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NO. 07-05-0327-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL A

JUNE 14, 2007

_____________________

PETRO PRO, LTD., L&R ENERGY CORPORATION,
NANCY WILSON BRISCOE, JUDITH BROCK SEITZ, AND CAROLYN ROGERS,
APPELLANTS

V.

UPLAND RESOURCES, INC., KCS RESOURCES, INC., GREAT LAKES
ENERGY

PARTNERS, L.L.C., AND STEVE ZEMKOSKI, APPELLEES

_________________________________

FROM THE 31ST DISTRICT COURT OF ROBERTS COUNTY;

NO. 1893; HONORABLE STEVEN R. EMMERT, JUDGE

_______________________________

Before CAMPBELL and HANCOCK and PIRTLE, JJ.

CONCURRING AND DISSENTING OPINION

There is much in the Court's opinion with which I agree. I do not
quarrel with the Court's discussion of the nature of our task, or with its
conclusion that the wellbore assignments are unambiguous. I join in the
Court's disposition of Petro's claims of trespass, bad faith trespass,
conversion, and money had and received, and of Petro's request that
production proceeds of the Skeeterbee wells be placed in the registry of
the court.

With regard to the declaratory relief, I agree also that the trial
court did not err by rejecting Petro's expansive view of its rights under
the assignments. I further agree with my colleagues that the Intervenors'
declaratory judgment position relying on Railroad Commission well density
rules is not persuasive.

My difference with the Court involves its conclusion that the language
used by the parties in the wellbore assignments reflects their intention
that the assignee was conveyed the right to recomplete the King "F" No. 2
well in the Brown Dolomite formation. From the language used in these
assignments, I would not find the parties intended both the assignor and
assignee to have the right to produce gas from the same formation.

The Court properly begins its analysis with the axioms that in Texas an
oil and gas lease is held to convey a determinable fee, vesting the lessee
with title to oil and gas in place, Cherokee Water Co. v.
Forderhause, 641 S.W.2d 522, 525 (Tex. 1982); W. T. Waggoner
Estate v. Sigler Oil Co., 188 Tex. 509, 19 S.W.2d 27, 28 (Tex. 1929),
and that an assignment of an oil and gas leasehold is similarly treated,
Rogers v. Ricane Enterprises, Inc., 772 S.W.2d 76, 80 (Tex.
1989). As the Court ultimately construes the assignments, however, Petro
was assigned the leasehold right to recomplete the King "F" No. 2 well for
the purpose of producing gas from the Brown Dolomite formation but the
assigned right was not accompanied by any ownership interest in the gas
outside the confines of the wellbore. Rather than concluding the parties
intended to grant Petro the right to recomplete the well to produce gas it
does not own, I would construe the assignments' language in a manner
consistent with our state's ownership-in-place theory.

My conclusion is that the trial court was correct to adopt the position
asserted by Upland.
(1) With respect to the leasehold rights that were at issue
before the trial court, I would enter judgment declaring that the
assignments in question did not convey the right to recomplete the King
"F" No. 2 well for production of gas from the Brown Dolomite formation.
(2) To the degree the Court's judgment is otherwise, I
respectfully dissent.

James T. Campbell

Justice

1. The court expresses the concern that adoption of
Upland's position requires us to imply language the assignments do not
contain. I do not agree. By the assignments, the assignee received all the
assignor's right, title and interest in and to the leases, "insofar and
only insofar as said leases cover rights in the wellbore of the King 'F'
No. 2 well." It seems to me we do not read language into the assignments
merely by acknowledging the undisputed, and indisputable, fact that the
well referred to in the assignments as the King "F" No. 2 (but not further
identified or described in the assignments) is a well producing only from
the Lips, West (Cleveland) Field. See, e.g., Texas Pac. Coal & Oil
Co. v. Masterson, 160 Tex. 548, 334 S.W.2d 436 (Tex. 1960) (court's
construction of unambiguous deed included references to stipulated facts).

2. Although title to gas in the Cleveland formation is
not at issue, Upland's brief acknowledges that the assignments conveyed
the "Cleveland Zone which was then open to production in the wellbore . .
. ."