## Facts

- Daniel and Elizabeth Barnard owned a 66-acre tract in Deemston Borough, Washington County, Pennsylvania; an adjoining 156-acre tract was owned by James B. Barnard.
- Monongahela Natural Gas Company held separate oil-and-gas leases on both tracts, each granting the exclusive right to drill for gas and providing for a fixed annual payment per producing well so long as gas was sold from it.
- The boundary between the tracts formed a corner such that a typical ten-acre drainage circle centered near that corner would cover substantially more of the plaintiffs’ tract than the adjoining tract.
- Monongahela drilled a producing gas well on the adjoining tract about 55 feet from the corner and roughly 35 feet from each boundary line.
- Before drilling, the plaintiffs objected that the well was too close to the boundary and would capture gas from beneath their land.
- Monongahela later drilled a second well on the plaintiffs’ tract near the same corner and close to the boundary, but it was nonproductive.
- Evidence indicated a producing gas well commonly drains gas from an area of roughly ten acres in all directions, implying the producing well would draw a substantial portion of gas from beneath the plaintiffs’ tract.
- The plaintiffs filed an equity action seeking an injunction against production from the adjoining-tract well and an accounting for gas allegedly drained from beneath their land, alleging the well’s placement was fraudulent and breached duties owed by a lessee holding both leases.
- The trial court found no fraud or bad faith and dismissed the bill; the plaintiffs appealed.

## Issues

1. Whether, under the rule of capture, a landowner or lessee may drill a gas well on any part of its own land near a boundary without liability for drainage from an adjoining tract.
2. Whether a single lessee holding leases on adjoining tracts breaches duties to one lessor by locating wells so as to drain that lessor’s land primarily for the benefit of the other, and what showing is required to prove “fraudulent or evasive” conduct warranting equitable relief.

## Decision

- The Supreme Court of Pennsylvania affirmed the decree dismissing the plaintiffs’ bill for injunction and accounting.
- The court held that a landowner (and its lessee) may drill on any part of its own land regardless of effects on neighbors; the adjoining owner’s remedy is to drill on its own land.
- The court further held that when the same lessee holds adjoining leases, liability may arise only if the lessee fraudulently or evasively drills to drain one lessor’s tract to the other’s detriment.
- On the facts, drilling a productive well near the boundary on one tract did not constitute fraud or evasion where the lessee also drilled on the plaintiffs’ tract and, in good faith, attempted to develop it.

## Legal Principles

- Under the rule of capture for oil and gas, production from a well lawfully drilled on one’s own land is not actionable merely because it draws migrating gas from beneath neighboring land.
- A lessee generally has the same right as the lessor to drill anywhere on the leased premises, even near boundaries.
- When one lessee controls adjoining leases, it must not, through fraudulent or evasive well placement, favor one lessor by draining the other; proof requires more than showing substantial drainage.
- A good-faith effort to develop the allegedly disadvantaged tract, even if unsuccessful, may defeat claims seeking injunctions or accountings based on boundary drainage.

## Conclusion

The court applied the rule of capture to reject drainage-based liability for a boundary-adjacent producing gas well and held that equitable relief against a lessee holding adjoining leases requires proof of fraudulent or evasive conduct, which was not shown where the lessee also made a good-faith attempt to develop the plaintiffs’ tract.


Barnard v. Monongahela Nat. Gas Co., 216 Pa. 362, 65 A. 801 (Pa. 1907)