## Facts

- EnerVest Operating, LLC operated coal bed methane (CBM) wells in Sebastian County, Arkansas, under leases and contracts with both the coal/surface owner and the oil-and-gas/mineral owners.
- A common grantor severed interests through three deeds:
  - The 1962 Wheeler deed conveyed an undivided one-half interest in “all oil, gas, and other minerals,” expressly excepting coal.
  - The 1965 Garland deed conveyed the surface and coal estate.
  - The 1976 Texas & Pacific deed conveyed the grantor’s remaining undivided one-half interest in “oil, gas, and other minerals,” again excepting coal.
- The “Gas Owners” became successors to the oil, gas, and other minerals estate (excluding coal); Sebastian Mining, LLC became successor to the surface and coal estate.
- After CBM production began, competing royalty claims arose over whether CBM belonged to the coal estate or to the oil-and-gas/mineral estate.
- EnerVest filed an interpleader action to determine the proper royalty recipients; the district court granted summary judgment to the Gas Owners on a stipulated record.

## Issues

1. Under Arkansas law and the deeds’ language conveying “oil, gas, and other minerals, except coal,” does ownership of CBM follow the coal estate or the oil-and-gas/mineral estate?
2. Whether clear deed language reserving coal, without expressly reserving CBM, permits treating CBM as part of the coal estate by implication.

## Decision

- The Eighth Circuit affirmed the district court’s summary judgment for the Gas Owners.
- The court held the deeds unambiguously conveyed CBM rights to the owners of “oil, gas, and other minerals,” and reserved only coal to the coal/surface estate.
- Because CBM is a form of natural gas, it falls within the granted “gas” interest and is not captured by an exception for “coal” absent explicit deed language to that effect.

## Legal Principles

- Deed interpretation under Arkansas law begins and ends with the plain language when the instrument is unambiguous; extrinsic evidence is unnecessary.
- Broad grants of “all oil, gas, and other minerals,” coupled with an express exception for coal, allocate gaseous minerals (including CBM) to the oil-and-gas/mineral estate unless CBM is specifically excluded.
- Arkansas law disfavors implied reservations that contradict clear conveyancing language.
- The physical association of a gas with coal seams does not reclassify the gas as “coal” where the deed’s text separately allocates coal and gas interests.

## Conclusion

Because the controlling deeds conveyed all oil, gas, and other minerals while excepting only coal, the CBM produced from the property belonged to the oil-and-gas/mineral estate, and the Gas Owners—not the coal and surface owner—were entitled to the CBM royalties.


EnerVest Operating, LLC v. Sebastian Mining, LLC, 676 F.3d 1144 (8th Cir. 2012)