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Coal, Oil and Gas
West Virginia University School of Law
Bowles, P. Nathan

OUTLINE FOR NATHAN BOWLES’ COAL OIL & GAS CLASS AT WVU COLLEGE OF LAW – FALL 2015

I. Basic Geology

A. Coal, Salt and Oil

1. Kier v. Peterson 41 Pa. 357, 358 (1862)

· Facts

o Peterson agreed to lease to the Kiers a piece of land to bore salt wells and erect buildings for the purpose of salt extraction – they agreed to pay Peterson 1/12 of each barrel of salt they extracted

o When they sunk the well oil arose

o Landowner argued he only intended to sell salt reserves

· Issue: The question is whom does the oil belong to?

· Holding: The Penn. court ruled that the Kiers were the owners of the oil because it could be reasonably expected that they would find oil when extracting salt and the oil is a product of mining the salt

o Anything produced in conjunction with salt belonged to the lessee

B. Oil and Gas

· Rule of Capture

· Oil and gas drilled for may not originate from the land which the drill is located, up to a half a mile sort of suction

II. The Title Report

A. Description

· Descriptions are the basis of a title report

o Use rocks, trees, and meanders of the creek to describe the title property

· Note: Tax map is very unreliable, good starting point but not authoritative

· ***Must know fundamentals of platting for final exam!!!

B. Severance of Estates

1. Minerals

a) List v. Cotts, 4 W. Va. 543 (1871)

· Facts

o Plaintiffs believe they had the exclusive right to dig coal under a certain tract, while Defendants believe the deed they received reserved the right for them to also dig coal at their convenience

· Issue

o Did the original deed grant just a license or actually give the grantee the full right to dig coal exclusively

· The court ruled that the deed could be interpreted as giving the grantee the exclusive right and relied on a similar case with a similar deed. The court granted the plaintiffs injunction.

b) Burdette v. Bruen, 118 W. Va. 624 (1937)

· Facts

o Bruen conveyed 250 acres TO Jane Botkin later she deeded to Samual Burdette

o Bruen heirs leased for oil and gas, Burdette then sued, claiming he owned oil and gas

o The controlling deed contained a provision stating “excepting and reserving from this grant all coal iron and minerals & the right to use and work the same for the use and benefit of the party of the first part”

· Issue

o The question was whether the deed actually excepted and reserved the oil and gas rights with the use of the term “minerals”

· Holding: The court ruled that the law is well settled – minerals includes oil and gas

o It is undisputed that a provision in a deed conveying minerals, or excepting and reserving the same, not limited or qualified as to intention by any other clause of the deed, includes not only solid mineral but oil and gas as well.

o ***Thus the court ruled that the use of the word minerals, especially after the words coal and iron, accepted and reserved the oil and gas rights.

§ Otherwise the use of the word “minerals” in the deed would have been pointless

c) Bruen v. Thaxton, 126 W. Va. 330 (1943)

· Facts

o Bruen conveyed to Thaxton 125 acres which was subject to the exception and reservation “Excepting and reserving all the coal and iron minerals found in or upon said land to the Bruen”

o However Thaxton later conveyed the land in question noting “the minerals are reserved to A.M. Bruen”

· Issue

o Were the oil and gas rights reserved in the reservation clause as evidenced by the meaning of the terms at the time and the parties intent at the time?

· Court ruled that Bruen did not intend to reserve all the mineral rights with the land, only the coal and iron minerals

o In the phrase, “all the coal and iron minerals” the words “coal” and “iron” qualify the word “minerals”.

o Bruen was made several other conveyances where he did reserve all minerals, thus he knew what he was doing by only conveying a few

· Concurrence

o Under the plain meaning doctrine it is apparent only coal and iron minerals were included

§ By including those and not mentioning anything else all other minerals were effectively excluded

§ In that time period people were certainly aware of oil and gas and it was also common throughout that region

d) Butler v. Powers, 65 A.3d 885 (Sp. Ct. Pa. 2013)

· Facts

o Grantor conveyed to grantee land but reserved “excepting one half of the minerals and petroleum oils” beneath the subject property

· Issue

o Whether the reservation included natural gas?

· Rule — Court followed the Dunham Rule

o Minerals just means what most people think of as minerals, thus oil and gas were not considered minerals at that time

o If, in connection with a conveyance of land, there i

· Facts

o Different than Faith Methodist b/c it is a will

o Gave Michael 317 acre farm, also six acres of coal underlying the 317 acres to be located around the dwelling houses and buildings…so as to protect them from

§ Presumably from subsidence

· Question – who owned the oil and gas under the 317 acres? Question because referred to the parcel as “land and surface”

· Rules

o If you write a will, the testator intends to dispose of the entire estate

· Court ruled that Michael owned the oil and gas under the 317 acres, the exclusion of a daughter Mary ($1) from the will led the court to believe he would not want this daughter to inherent any interest in the land

o This showed he had not forgotten here, purposefully left her out because she did not like the man his daughter chose to marry

c) Platting – in class exercise notes

· Metes and bounds is the standard used

o Go from marker to marker, stone to stone, tree to stone, tree to tree

o Never go beyond 90 degrees

3. Special Problems

a) Deed or Lease? Royalty or mineral in place?

(1) Toothman v. Courtney, 62 W.Va. 167 (1907) “If ya call a tail a leg, how many legs does a lamb have? Lincoln – still has 4.

Despite the appearance of a grant this was actually a lease

· Facts

o Toothman executed to Ford an instrument that was designated an “oil lease”

o In express terms, it granted to Ford “all the oil and gas in and under” the land, “to have and to hold for the term of seven years” from the date “and as much longer as oil or gas is found in paying quantities thereon.”

§ Drill within 10 months or pay $144, otherwise null and void

§ To pay 1/8 of oil; $300/year gas well

o Later granted a “deed for royalty” to McDermott– 1/16 of all oil and gas in and under the 143 acres

· Issue: whether the instrument executed by Toothman to Ford passed the fee simple title to the oil and gas?