Musser Davis Land Co. v. Union Pacific Resources

                 UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT



                             No. 98-30673


                         MUSSER DAVIS LAND CO,

                                                 Plaintiff - Appellee,

                                VERSUS

                    UNION PACIFIC RESOURCES,

                                                 Defendant - Appellant.


          Appeal from the United States District Court
              for the Western District of Louisiana
                           January 21, 2000
Before JONES, DeMOSS, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:

     In this diversity case, Union Pacific Resources (UPR) appeals

from adverse declaratory relief granted to Musser Davis Land

Company (Musser Davis) by the district court concerning the rights

of each party under an oil and gas lease with respect to seismic

exploration. The district court concluded that UPR, as assignee of

a mineral lease with the exclusive right to enter upon and use the

land of the lessor, Musser Davis, for the purpose of exploration

for and production of oil and gas, does not enjoy the right to

conduct seismic exploration of the leased premises.       The district




                                   1
court also concluded that UPR had no right to sell or disseminate

to third parties any seismic data gleaned from Musser Davis lands.

Because we are of the opinion that the district court’s decision is

contrary to the applicable state law as we believe it would be

determined by the state’s highest court, the district court’s

declaratory judgment is reversed and the case is remanded.

                   I.   FACTS and PROCEDURAL HISTORY

     By assignments dated April 1, 1997 and October 17, 1997, UPR

purchased a 72.1875 per cent interest in an oil and gas lease

originally contracted between Musser Davis (lessor) and Eagle Oil

and Gas Company (lessee) on September 1, 1996.1                     Through the

assignments from Eagle Oil and Gas to two other entities and their

subsequent assignments to UPR, UPR acquired the mineral exploration

rights granted to Eagle Oil and Gas in the original lease.                  See

La.R.S. §§ 31:127 (“The lessee’s interest in a mineral lease may be

assigned or subleased in whole or in part.”) and 31:128 (“To the

extent of the interest acquired, an assignee or sublessee acquires

the rights   and   powers   of   the       lessee   and   becomes   responsible

directly to the original lessor for performance of the lessee’s

obligations.”).    Musser Davis does not dispute that the original

lessee acquired the exclusive right to explore for and produce oil

and gas on the leased lands or that UPR has the authority to

     1
      On October 2, 1996, Eagle Oil and Gas Company assigned its
interest in the lease -- 50 per cent to Shield Petroleum
Incorporated and 50 per cent to Hugoton Energy Corporation. By the
April 1, 1997 assignment, UPR purchased a 46.25 per cent interest
in the lease from Shield Petroleum; by the October 17, 1997
assignment, UPR purchased an additional 25.9375 per cent interest
in the lease from Hugoton Energy.

                                       2
exercise that right.

     The lease covers 1066.46 acres -- all of Musser Davis’s lands

in Beauregard Parish, Louisiana.     In July 1997, UPR sought to

obtain from Musser Davis a seismic permit before conducting a

seismology survey of the lands and offered to pay in advance $7,290

for anticipated incidental property damages.   Musser Davis refused

and negotiations ensued.    Musser Davis offered to condition its

consent to the survey on UPR’s agreement not to transfer any

seismic data to third parties. UPR rejected the offer and informed

Musser Davis of its intention to conduct the survey under the lease

without a special permit.

     On February 24, 1998, Musser Davis obtained a temporary

restraining order in Louisiana state court to prevent the seismic

survey and the transfer of seismic data.   UPR, upon the basis of

diversity of citizenship, removed the action to the United States

District Court for the Western District of Louisiana on March 4,

1998.   The district court denied Musser-Davis’s motion to remand.

     The district court dissolved the temporary restraining order

when the parties agreed that UPR would be permitted to conduct the

proposed seismic operations with the district court to determine

the consideration to be paid Musser Davis pursuant to a declaratory

judgment action.   The parties also agreed that UPR would refrain

from disseminating the seismic data pending a final decision in the

litigation.

