## Facts

- Old Ben Coal Company controlled coal, oil, and gas interests under lands in Franklin County, Illinois, and executed oil and gas leases in the early 1980s.
- The leases granted rights to produce “oil, all gases, liquid hydrocarbons, and their constituent products,” but included restrictions tied to coal mining and, as construed by the court, excluded coalbed methane (CBM) production from coal seams and mine voids.
- Coal mining left coal seams that contained gas and underground mine voids that held methane liberated by mining.
- Continental Resources of Illinois, Inc. later acquired, by assignment, three of the oil and gas leases.
- Illinois Methane, LLC (with DeMier Oil Company) produced CBM from wells located off Continental’s leased premises, allegedly drawing gas originating from coal seams and mine voids associated with the mined areas under and adjacent to Continental’s leases.
- Continental sued, alleging (i) its leases gave it the exclusive right to explore for and produce the gas being produced as CBM, and (ii) it was entitled to share in proceeds from CBM produced from mine voids tied to a larger mine system that included nearby lands in which Continental claimed coal-related rights.
- Continental argued the rule of capture did not bar relief because methane in mine voids had already been “captured” or “reduced to possession” by being confined in human-made cavities.
- The circuit court dismissed the complaint for failure to state a claim, concluding Continental had no lease-based right to produce CBM and that the rule of capture defeated the drainage theory; Continental appealed.

## Issues

1. Whether the oil and gas leases, read as a whole, conveyed to Continental the right to explore for or produce coalbed methane from coal seams or mine voids.
2. Whether methane present in underground coal mine voids is “captured” or “possessed” such that a claimant can own it prior to actual production, notwithstanding the rule of capture.
3. Whether Continental stated a viable cause of action for drainage or interference with mineral rights given the lease terms and the rule of capture.

## Decision

- The appellate court affirmed dismissal for failure to state a cause of action.
- The leases did not convey to Continental the right to produce coalbed methane; the instruments were conventional oil and gas leases with restrictions construed to exclude CBM from seams and voids.
- Methane in mine voids was not “captured” or “possessed” merely because it occupied a human-made cavity; under the rule of capture, gas is not owned before reduction to possession.
- Without a lease-based CBM right and without ownership through capture, Continental lacked a protectable interest to support drainage or proceeds-sharing claims.

## Legal Principles

- Oil and gas lease rights are determined by the lease language construed as a whole; broad “oil and gas” grants do not necessarily include coalbed methane when the agreement reflects an exclusion tied to coal-seam or mine-void methane.
- Under the rule of capture, natural gas is not owned prior to actual capture or reduction to possession; subsurface presence alone does not confer title.
- Gas located in underground mine voids remains subject to the rule of capture and is not treated as “captured” absent physical production.
- A drainage or interference claim requires a cognizable underlying right to the mineral allegedly drained; where the plaintiff lacks that right, the complaint fails to state a claim.

## Conclusion

The court held that conventional oil and gas leases, as interpreted in light of their restrictions, did not grant coalbed methane rights, and that methane in mine voids is not owned until actually produced under the rule of capture; accordingly, Continental’s drainage and proceeds-sharing theories failed as a matter of law.


Continental Resources of Ill., Inc. v. Ill. Methane, LLC, 847 N.E.2d 897 (Ill. App. Ct. 5th Dist. 2006)