pjc-oil-and-gas-2022-lib

D AMAGES

PJC 313.11

PJC 313.11 Defensive Question on Reduction of Damages Resulting from Good-Faith Trespass If you answered “Yes” to Question ______ [ 313.10 ], then answer the fol lowing question. Otherwise, do not answer the following question. QUESTION ______ What reasonable drilling and operating costs, if any, did Don Davis incur in producing minerals from Paul Payne ’s land after the date [ insert description of act or omission for which liability was determined ] began? Answer in dollars and cents, if any. Answer: _______________ COMMENT When to use. PJC 313.11 should be used when the defendant alleges trespass that damaged the value of the plaintiff’s mineral interests was committed in good faith; thus, this question should be conditioned on findings of liability and on an affirmative finding of good faith in answer to PJC 313.10. Damages when trespass not in good faith. If the trespasser is not found to have acted in good faith, damages are measured by the market value of the minerals pro duced, without any deductions. Cage Brothers v. Whiteman , 163 S.W.2d 638, 642 (Tex. Comm’n App. 1942); Mayfield v. Benavides , 693 S.W.2d 500, 506 (Tex. App.— San Antonio 1985, writ ref’d n.r.e.). The question for this measure of damages is at PJC 313.9. Liability of good-faith trespasser. A good-faith trespasser who produces oil or gas is liable to the owner only for the value of the minerals removed, after deducting reasonable drilling and operating costs. Right of Way Oil Co. v. Gladys City Oil, Gas & Manufacturing Co. , 157 S.W. 737, 740 (Tex. 1913); Bender v. Brooks , 127 S.W. 168, 170–71 (Tex. 1910); Hunt v. HNG Oil Co. , 791 S.W.2d 191, 193, 194 (Tex. App.— Corpus Christi–Edinburg 1990, writ denied); Benavides , 693 S.W.2d at 506. In Hunt , deductions were permitted for completion costs, production taxes, transportation charges, operating expenses, and royalties paid to the landowner. Initial costs of drilling the well were not an allowable deduction in Hunt because they were incurred while the lease was in effect (and thus not during the trespass). Ini tial drilling costs incurred while the lease is in effect may be recoverable in equity, however. See Wagner & Brown, Ltd. v. Sheppard , 282 S.W.3d 419, 428–29 (Tex. 2008).

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