     Musser Davis sought declaratory relief on two issues: (1)

whether UPR has the right to conduct seismic operations on the


                                 3
leased premises solely by virtue of its rights under the mineral

lease; and (2) whether UPR has the right to sell or disseminate to

third parties any seismic data it develops pertaining to the Musser

Davis properties.      The district court held a bench trial on the

existing record, briefs, and affidavits.           By memorandum opinion

dated May 20, 1998, the district court decided both issues in favor

of Musser Davis and against UPR, concluding that (1) UPR does not

enjoy under the terms of the oil and gas lease the right to conduct

seismic   operations   without     additional   express   consent    of   the

lessor; Louisiana Revised Statute 30:217 proscribes as a criminal

trespass geological surveys conducted by UPR without Musser Davis’s

special, express consent; and (2) Musser Davis, as landowner,

exclusively owns any seismic data developed by UPR from geophysical

surveys of the leased lands.

                             II.    ANALYSIS

      We review the district court’s interpretation of contracts and

conclusions of law de novo and under the same standards that guided

the   district   court.    See     Exxon   Corp.   v.   Crosby-Mississippi

Resources, Ltd., 154 F.3d 202, 205 (5th Cir. 1998) (citing American

Totalisator Co. v. Fair Grounds Corp., 3 F.3d 810, 813 (5th Cir.

1993)).   Because this is a diversity action, we sit as an Erie

court and must apply Louisiana law in an attempt to rule as a

Louisiana court would if presented with the same issues.            See Erie

R.R. v. Tompkins, 304 U.S. 64, 79-80 (1938); Mozeke v. Int’l Paper

Co., 856 F.2d 722, 724 (5th Cir. 1988).         To determine a state law

question, we first look to decisions of the Louisiana Supreme


                                     4
Court. See Transcontinental Gas v. Transportation Ins. Co., 953

F.2d 985, 988 (5th Cir. 1992).   If the Louisiana Supreme Court has

not spoken on the issue, it is our duty to determine as best we can

what that court would decide.    See id; Hulin v. Fibreboard Corp.,

178 F.3d 316, 318-19 (5th Cir. 1999).

A. Right to Conduct Seismic Exploration

     Under Louisiana law, the right to explore and develop one’s

property for the production of minerals, and to reduce minerals to

possession and ownership, belongs exclusively to the landowner.

See La.R.S. § 31:6; Frey v. Amoco Production Co., 603 So.2d 166,

171 (La. 1992). Musser Davis, as landowner, enjoyed this exclusive

right and was free to convey, reserve, or lease the right.     See

La.R.S. § 31:15; Frey, 603 So.2d at 171.   “In this manner, rights

in minerals may be considered ‘separable component parts of the

ownership of land.’”   Frey, 603 So.2d at 171 (citing and quoting 2

A.N. Yiannopoulos, Louisiana Civil Law Treatise: Property § 118

(3rd ed. 1991) (in turn citing La.R.S. § 31:8)).

     Under the Louisiana Mineral Code, Louisiana Revised Statutes

Title 31, “[a] mineral lease is a contract by which the lessee is

granted the right to explore for and produce minerals.”   La.R.S. §

31:114.   The Mineral Code preeminently, but not exclusively,

governs the interpretation of mineral leases and was intended to

prevail in any conflict between it and the Civil Code or other

state laws.   The Civil Code and other laws are applicable in the

absence of an explicit or implicit Mineral Code provision.     See

La.R.S. § 31:2 (“In the event of conflict between the provisions of


                                 5
this [Mineral] Code and those of the Civil Code or other laws the

provisions of this Code shall prevail.              If this Code does not

expressly or impliedly provide for a particular situation, the

Civil Code or other laws are applicable.”); Frey, 603 So.2d at 171;

American Lung Ass’n v. State, 645 So.2d 1219, 1221-22 (La.App. 1st

Cir. 1994).

     Under the Mineral Code, the landowner-lessor and lessee “must

exercise their respective rights with reasonable regard for those

of the other.”     La.R.S. § 30:11.       Article 122 of the Mineral Code

defines the lessee’s obligations: “A mineral lessee is not under a

fiduciary obligation to his lessor, but he is bound to perform the

contract in good faith and to develop and operate the property

leased as a reasonably prudent operator for the mutual benefit of

himself   and    his   lessor.    Parties     may   stipulate    what    shall

constitute reasonably prudent conduct on the part of the lessee.”

