and 2020, the surface owners of the Leases executed produced water lease agreements (“PWLAs”) with Cactus Water Services, LLC (“Cactus”) ( Id. at 11). The PWLAs conveyed all right, title, and interest in and to water from oil and gas producing formations and flowback water produced from oil and gas operations in the land covered by the Leases ( Id.) . Cactus informed COG of its claim under the PWLAs in March 2020 ( Id. at 12). COG responded by suing for a declaration that COG, not Cactus,
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