Limitation of Surface Easement in Severed Mineral Estates: No Horizontal Off-Site Drilling Absent Express Consent

Introduction

The Sixth Circuit’s decision in EOG Resources, Inc. v. Lucky Land Management, LLC establishes a clear rule: a mineral‐estate owner or lessee may not use the surface of one tract to drill horizontally into adjoining tracts—even if the same party holds the subsurface rights—unless the surface owner has expressly granted that privilege. In this dispute, EOG Resources, which held oil and gas leases under Lucky Land’s 313‐acre deer‐hunting property in Ohio, sought a preliminary injunction to clear 35–45 acres and install horizontal drilling pads that would tap neighboring reservoirs. The district court granted the injunction, but the Sixth Circuit reversed, holding that (1) the severance deeds did not grant an off‐site drilling right by express language or necessary implication, (2) EOG failed to show irreparable harm, and (3) the equities and public interest did not favor preliminary relief.

Summary of the Judgment

1. Background and Procedural History
– Lucky Land Management purchased and developed a rural property for deer hunting, investing over $1 million in surface improvements.
– Subsurface oil and gas rights had been severed in the 1950s by reservation in a deed that granted “the right to enter … and all necessary and proper rights in connection therewith.”
– EOG acquired the mineral lease rights and demanded surface access to build large horizontal drill pads to produce oil and gas from adjacent lands. Lucky Land refused.
– The district court granted a preliminary injunction ordering access (with $100,000 paid as “due regard”), and the motions panel later stayed that injunction pending appeal.

2. Sixth Circuit Holding (Reversed)
– A mineral owner’s easement to use the surface is limited to production of minerals from that same tract.
– Horizontal drilling under neighboring properties without express surface‐use rights is an unauthorized use and a trespass.
– EOG could not demonstrate irreparable injury from waiting for a final ruling; lost profits alone are compensable in damages.
– Granting the injunction allowed EOG to inflict irreversible harm (deforestation) and upset the status quo.
– The public interest did not clearly favor EOG’s request.

Analysis

Precedents Cited

Franklin v. Callicoat (Ohio Ct. Com. Pl. 1954): A severance deed creates only an implied surface easement for minerals under the same tract; it does not authorize surface use for mining adjacent premises.
Chesapeake Exploration, LLC v. Buell (Ohio 2015): Ohio law implies a surface easement “necessary and proper” for production under that tract, but no more.
Eclipse Resources-Ohio, LLC v. Madzia (6th Cir. 2017): Where a lease expressly authorizes transport of oil and gas “from the subject lands and other lands,” it unambiguously permits cross-boundary operations.
Jewett Sportsmen & Farmers Club, Inc. v. Chesapeake Exploration, LLC (Ohio Ct. Com. Pl. 2012): A grantee without express off-site rights cannot use the surface to reach minerals beyond the property lines.
Winter v. Natural Resources Defense Council (U.S. 2008): To obtain a preliminary injunction, a movant must show likely success on the merits, irreparable harm, favorable balance of equities, and alignment with the public interest.

Legal Reasoning

The Sixth Circuit applied Ohio property and oil‐and‐gas law to determine the scope of a mineral owner’s surface easement:

Default Rule of Surface‐Easement Scope
– Ohio presumes that reservation of mineral rights carries only the right to use the surface for production of minerals under that same parcel.
– Any extension—to drill horizontally into adjacent parcels—must appear by express deed or lease provision.
Treatises and Out-of-State Authority
– Williams & Meyers, Kuntz, Summers, American Jurisprudence, Corpus Juris Secundum, and leading cases nationwide uniformly reject implied off-site drilling rights.
Application to the Severance Deeds
– The 1950s severance deeds reserved standard “necessary and proper” rights but contained no language authorizing surface use for neighboring tracts.
– EOG conceded no express grant and could not overcome the strong presumption against implied off-site rights.
Preliminary Injunction Requirements
- Likelihood of Success: Absent express language, EOG could not prevail on the merits.
- Irreparable Harm: EOG’s alleged lost profits were fully compensable by damages; no imminent irreparable injury existed.
- Balance of Equities: Granting relief allowed EOG to deforest 35 acres—classic irreparable waste—while denying the injunction would have preserved the status quo.
- Public Interest: Neutral or unfavorable without a showing of legal entitlement or irreparable harm.

Impact

This decision clarifies and reinforces several important principles:

In Ohio (and by persuasive analogy elsewhere), severed mineral estates do not carry off-site surface easements for horizontal drilling absent express contractual language.
Landowners and mineral lessees must negotiate specific surface-use agreements if horizontal, extended-reach operations are desired.
Plaintiffs seeking preliminary injunctions must affirmatively show irreparable harm; economic loss alone is insufficient.
Courts must preserve the status quo when denying immediate relief, not enable irreversible alterations pre-trial.

Complex Concepts Simplified

Severed Estates: When surface rights and subsurface (mineral) rights are split between different owners, each has limited bundles of rights.
Implied Easement: By default, a mineral owner gets only the surface access “reasonably necessary” to drill under that same tract.
Horizontal vs. Vertical Drilling: Vertical wells go straight down. Horizontal wells turn sideways underground to reach a larger reservoir area, requiring bigger surface pads.
Preliminary Injunction: A short-term court order to preserve the parties’ positions until a full hearing; requires proof of likely success, irreparable harm, favorable equities, and public interest alignment.
Irreparable Harm: Injury that cannot be fixed with money damages alone. Cutting down trees is irreversible on a litigation timeline.

Conclusion

The Sixth Circuit’s ruling in EOG Resources v. Lucky Land underscores that mineral owners’ surface easements are confined to operations under the same tract unless the surface owner consents to off-site activities. It affirms that (1) courts will not imply sweeping drilling rights from general “necessary and proper” language, (2) injunction seekers must demonstrate irreparable injury beyond lost profits, and (3) equity demands preservation of the status quo and avoidance of irreversible waste. This precedent will guide oil-and-gas operators, landowners, and courts in negotiating, drafting, and interpreting mineral leases and surface-use agreements, particularly in the horizontal drilling era.