La.R.S.   §     31:122.    This   article     codifies   Civil    Code     and

jurisprudential principles that require every lessee to enjoy the

thing leased as a “good administrator” and obligates a mineral

lessee to act as a “reasonably prudent operator.”          See La.Civ.Code

art. 2710; La.R.S. § 31:122 and comment.         The   lessee’s obligation

to develop or explore the leased premises, which springs from the

obligation to act as a prudent operator, was first articulated by

the Louisiana courts in Carter v. Arkansas Louisiana Gas Company,

36 So.2d 26 (1948), and later confirmed in Article 122 of the

Louisiana Mineral Code.     See Thomas A. Harrell, A Mineral Lessee’s

Obligation to Explore Unproductive Portions of the Leased Premises


                                      6
in Louisiana, 52 La.L.Rev. 387, 390-92 (1991).   The very nature of

the mineral lease “implies that the parties contemplate that the

lessee will do whatever is customary and reasonable to discover and

exploit the mineral deposits underlying the leased premises.”

Harrell, supra, at 387.

     Because the Mineral Code expressly recognizes the principle of

freedom of contract, see La.R.S. § 31:3, the reach of the term

“exploration” may not be ascertained without reference to the oil

and gas lease in which it appears.    See Frey, 603 So.2d at 171.

The operative provision in the mineral lease at issue is as

follows:

     Grant of Lease. Lessor hereby grants, leases and lets
     unto Lessee the exclusive right, subject to all the
     provisions hereof, to enter upon and use the land in
     Beauregard Parish, Louisiana, described in Section 2
     hereof, for the purpose of the exploration for and the
     production of oil and gas, and derivatives therefrom, it
     being understood that Lessor reserves all other minerals
     in, under and appertaining to the land. Lessee’s rights
     shall include the reasonable use of the surface of the
     land in order to accomplish the exploration for and the
     production of oil or gas. It is specifically understood,
     however, that the Lessee shall be responsible for any
     damage done to Lessor’s property as more fully set forth
     hereinafter.
The lease does not define the term “exploration” or expressly

provide whether seismic operations are contemplated by the parties.

Thus the question before this court is whether a lease granting the

lessee the exclusive right to explore for oil and gas without

defining or limiting in any way the term “exploration” bestows upon

                                7
the lessee the right to conduct seismic exploration to determine

the presence of subsurface trapping mechanisms favorable to oil and

gas production.

     The Louisiana Supreme Court, in Frey v. Amoco Production

Company, recognized that mineral leases are construed as leases

generally, and, wherever pertinent, the Civil Code provisions

applicable to ordinary leases are applied to mineral leases.      603

So.2d at 171 (citing Succession of Doll v. Doll, 593 So.2d 1239

(La. 1992); Melancon v.Texas Co., 89 So.2d 135 (1956); La.R.S. §

31:2; McCollam, A Primer for the Practice of Mineral Law Under the

New Louisiana Mineral Code, 50 Tul.L.Rev. 729, 733 (1976); L.

McDougal, Louisiana Oil and Gas Law § 3.1 (1991)). Accordingly, in

interpreting and applying a general royalty clause in a mineral

lease to take-or-pay payments made to a lessee, the Court relied in

part on the Civil Code articles pertaining to interpretation of

contracts.   See Frey, 603 So.2d at 171-72.   The Court stated:

     The purpose of interpretation is to determine the common
     intent of the parties. See La.Civ.Code art. 2045. Words
     of art and technical terms must be given their technical
     meaning when the contract involves a technical matter,
     see La.Civ.Code art. 2047, and words susceptible of
     different meanings are to be interpreted as having the
     meaning that best conforms to the object of the contract.
     See La.Civ.Code art. 2048. A doubtful provision must be
     interpreted in light of the nature of the contract,
     equity, usages, the conduct of the parties before and
     after formation of the contract, and other contracts of
     a like nature between the same parties. La.Civ.Code art.
     2053.    When the parties made no provision for a


                                 8
     particular situation, it must be assumed that they
     intended to bind themselves not only to the express
     provisions of the contract, but also to whatever the law,
     equity, or usage regards as implied in a contract of that
     kind or necessary for the contract to receive its
     purpose. La.Civ.Code art 2054. To these basic concepts,
     we add one other.     In Louisiana, a mineral lease is
     interpreted so as to give effect to the covenants implied
     in every such lease. See La.Rev.Stat. § 31:122.
Id. at 172.

