Pooling and Unitization: Unit Operator Defau Liens

摘要

The court is presented with a lien priority contest between an oil and gas mortgagee (Gasrock Capital) and a well service company (Pan American Drilling) who contracts with the operator of the unitized field and asserts a statutory oil and gas lien. The subject unit is formed under the unitization provisions of 52 O.S. 2011, § 287.1, et seq. The underlying oil and gas leases on which the competing liens are claimed are owned by EnDevCo Eureka, L.L.C. (EnDevCo). Gasrock Capital's mortgage from EnDevCo is recorded in the real estate records on April 24, 2006. EnDevCo subsequently hires Pan American Drilling to drill a well on the unit that includes EnDevCo's oil and gas leases. Pan American Drilling commences work at the well location on or about September 25,2007. EnDevCo ultimately defaults on its payment obligations to GasRock Capital and to the drilling contractors. Pan American Drilling files its oil and gas lien statement on July 8, 2008. In the lien foreclosure litigation that follows, GasRock Capital asserts that because its mortgage was recorded prior to Pan American Drilling's commencement of work on the property, GasRock Capital has first-in-time priority over the competing well lien under 42 O.S. 2011, § 144. Pan American Drilling responds mat 52 O.S. 2011, § 287.8 grants its contractor lien claim first priority for the operating expenses of the unit. Section 287.8 provides in pertinent part that the unit shall have a first and prior lien upon the leasehold estate and other oil and gas rights to secure the payment of the amount of the unit expense. The trial court rules in favor of Pan American Drilling. GasRock Capital appeals. Held: affirmed. In affirming the decision of the trial court, the Oklahoma Court of Appeals first finds that an oil and gas unit operator's statutory lien has priority over a mortgagee's lien regardless of the first-in-time recording of the mortgage. GasRock Capital asserts mat the foregoing proposition has no application to the present case because Pan American Drilling is not the operator of the unit and is merely a contractor. However, the court notes that the Plan of Unitization for the subject unit expressly provides that the unit would have a first and prior lien on the leasehold interests to secure payment of unit expense.