TEXOLA DRILLING CO. v. OKLAHOMA CORPORATION COM'N

TEXOLA DRILLING CO. v. OKLAHOMA CORPORATION COM'N
1955 OK 72
281 P.2d 405
Case Number: 36299
Decided: 03/22/1955
Supreme Court of Oklahoma

TEXOLA DRILLING COMPANY, A CORPORATION, PLAINTIFF IN ERROR,

v.

THE OKLAHOMA CORPORATION COMMISSION, REFORD BOND, CHAIRMAN, RAY O. WEEMS AND RAY C. JONES, MEMBERS OF THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA, SAC & FOX PRUE SAND UNIT AND WILCOX OIL COMPANY, A CORPORATION, UNIT OPERATOR, DEFENDANTS IN ERROR.

Syllabus

¶0 1. The Corporation Commission is without judicial authority to render a money judgment or to establish a lien and order its foreclosure in satisfaction thereof.

2. Where in appropriate proceedings had therein, the Corporation Commission entered an order granting an application for the establishment of a unit for the unitized management, operation and further development of leases covering a certain area of an oil field in accord with a plan of unitization under Chap. 3a, Okla.Sess.Laws, 1951, and in its order retained jurisdiction to amend, modify and interpret said order, and after the unit had been in operation more than a year, and had assessed one of its lessee members with a share of the cost of establishing and operation said unit, and upon its refusal to pay, the unit had instituted a District Court action against said lessee to collect its said share by foreclosing its claimed lien against said defendant's interest in the unitized area, and before trial of said action, said lessee applied to the Corporation Commission for an order amending, modifying and/or interpreting its original order in such a way as to assert a denial of the unit's alleged cause or causes of action [281 P.2d 406] in the District Court action; Held: Under the circumstances, the Corporation Commission committed no error in denying the latter application.

Appeal from Order of Oklahoma Corporation Commission.

Proceedings on the application of Texola Drilling Company for an order amending, modifying and/or interpreting its previous Order No. 25912, establishing the "Sac & Fox Prue Sand Unit" in Lincoln County, Oklahoma. From an order denying said application, said Drilling Company appeals. Affirmed.

Richard W. Fowler, Oklahoma City, and Arthur H. Dolman, Dallas, Texas, Richardson, Cochran, Dudley, Fowler & Rucks, Oklahoma City, and Blakeley, Walker, Dolman, Shoptaw & Wilson, Dallas, Texas, of counsel, for plaintiff in error.

Glenn R. Davis, Tulsa, T. Murray Robinson, Oklahoma City, for Sac and Fox Prue Sand Unit and Wilcox Oil Co., a corp., Unit Operator, Floyd Green, Oklahoma City, Conservation Atty., for Corporation Commission, for defendants in error.

BLACKBIRD, J.

¶1 Plaintiff in error, Texola Drilling Company, hereinafter referred to merely as Texola, and the defendant in error, Wilcox Oil Company, hereinafter referred to as Wilcox, are, and, at all times material to the present controversy, have been, owners of oil and gas leases in what is known as the Sac & Fox Field of Lincoln County, Oklahoma.

¶2 In January, 1952, Wilcox commenced Cause CD No. 3654, in the State Corporation Commission by filing its application, under the provisions of the Twenty-Third Legislature's Senate Bill No. 203, chap. 3a, Okla. Sess. Laws 1951, Tit.

"The Commission retains continuing jurisdiction over said unit for the purpose of amending, modifying and interpreting the terms and provisions of this order and the Plan Of Unitization of said Unit."

¶3 No appeal was taken from said order and the Sac & Fox Prue Field Unit was activated and began its functioning. One of the first acts of its operators committee was to select Wilcox as unit operator. Then, in accordance with Art. V of the unitization plan, said committee caused an inventory to be made of the lease and operating equipment of the various lessees in the unit and determined what items of such equipment were necessary to be taken over by the unit for its operations. After so doing, the committee then determined the value or cost to the unit that should be placed on said equipment and apportioned such total cost among the several lessees on the basis of the unitization plan's schedule of their individual participation in the unit, and credited each lessee with its proper portion of such inventory value, all as provided by the unitization plan. As a predicate for this, the committee determined that all of the various lessees' pipe necessary for the unit's use in producing and developing the unitized area should be given an inventory value of 60% of the price of similar new pipe.

¶4 When Texola was debited with its portion of the unit's equipment inventory, or capital investment, and credited with the inventory price of its equipment contribution thereto, it was found that the debit was greater than the credit by $30,003.73; and it was billed therefor. After the unit [281 P.2d 407] had taken over the operation of the unitized area, and, during approximately a year and a half of such operation, during which it incurred a substantial debt for the installation and operation of the water flooding process, Texola's share of the unit's expenses grew to a total of $31,161.99, its share of the operating and subsequent capital investment expense (as distinguished from the original capital investment) being $5,147, while its credit for production from the single oil well on its lease during said period applied on said debt by Wilcox, as unit operator, (in accordance with the unitization plan provision pertaining thereto), was only $3,988.74. After Texola refused to pay this $31,161.99, the unit instituted Cause No. 15783, in the District Court of Lincoln County, to collect same and therein prayed for foreclosure of a lien against Texola's interest in the unit which said plaintiff claimed on the basis of the unitization plan or so-called "operator's agreement" and Tit.

¶5 The afore-described reasons which Texola urged for its attempt to get the Commission to modify Order No. 25912, have been decreased by one in number because of the unit's concession in this appeal that it seeks no money judgment by reason of the cause or causes of action it has alleged in the Lincoln County suit (Cause No. 15783, supra).

¶6 This still leaves for determination the question of whether or not the Commission should have modified its said previous order or the plan of unitization thereby put into effect by in some manner showing that it was not within the order's contemplation that the lien the unit was to have for debts of the unit's several lessees, such as the one described herein, be a lien against said debtor's leasehold or entire interest in the unit, but was to be a lien only against its share of the unit's oil and gas production which could not be "foreclosed" (as that term is usually understood) by court action such as the unit is attempting in the pending Lincoln County [281 P.2d 408] suit. Nor does the unit's concession eliminate the question as to whether the Commission should have compelled the unit to give Texola a larger credit for its pipe in the unit's capital investment inventory.

¶7 In connection with the latter question, we find no cause for reversing the Commission's order. The testimony of Texola's sole witness shows that he was that company's representative on the operators committee and that he concurred in the committee's determination to fix 60% of the new price as the appraised value of all of the lessees' contributions of pipe to the unit's capital investment.

¶8 Nor do we believe the Commission erred in refusing to modify Order No. 25912, on the other grounds that Texola urges. While neither Tit.

¶9 In view of the above considerations, we think the Corporation Commission properly refused the supplemental order Texola sought. The order appealed from is therefore affirmed.

¶10 JOHNSON, C.J., WILLIAMS, V.C.J., and WELCH, CORN, DAVISON, HALLEY and JACKSON, JJ., concur.