     Accordingly, the usages, words of art, and technical terms of

the oil and gas industry should be taken into consideration in

interpreting the lease exploration clause.    A leading mineral law

treatise defines mineral exploration operations, as the term is

regularly used in the industry, as including aerial and geophysical

surveys, geological studies, core testing, and drilling test wells,

see 8 Patrick H. Martin & Bruce M. Kramer, William & Meyers Oil and

Gas Law: Manual of Terms, 364 (1998); and a seismic survey as one

of the principal methods of geophysical survey.       See Martin &

Kramer, supra, at 457-58.2   The purpose of geophysical operations

is to determine the characteristics of underground structures, with

particular reference to characteristics which are favorable to the

possible presence of oil or gas.   See 1 Eugene Kuntz, A Treatise on



     2
      Definitional support is also provided by state and federal
statutes. See La.R.S. §§ 30:208 and 209 (to “explore” the mineral
resources of state lands the State Mineral Board may “conduct
geological and geophysical surveys”); 43 U.S.C. § 1331 (for
purposes of the Outer Continental Shelf Lands Act, “exploration”
includes “geophysical surveys where magnetic, gravity, seismic, or
other systems are used to detect or imply the presence of such
minerals”).

                                   9
the Law of Oil and Gas, § 12.7 (1987).              Geophysical operations

involve the detection and measuring of subsurface structures, and

the seismic method obtains this information by measuring the

reflection, refraction, and velocity of shock waves created by

explosive charges set off in holes in the earth.            See Kuntz, supra.

Moreover, the extensive and prevalent use of seismic exploration,

especially the three dimensional methodology, distinguishes it as

the preeminent method of mineral exploration currently employed in

the industry.    See, e.g., Owen L. Anderson and John D. Pigott, 3D

Seismic Technology: Its Uses, Limits, & Legal Ramifications, 42

Rocky Mtn. Min. L. Inst. § 16.01 (1996)(“During the past twenty-

five   years    the   3D    (three   dimensional)        seismic   method   has

revolutionized the petroleum industry, in the way it conducts

seismic exploration and exploitation, and in the way it thinks. At

present, geophysicists who use 3D seismic technologies, together

with geologists and engineers are necessary components of the

petroleum team.        In fact, in most cases today, it would be

unthinkable     to    exclude    geophysicists.”)        (internal    citation

omitted);   Martin    &    Kramer,   supra,   at   457   (“Perhaps   the    most

commonly used geophysical device is the seismograph . . . . Today,

in any new exploration area, geophysical investigation is the

almost universal preliminary to exploratory drilling.”); Nick N.

Savit, Reflections on Ownership, Protection And Transfer Of Seismic

Data: Are There Bright Spots On The Horizon?, 37 Rocky Mtn. Min. L.

Inst. § 14.02[1] (1991)(“Seismic exploration is among the first

steps in the oil and gas exploration process.”).


                                      10
       In fact, two oil and gas treatises say that seismic operations

are generally accepted as included in the methods of “exploration”

even   if   they   were   not   extant   at   the   time   of   the   lease   or

specifically referred to in the mineral deed or lease:

          It now appears generally accepted that a mineral
     owner or lessee may engage in geophysical work including
     seismic operations and that he may conduct secondary
     recovery operations on the land even though the deed or
     lease did not specifically refer to such operations and
     even though at the time of the execution of the deed or
     lease such operations were uncommon or even unknown. The
     deed or lease in authorizing exploration for and
     production of minerals cannot reasonably be said to limit
     the methods employed for the exploration and production
     to those known at the time of the execution of the
     instrument.
1 Patrick H. Martin & Bruce M. Kramer, Williams & Meyers Oil and

Gas Law, § 218.5 (1998); see also Kuntz, supra, at 351 (the mineral

lessee has the implied right to make geophysical explorations by

seismographic tests, even over the lessor’s protest, although the

lease is silent regarding exploration and even though such methods

were not known at the time the lease was granted).3

       3
      These treatises each rely in part upon this court’s opinion
in Yates v. Gulf Oil Corp., 182 F.2d 286, 289 (5th Cir. 1950)(under
a 1924 mineral lease, granted before the advent of seismographic
geophysical testing and silent with respect to exploration, the
lessee impliedly enjoyed the right to conduct seismic explorations
over the landowner’s objections). Yates concerned Texas law, but
the opinion is instructive in the instant matter because it sheds
light upon industry practice and custom. As the lease at issue in
this litigation expressly conferred upon the lessee the exclusive
right to conduct exploration for oil and gas and because
seismographic geophysical testing had long been recognized as a
common, if not prevalent, exploration method before the lease was
granted, as assignee of the lease UPR enjoys the right to conduct

