Enervest Operating, LLC, Formerly Doing Business As Cdx Gas, LLC v. Sebastian Mining, LLC, Also Known As Shriram Sebastian, LLC

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Submitted: January 9, 2012

Before WOLLMAN, LOKEN, and GRUENDER, Circuit Judges.

This case involves the property rights to coal bed methane gas (“CBM”) produced from certain lands located in Sebastian County, Arkansas. CBM is a form of natural gas, comprised primarily of methane, that forms in coal beds and may exist in the form of a free gas, of a gas dissolved in the water in coal, or of a gas adsorbed on the surface of the coal. The original holder of fee simple absolute title to the lands (“Grantor”) conveyed surface and coal rights in 1965 via an instrument the parties refer to as the Garland Deed. Sebastian Mining, LLC (“Coal Owner”) acquired those rights effective April 30, 2010. However, three years before the grant of the coal rights, in 1962, the Grantor had conveyed an undivided one-half interest in all oil, gas, and other mineral rights except coal via an instrument known as the Wheeler Deed. In 1976, the Grantor conveyed its second undivided one-half interest via an instrument known as the Texas & Pacific Deed. Anadarko Petroleum Corporation; Andromeda Partners, LP; Jack R. Crissup; Deborah M. Crissup; and Ream Interests, Inc. (collectively “Gas Owners”) are the successors-in-interest to the rights the Grantor conveyed in the Wheeler and Texas & Pacific Deeds. EnerVest Operating, LLC entered into various oil and gas leases and contracts with the Coal Owner and Gas Owners to produce CBM from the lands and initiated this interpleader action seeking a ruling as to whether the Coal Owner or the Gas Owners are entitled to the CBM royalties. The parties moved for summary judgment on a stipulated record that includes the Wheeler, Garland, and Texas & Pacific Deeds. The district court held *fn1 that the Grantor conveyed the CBM rights to the Gas Owners and, therefore, that the Gas Owners were entitled to the CBM royalties. We affirm.

Enervest Operating, LLC, Formerly Doing Business As Cdx Gas, LLC v. Sebastian Mining, LLC, Also Known As Shriram Sebastian, LLC

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