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Singer Oil Co. LLC v. Newfield Exploration Mid-Continent Inc.

United States District Court, W.D. Oklahoma

October 10, 2017

SINGER OIL COMPANY, LLC, an Oklahoma limited liability company, Plaintiff,
v.
NEWFIELD EXPLORATION MID-CONTINENT, INC., a foreign corporation domesticated to do business in Oklahoma, and HALLIBURTON ENERGY SERVICES, INC., a foreign corporation domesticated to do business in Oklahoma, Defendants.

          ORDER

          VICKI MILES-LaGRANGE UNITED STATES DISTRICT JUDGE

         This case is scheduled for trial on the Court's November 2017 trial docket.

         Before the Court is defendant Newfield Exploration Mid-Continent, Inc.'s (“Newfield”) Motion for Partial Summary Judgment, filed July 3, 2017. On July 24, 2017, plaintiff filed its response. On July 31, 2017, Newfield filed its reply, and on August 22, 2017, Newfield filed its supplement to its motion for partial summary judgment. On September 20, 2017, plaintiff filed its supplemental response and objection, and on September 27, 2017, Newfield filed its reply to plaintiff's supplemental response and objection. Based on the parties' submissions, the Court makes its determination.

         I. Introduction

         Effective January 1, 2015, plaintiff became the owner and operator of the Smith No. 1 Well, located in the NW/4 of Section 18-16N-6W, Kingfisher County, Oklahoma, which has produced from the Big Lime, Skinner, and Mississippi Lime formations (the “Smith Well”). In early 2015, Newfield began planning to drill the Edgar 1H-18X well (the “Edgar Well”), a horizontal well which was to be drilled laterally through the W/2 of Sections 18 and 19-16N-6W, Kingfisher County, Oklahoma, and to be completed in the Mississippi formation. In anticipation that Newfield's operations could potentially, temporarily disrupt production from the Smith Well or others during Newfield's completion operation of the Edgar Well and others in the area, Newfield and plaintiff entered into negotiations for an agreement in or about June 2015. On June 30, 2015, Newfield sent a proposed draft of the Consent and Release Agreement to plaintiff for review and comment. Newfield and plaintiff entered into the Consent and Release Agreement, effective June 29, 2015.

         On June 9, 2016, plaintiff filed the instant action. Plaintiff alleges that when Newfield engaged in hydraulic fracturing during the completion operation of the Edgar Well, the Smith Well was damaged as a result. In its petition, plaintiff alleges various contract claims and negligence claims against Newfield. Plaintiff also seeks punitive damages. Newfield now moves for summary judgment on all of plaintiff's claims except the claim for actual damages for diminution in value of the Smith Well.

         II. Summary Judgment Standard

          “Summary judgment is ap propriate if the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The moving party is entitled to summary judgment where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party. When applying this standard, [the Court] examines the record and reasonable inferences drawn therefrom in the light most favorable to the non-moving party.” 19 Solid Waste Dep't Mechs. v. City of Albuquerque, 156 F.3d 1068, 1071-72 (10th Cir. 1998) (internal citations and quotations omitted).

         “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Furthermore, the non-movant has a burden of doing more than simply showing there is some metaphysical doubt as to the material facts. Rather, the relevant inquiry is whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Neustrom v. Union Pac. R.R. Co., 156 F.3d 1057, 1066 (10th Cir. 1998) (internal citations and quotations omitted).

         III. Discussion

         In its motion for partial summary judgment, Newfield asserts that plaintiff knowingly and intentionally waived all claims for damages except a claim for actual damages for diminution in value of the Mississippi formation in the Smith Well in the Consent and Release Agreement. Newfield further asserts that it cannot be held to be negligent per se since it drilled and completed the Edgar Well in accordance with all rules and regulations of the Oklahoma Corporation Commission. Finally, Newfield asserts that plaintiff cannot prove any facts which might otherwise entitle it to punitive damages.

         A. Consent and Release Agreement

Newfield asserts that under the Consent and Release Agreement, plaintiff has waived all claims for damages in this case except a claim for actual damages for diminution in value of the Mississippi formation in the Smith Well. The Consent and Release Agreement provides, in pertinent part:

Irrespective of whether Singer has consented to the drilling of a Newfield Horizontal, if Singer believes that its ultimate recovery of hydrocarbons from the currently producing interval of any Affected Existing Vertical Well that is attributable to such Newfield Horizontal has been permanently decreased (or said well is otherwise adversely affected) as a result of a Newfield Horizontal, then Singer shall within ninety (90) days after the conclusion of the completion operations on the applicable Newfield Horizontal (such date with respect to each Newfield Horizontal, the “Claim Deadline”) provide Newfield with written notice of any claims that Singer has that such Newfield Horizontal has caused any such adverse effect or decrease in production along with supporting information reasonably necessary for Newfield to verify the existence and accuracy of such claim (each such notice a “Claim Notice”). To the extent that prior to the Claim Deadline for each Newfield Horizontal Singer does not provide Newfield with a Claim Notice with respect to Affected Existing Vertical Wells attributable to such Newfield Horizontal, Singer shall be deemed to have waived any and all rights, claims or causes of action to recovery of damages or otherwise with respect to any such Affected Existing Vertical Wells (including, without limitation, any rights to indemnification pursuant to this Agreement that are attributable to such Newfield Horizontal.) From and after receipt of a Claim Notice by Newfield, the Parties will thereafter enter into good faith negotiations to resolve the amount of compensation, if any, to which Singer owns an interest in the applicable Affected Existing Vertical Well(s) that are the subject of such Claim Notice may be entitled and which are determined to have been caused by the applicable Newfield Horizontal. Such good faith negotiations shall give preference to (but shall not mandate) the selection of a mutually satisfactory third party engineer for purposes of providing a binding determination as to the amount of compensation, if any, to Singer which owns an interest in the ...

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