                                     11
     Commentators        on   Louisiana     mineral     law   reach    the   same

conclusion: a mineral lessee, by virtue of a lease granting the

exclusive and unqualified right to explore the leased premises, has

the right to engage in geophysical exploration of the leased

property.    See Luther T. McDougal, Louisiana Oil and Gas Law § 3.4

(1991)(citing 5 Howard R. Williams & Charles J. Meyer, Oil & Gas

Law § 826.3 (1986) for the proposition that geophysical operations

are but one example of the lessee’s implied right under Louisiana

law to use the surface of the leased premises to the extent

“reasonably necessary” to explore for and drill oil and gas wells).

Moreover, “[s]eismic exploration [and] geological studies . . . are

[ ] things that prudent operators do to discover potentially

productive mineral reservoirs under lands, and things that the

[Louisiana] courts have recognized as being comprehended within the

obligation to investigate the mineral potential of the property.”

Harrell, supra, at 405; see also Wadkins v. Wilson Oil Corp., 6

So.2d 720, 721 (La. 1942)(a mineral lease creates an “implied

covenant    that   the    lessee   [will]    develop    the   leased    premises

according to the recognized custom and progressive practices among

operators in the field”); 5 Patrick H. Martin & Bruce M. Kramer,

Williams & Meyers Oil and Gas Law § 861.3 (1998) (implied covenant

to conduct operations with reasonable care and due diligence

requires    lessee   to   use   modern     production    techniques)     (citing

Wadkins, 6 So.2d at 721).

     Thus the industry usages and practices indicate that in


seismic explorations of the leased premises.

                                      12
Louisiana and elsewhere an exclusive right of exploration lease

clause generally is understood to include the right to conduct

seismic operations.     We have found no reported Louisiana court

decision expressly holding that a mineral lessee (or assignee) with

the exclusive and unqualified right to explore for oil and gas may,

in the absence of a contrary contractual provision, conduct prudent

and   reasonable    seismic   operations    on     the   leased     premises.

Nevertheless, we believe that the Louisiana Supreme Court would so

hold if the question were squarely presented.

      Several    Louisiana    cases    contain     assumptions,      implicit

holdings, or dictum to this effect.             See, e.g., IP Timberlands

Operating Co., Ltd. v. Denmiss Corp., 657 So.2d 282, 300 (La.App.

1st Cir. 1995) (“Under a mineral lease, the lessee is granted the

right to explore and develop minerals either by seismic exploration

or drilling operations without obtaining further permission from

the mineral owners.”) (holding that the surface lessee and timber

owner lacked authority to grant seismic permits over lands the

mineral rights of which were owned by another); Tinsley v. Seismic

Explorations, Inc., 117 So.2d 897, 903 (La. 1960)(a mineral lessee

was assumed to have exclusive seismic rights and but for the

failure to prove damages could have recovered for geophysical

trespass by a third party who acted with the land owner/lessor’s

consent).4      Significantly,   a    federal    district   court    applying

      4
      The court of appeal had held that, by virtue of the mineral
lease, Tinsley, as lessee had a real right, the exclusive right to
explore the leased premises for minerals, assertable in an action
in tort for unauthorized seismic tests by a trespasser.        See
Tinsley v. Seismic Explorations, Inc. of Delaware, 111 So.2d 834,

                                      13
Louisiana law has expressly held that a mineral lessee vested with

the exclusive and unqualified right to explore for minerals enjoys

the right to conduct seismic operations anywhere on the leased

premises, even over the landowner’s objections, so long as the

landowner’s rights are reasonably regarded and his use of the

surface is not unduly disrupted.             See Pennington v. Colonial

Pipeline Co., 260 F.Supp. 643, 649 (E.D.La. 1966).

     After considering the foregoing data, we conclude that the

mineral lease in the present case granted the lessee the right to

prudently conduct reasonable seismic operations as part of the

exclusive   and   unqualified   right   to    explore   for   oil   and   gas.

