Limitations of Action: Gas Balancing Joint Operating Agreement: Gas Balancing Provision

摘要

Sanderson and other underproduced owners in a gas well seek a cash balancing. They allege that the operator's proposed plugging and abandonment of the subject well, and the fact that certain owners were in fact abandoning the well, triggers the provision of the applicable operating agreement which provides that "in the event production of gas permanently ceases prior to the time that the accounts of the parties have been balanced, a complete balancing shall be accomplished by a money settlement." The overproduced parties decline to balance and instead assert that Sanderson's claim is time-barred by several statutes of limitations. Sanderson files the present lawsuit seeking an accounting and damages. The overproduced defendants specifically allege in their defense that Sanderson's claim are barred by the five-year statutes of limitations set forth in 12 O.S. 2001 § 95 and 52 O.S. 2001, § 570.10 since more than five years has elapsed between (a) the date Marathon assigned to Sanderson the already-underproduced interest that is at issue in this case, and (b) the date Sanderson files the present lawsuit. The district court finds that the statute of limitations on a claim for gas balancing begins to run when there is an ouster or a termination of the cotenancy relationship between the underproduced party and the overproduced party. It further finds that the cotenancy relationship between Marathon and the overproduced defendants was terminated when Marathon sold its interest in the well, and assigns its underproduction claim to Sanderson, thereby commencing the running of the limitations period. After observing that enough time elapsed since the assignment to Sanderson for both a three-year and five-year limitations period to have run, the district court enters judgment for the defendants, finding the Sanderson's claim is barred. Held: reversed and remanded. In reversing the trial court's ruling that the statutes of limitation bar Sanderson's claim, the appellate court finds that the rules of gas balancing described in the Harrell decision allow Sanderson, as the assignee of an underproduced owner, to wait until the relationship with the overproduced working interest owners ends before demanding a balancing. As a result, the statute of limitations does not commence to run upon Marathon's sale of its underproduced interest to Sanderson over five years earlier.