## Facts

- An 1859 recorded deed conveyed the “exclusive privilege” of producing oil from certain Johnson County, Kentucky lands, separating the oil rights from the surface estate.
- Over time, John T. Diederich acquired the claimed oil (mineral) rights through succession from the 1859 grantees.
- E. C. Ware acquired the surface estate to a 56-acre tract that was subject to the earlier severance of oil rights.
- In 1923, a predecessor in Ware’s title leased the right to drill for oil on the tract to Mid South Oil Company.
- In 1924, Mid South drilled two producing wells in a corner of the 56-acre tract and operated them openly, notoriously, and continuously for decades.
- Diederich’s predecessors in interest were informed that the drilling and production were being conducted under an adverse claim to the oil rights, but they did not take action to assert the severed oil title during the limitations period.
- Diederich filed a declaratory judgment action seeking a determination that he remained the owner of the oil rights despite the long-running production.
- The trial court entered judgment for Ware based on adverse possession, and Diederich appealed.

## Issues

1. After oil rights have been severed from the surface by deed, can the surface owner acquire title to the severed oil estate by adverse possession through drilling and producing oil for the statutory period under a hostile claim known to the mineral owner?
2. If adverse possession of severed oil rights is possible, does production from two wells located in a corner of a 56-acre tract support adverse possession of the oil rights under the entire tract or only the area immediately occupied or drained by the wells?

## Decision

- The Court of Appeals of Kentucky affirmed the judgment for Ware.
- The court held that severed oil rights are a separate estate in land and may be acquired by adverse possession.
- The court concluded that the long, open, continuous operation of the two wells under a clearly adverse claim—together with the mineral owner’s notice and long inaction—was sufficient to vest Ware with title to the oil rights by adverse possession.
- On the facts presented, the adverse possession was treated as extending to the oil rights under the entire 56-acre tract, not merely the corner where the wells were drilled.

## Legal Principles

- A severed mineral (oil) estate is an interest in land distinct from the surface estate and is subject to loss or acquisition by adverse possession.
- To adversely possess a severed oil estate, the claimant must prove the standard elements—actual, open, notorious, exclusive, hostile, and continuous possession for the statutory period—applied to the mineral estate.
- Actual possession of severed oil rights is shown by acts that assert dominion over the oil estate, including drilling and ongoing production.
- Hostility may be shown where production is carried on as a claim of right inconsistent with the severed mineral owner’s title, especially where the mineral owner has been told the operations are under an adverse claim and nevertheless fails to act within the limitations period.
- Where production and the asserted claim are directed to the oil estate associated with the tract, and the conduct is sufficiently visible and continuous, adverse possession may mature as to the oil rights for the tract rather than being confined to the immediate well sites.

## Conclusion

Diederich v. Ware holds that severed oil rights in Kentucky may be acquired by adverse possession when a surface owner (through a lessee) drills and continuously operates producing wells openly and under a hostile claim known to the mineral owner, and the mineral owner fails to assert rights within the statutory period; on these facts, the court affirmed that title by adverse possession reached the oil rights under the entire 56-acre tract.


Diederich v. Ware, 288 S.W.2d 643 (1956)