## Facts

- A landowner conveyed a severed coal estate to Central’s predecessor by deed granting “all coal” and the right to mine and remove it.
- After the coal conveyance, the landowner (or successor) executed oil and gas leases covering the same lands to Davis Operating and other lessees.
- The lessees drilled wells and produced methane and other gases from coal seams and coal-associated formations (coalbed methane).
- Central asserted that coalbed methane belongs to the coal owner because it is generated by coalification and is located within the coal formation.
- Central filed a quiet title action seeking a declaration that it owned the coalbed methane and that the lessees had no right to produce it.

## Issues

1. Whether a deed conveying “all coal” with the right to mine and remove it conveys ownership of coalbed methane.
2. Whether the coal owner gains title to all substances within the coal formation when the coal deed is the first mineral conveyance affecting the tract.
3. Whether coalbed methane should be governed by Kansas oil-and-gas ownership rules or by a special rule tied to coal ownership.

## Decision

- The Kansas Supreme Court affirmed summary judgment for the oil-and-gas lessees.
- The Court held that “all coal” does not include coalbed methane under the deed’s language and Kansas law.
- The Court rejected a rule allocating coalbed methane based on the gas’s geologic origin in coalification.
- The Court rejected a “first mineral conveyance” doctrine that would award all substances in the coal formation to the coal grantee.
- The Court treated coalbed methane as natural gas governed by Kansas oil-and-gas principles; absent an express conveyance to the coal owner, coalbed methane belongs to the fee owner and its oil-and-gas lessees.

## Legal Principles

- In Kansas, oil and gas in place are part of the realty and belong to the fee owner unless severed by grant, reservation, or exception.
- Coalbed methane is treated as natural gas for ownership purposes and follows the oil-and-gas estate unless the parties expressly allocate it differently.
- A conveyance of “all coal” and the right to “mine and remove” it conveys the solid coal estate and does not, without specific language, convey gaseous hydrocarbons.
- Mineral title is determined by the substance’s character and the conveyance language, not by a substance’s geologic origin.
- The fact that a coal deed predates later oil-and-gas conveyances does not expand the coal estate to include other substances within the coal formation.

## Conclusion

The Court held that a deed conveying “all coal” does not transfer ownership of coalbed methane; coalbed methane is owned under Kansas oil-and-gas rules by the fee owner and may be produced by the fee owner’s oil-and-gas lessees absent an express conveyance to the coal owner.


Central Natural Res., Inc. v. Davis Operating Co., 288 Kan. 234, 201 P.3d 680 (Kan. 2009)