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.
19