## Facts

- Mitchell Energy Corporation proposed unitized secondary recovery (waterflood) of the Teapot Formation in Converse County, Wyoming, covering about 7,385 acres.
- Kye Trout, Jr. held working interests in leases within the proposed unit area.
- Working-interest owners met, evaluated multiple allocation formulas, and voted; the selected formula received 82.39% support, while Trout’s preferred formula was rejected by most owners.
- Trout did not oppose unitization to prevent waste; he opposed only the proposed allocation formula as unfair to his interests.
- At the Commission hearing, Trout’s engineer supported unitization and testified that remaining outside the unit would constitute waste.
- Two other engineers testified that the proposed allocation formula was fair and equitable.
- The Wyoming Oil and Gas Conservation Commission approved the unitization plan and allocation formula by order, finding the formula allocated production in a just and equitable manner and protected correlative rights.
- Trout sought judicial review; the case reached the Wyoming Supreme Court on certification.

## Issues

1. Whether the Commission’s material findings were supported by substantial evidence on the whole record.
2. Whether the Commission could approve a unit allocation formula without evidence that it protected correlative rights and allocated production equitably.
3. Whether the Commission’s approval of the allocation formula was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

## Decision

- The Wyoming Supreme Court affirmed the Commission’s order approving unitization and the allocation formula.
- The Court held substantial evidence supported the Commission’s findings, including expert testimony that the formula was fair and equitable.
- The Court held the record supported the Commission’s determination that the formula reasonably protected correlative rights and allocated production justly and equitably.
- The Court held the Commission’s action was not arbitrary, capricious, or an abuse of discretion, and the agency adequately explained its decision.

## Legal Principles

- On review of administrative action, courts uphold agency fact-finding if supported by substantial evidence in the record as a whole.
- A unitization allocation formula need not be exact; it must be just and equitable and provide reasonable protection of correlative rights while furthering waste prevention.
- Conflicts in expert testimony are for the agency, as fact-finder, to resolve; a reviewing court will not reweigh technical evidence when the agency’s choice is supported by the record.
- An agency decision is upheld against arbitrary-and-capricious review when it reflects reasoned decision-making grounded in findings and record support, including technical testimony and operational feasibility.

## Conclusion

The court upheld the Commission’s approval of unitization and the chosen allocation formula because the Commission made express findings on fairness and correlative rights, relied on expert testimony supporting the formula, and issued a reasoned order that satisfied substantial-evidence and arbitrariness review standards.


Trout v. Wyo. Oil & Gas Conservation Comm’n, 721 P.2d 1047 (Wyo. 1986)