Consequently, if UPR were to conduct a seismic survey on the leased

premises as a reasonable and prudent operator, its actions would

not constitute a trespass under Revised Statute 30:217 because the

lease constitutes authorization and consent to such operations by

the landowner.5     The district court interpreted this criminal


836-37 (La.App. Cir. 1959), rev’d on other grounds, 117 So.2d 897
(La. 1960).    The precedential value of the court of appeal’s
decision is diminished, however, by the Supreme Court’s resolution
of the case.
     5
       In pertinent part, La.R.S. § 30:217 provides:
A.(1) No person shall conduct geological surveys for oil, gas, or
other minerals by means of a torsion balance, seismograph
explosions, mechanical device, or any other method whatsoever, on
any land, unless he has obtained the consent of either the owner or
the party or parties authorized to execute geological surveys,
leases, or permits as provided in the Louisiana Mineral Code.
(2) “Owner” as used herein shall not include a person or legal
entity with only a surface or subsurface leasehold interest in the
property.
(3) Whoever violates this Subsection shall be fined not less than
five hundred dollars nor more than five thousand dollars or
imprisoned for not less than thirty days nor more than six months,
or both.

                                   14
trespass statute to require that a mineral explorer must obtain the

mineral      owner’s   express   and    specific    consent   to    geophysical

operations, not just consent to exploration for minerals, before

conducting seismic operations. We do not believe the statute would

be given this interpretation by the state courts.                    Under the

Mineral Code as illumined by Louisiana jurisprudence and industry

usages and practices, the right to conduct prudent, reasonable

seismic operations is implied within the exclusive and unqualified

right to explore the leased premises for oil and gas, unless the

mineral lease or other contract provides otherwise.                   Thus the

owner’s grant of the exclusive right of exploration in accordance

with the Mineral Code evidences both the grantee’s right to conduct

such seismic tests and the grantor’s agreement or consent to such

operations.      Section 217 by its express terms requires a person

conducting seismographs to obtain “consent of either the owner or

the party or parties authorized to execute geological surveys,

leases, or permits as provided in the Louisiana Mineral Code.”

La.R.S. § 217. Under Louisiana law, criminal statutes are strictly

construed against the state.           See, e.g., Gibbs Const. Co., Inc. v.

Louisiana, 540 So.2d 268, 268-69 (La. 1989); Int’l Harvester Credit

Corp.   v.    Seale,   518   So.2d   1039,   1041   (La.   1988).      Strictly

construed, § 217 does not criminalize the conduct of a seismic

operator acting under the authority of a mineral lease granted by

a mineral owner that vests the lessee with the exclusive and

unqualified right to explore for and produce oil and gas.                   See




                                        15
La.R.S. §§ 31:15, 31:114-148.

     The district court, without extensive discussion, cited three

Louisiana   courts     of   appeal      decisions   as     authority   for   its

conclusion that the land owner’s grant of the exclusive right to

explore by a mineral lease does not include consent to conduct

seismic operations: Jeanes v. G.F.S., 647 So.2d 533 (La.App. 3rd

Cir. 1994); Ard v. Samedan Oil Corp., 483 So.2d 925 (La. 1986); and

Lloyd v. Hunt Exploration, Inc., 430 So.2d 298 (La.App. 3rd Cir.

1983).    Of these cases, only Jeanes involved the application of

Revised Statute 30:217.         More importantly, none of these cases

involved seismic operations conducted by a mineral lessee or other

person vested with the right to explore for minerals.

     Musser Davis also argues that UPR’s attempts to obtain a

“seismic permit” demonstrate that the mineral lease alone does not

confer the right to conduct seismic exploration.              This contention

is without merit.      Even when a mineral lease vests in the lessee

exclusive right to explore for minerals, under industry usage and

practice the lessee usually obtains a “seismic permit” from the

landowner as an added precaution against undue interference with

the surface owner’s use of the premises and as a matter of courtesy

to inform the owner of the time, location, and method of seismic

exploration to be conducted.         In this regard, the permit is but a

mechanism by which the mineral lessee can discharge its duty under

Article   11   of    the    Louisiana     Mineral   Code     to   exercise   its

exploration rights with reasonable regard for the surface rights of

the landowner.      See La.R.S. § 31:11; Pennington, 260 F.Supp. at


                                        16
649; McDougal, supra.      This permit is also a convenient mechanism

by which the lessee can prepay for incidental property damage

caused by the seismic operation.          UPR was obliged to repair such

damages by the Mineral Code, see La.R.S. § 31:122 (the implied

obligation as a prudent operator to restore the surface), and the

mineral lease itself (“It is specifically understood, however, that

the Lessee shall be responsible for any damage done to Lessor’s

property as more fully set forth hereinafter.”).         In the context of

this case, as assignee of the mineral lease with the exclusive and

unqualified   right   to   explore   for   oil   and   gas   on   the   leased

premises, UPR had the right to conduct seismic operations as an

element of mineral exploration, and the “seismic permit” was not a

legal prerequisite to such operations by UPR. See McDougal, supra;

