Samedan Oil Corp. v. Corporation Commission
100 Oil & Gas Rep. 334, 1988 OK 56, 755 P.2d 664 (1988)
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Rule of Law:
A party that successfully litigates to establish a particular legal status is judicially estopped from later assuming an inconsistent position to avoid the obligations of that status, especially after the outcome of the underlying venture becomes known.
Facts:
- The Corporation Commission issued Pooling Order #242128, naming Lincoln Rock as the operator of the Bedo No. 4 Well and giving Samedan 15 days to elect to participate.
- After a scrivener's error in the first order was discovered, the Commission issued Correction Pooling Order #244026 on August 29, 1983, which restarted the election period.
- On September 9, 1983, within the new time period, Samedan formally notified Lincoln Rock that it elected to participate as a working interest owner in the well.
- Lincoln Rock rejected Samedan’s election, asserting that the correction order did not reopen the election period.
- Samedan then initiated proceedings with the Corporation Commission to affirm the validity of its election to participate.
- On or about April 20, 1984, the well was completed and determined to be a marginal producer.
- After the Commission affirmed Samedan's status as a participant, Lincoln Rock billed Samedan for its share of the costs on May 30, 1984.
- On June 14, 1984, Samedan refused to pay, asserting for the first time that its election was invalid because it had failed to comply with the order's security provisions within 20 days.
Procedural Posture:
- Samedan filed an application with the Oklahoma Corporation Commission to clarify the pooling orders and determine that its election to participate in the well was proper and timely.
- A trial examiner and subsequently a referee recommended that the Commission rule in favor of Samedan.
- The Commission issued Order #259992, which held that the Correction Pooling Order was controlling and that all parties who made affirmative elections under it were bound by those elections. This order was not appealed.
- After Samedan later refused to pay its share of costs, Lincoln Rock filed a new application requesting the Commission to clarify that Samedan was obligated to pay.
- The Commission, after further hearings, issued Order #298259, holding that Samedan is a participant in the well and is responsible for its share of the costs.
- Samedan (appellant) appealed Order #298259 to the Supreme Court of Oklahoma; Lincoln Rock is the appellee.
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Issue:
Is a party that affirmatively litigates to establish its right to participate as a working interest owner in a well bound by that election, thereby obligating it to pay its proportionate share of costs, even if it later claims the election was not perfected?
Opinions:
Majority - Justice Alma Wilson
Yes. A party that affirmatively litigates to establish its right to participate is bound by that election and its resulting obligations. Parties on appeal are not permitted to secure a reversal of a judgment by assuming an inconsistent position from the one taken in the trial court. Samedan actively sought a determination from the Commission that it was a participant, filing its application long after the 20-day period to furnish security had expired. It never contended that its election was not perfected until after learning the well was a marginal producer and it was billed for costs. To allow Samedan to reverse its position now would be an abuse and manipulation of the judicial process. The security provisions in the pooling order are for the benefit of the operator (Lincoln Rock), not for the electing party (Samedan) to use as an escape hatch from a poor investment.
Analysis:
This decision solidifies the application of judicial estoppel in administrative and appellate proceedings, preventing litigants from strategically changing their legal theories based on intervening factual developments. It establishes that a party's litigation conduct to affirm a right also serves to affirm the corresponding obligations. In the context of oil and gas law, the ruling prevents non-operators from 'riding the well down'—waiting to see if a well is profitable before committing to their financial obligations—thereby protecting operators from bearing an unfair share of the risk.
