We can't find the internet
Attempting to reconnect
Something went wrong!
Attempting to reconnect
Cactus Water Services, LLC v. COG Operating, LLC
The Texas Supreme Court held that operators own produced water generated from oil and gas production under leases silent on waste stream ownership, rejecting surface owners' attempt to convey those rights to a third-party water services company. COG Operating's $21 million disposal of 52 million barrels of produced water from 72 horizontal Delaware Basin wells became the subject of competing ownership claims when surface owners purported to grant produced water rights to Cactus Water Services through separate surface agreements.
Analysis
Texas Supreme Court Resolves Produced Water Ownership: Mineral Lessee Prevails Over Surface Estate in First-Impression Case
The Texas Supreme Court held that mineral rights lessees, not surface estate lessees holding produced water lease agreements, possess the right to custody, control, and disposition of constituent water in produced water from hydrocarbon operations. The court ruled that while water is not part of the mineral estate, the mineral lessee's rights to possess and dispose of produced water as an incident of hydrocarbon production cannot be reserved by the surface owner absent express language.
Texas Supreme Court Vests Produced Water Ownership in Operators Under Silent Leases
The Texas Supreme Court held that operators own produced water generated from oil and gas production under leases silent on waste stream ownership, rejecting surface owners' attempt to convey those rights to a third-party water services company. COG Operating's $21 million disposal of 52 million barrels of produced water from 72 horizontal Delaware Basin wells became the subject of competing ownership claims when surface owners purported to grant produced water rights to Cactus Water Services through separate surface agreements.
Texas Supreme Court Holds Produced Water Belongs to Mineral Estate Absent Express Reservation
The Texas Supreme Court held in a matter of first impression that mineral rights lessees, rather than surface estate lessees holding produced-water lease agreements, possess the right to custody, control, and disposition of produced water from hydrocarbon production. The Court reasoned that water is not part of the mineral estate but remains with the surface estate unless expressly severed, yet the mineral lessee's rights necessarily include disposition of this inherent and inescapable byproduct of oil-and-gas operations.