42 Rocky Mtn. Min. Inst., supra, at §§ 16.04[1] and 16.04[3][g].

B. Ownership of Seismic Data

     The district court’s decision that Musser Davis owns the

seismic data obtained by UPR was based directly upon its erroneous

conclusion that UPR’s seismic operations without additional express

consent by Musser Davis would constitute geophysical trespass under

§ 217.   The district court cited Layne Louisiana Co. v. Superior

Oil Co., 26 So.2d 20 (La. 1946) in support of its decision.

However, that case further illustrates that the district court’s

decision is not consistent with Louisiana legal principles.                In

Layne, the landowner owned a 2098 acre tract of land subject to an

outstanding mineral servitude on 1363.5 acres of the tract.               See

id. at 21.    A person with no right of exploration from either the


                                     17
landowner or the mineral servitude owner unlawfully conducted

seismic operations on the entire tract.           See id.     The court awarded

the landowner damages only for trespass upon the 734.5 acres in

which his mineral rights were intact and unburdened.                   See id. at

22.     He was not allowed recovery for trespass upon the acreage

burdened by the mineral servitude because the right to explore that

acreage had been transferred with the grant of the servitude, and

damage to his reversionary interest in those mineral acres was too

speculative, especially since the mineral acres might never revert

to the landowner if production were achieved.               See id. at 24; see

also Holcombe v. Superior Oil Co., 35 So.2d 457, 458 (La. 1948)

(mineral servitude owners of 1163.5 of the 1363.5 acres to which

Layne held only a reversionary mineral interest prevailed in their

geophysical trespass action related to lands burdened by their

mineral servitude, as their right to explore by virtue of their

mineral    servitude    encompassed    the   right      to    conduct     seismic

operations).

      That a mineral lessee or permitee ordinarily acquires a

valuable    exclusive   property     right   in    data      derived    from   its

geophysical    survey   has   been   confirmed     by     criminal     and   civil

litigation involving the misappropriation and right to sell such

data.    See, e.g., Tidelands Royalty B Corp. v. Gulf Oil Corp., 804

F.2d 1344, 1351 (5th Cir. 1986)(exploration company that conducted

geophysical survey on federal lands owned resulting confidential

data and could sell it to lessee production company for fee and

overriding royalties); U.S. v. Kent, 608 F.2d 542, 544-45 (5th Cir.


                                      18
1989) (mail fraud indictment is sufficient where it alleges that

defendants used mails to execute fraudulent scheme involving the

theft       and     illegal    use     of    confidential       geophysical   data   of

production company); Abbott v. U.S., 239 F.2d 310, 312-24 (5th Cir.

1956)(prosecution and conviction of defendant for theft of a

production company’s geological surveys and maps causing company’s

loss of valuable property interests).6

     Accordingly, in the absence of a contrary provision in the oil

and gas lease or other contract between the parties, we conclude

that UPR would be entitled to the ownership of the seismic data it

develops      pursuant        to   its      prudent   and   reasonable     geophysical

operations incidental to its exercise of the exclusive right to

explore and produce oil and gas under the lease.

                                     III.    CONCLUSION

     For the foregoing reasons, the district court judgment is

REVERSED          and   the   case     is    REMANDED     for    further   proceedings

consistent with this opinion.




        6
       It is also telling that in a major mineral law treatise
giving extensive treatment to the subject of “Reflections on
Ownership, Protection and Transfer of Seismic Data,” there is no
mention of even the possibility that the mineral lessees or
permitees collecting seismic data on lands owned by others do not
acquire ownership of that data. See 37 Rocky Mtn. Min. L. Inst. §
14. Rather, that treatise expressly refers to permitees as “data
owners.” 37 Rocky Mtn. Min. L. Inst., supra, at § 14.01.

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