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XTO Energy, Inc. v. Schmidt

October 20, 2009

XTO ENERGY, INC., PLAINTIFF,
v.
KENNETH SCHMIDT, DEFENDANT.



The opinion of the court was delivered by: Daniel L. Hovland, Chief Judge United States District Court

ORDER GRANTING EX PARTE TEMPORARY RESTRAINING ORDER

Before the Court is the Plaintiff's "Motion for Temporary Restraining Order Without Notice" filed on October 15, 2009. See Docket No. 2. The Plaintiff seeks a temporary restraining order enjoining and restraining the Defendant from interfering in any way with the Plaintiff's attempts to access, and use for geophysical operations, the following real property, located in Williams County, North Dakota:

Township 154 North, Range 96 West Sec. 8: N1/2 Sec. 9: S1/2SW1/4 Sec. 17: N1/2N1/2

I. BACKGROUND

The plaintiff, XTO Energy, Inc., is an oil and gas exploration company that owns an interest in the oil and gas leasehold estate or other rights in and under real property located in the state of North Dakota. XTO Energy retained Quantum Geophysical, Inc./Geokinetics USA, Inc. to conduct geophysical operations on an area approximately 99 square miles in size, located in McKenzie, Williams, and Mountrail Counties in North Dakota. This project is known as the South Nesson 3D Phase II area. Geokinetics retained Erickson Contract Survey to survey the areas in advance of Geokinetics' operations. To date, Erickson Contract Survey has conducted survey operations on approximately 62% of the South Nesson 3D Phase II and geophysical operations have commenced. The defendant, Kenneth Schmidt, owns property located in Williams County that is located within the South Nesson 3D Phase II area. The Schmidt property is located at:

Township 154 North, Range 96 West

Sec. 8: N1/2 Sec. 9: S1/2SW1/4 Sec. 17: N1/2N1/2 Schmidt owns the surface estate of the property. XTO Energy owns an interest in and to the oil and gas leasehold estate in and under the Schmidt property, granting XTO Energy the right to conduct geophysical operations on the Schmidt property.

The purpose of the geophysical operation is to gather data from deep beneath the surface of the earth to be processed and analyzed for use in oil and gas exploration activities. XTO Energy contends that the most commonly used geophysical exploration device is the seismograph. The seismograph measures the reflection, refraction, and velocity of seismic or shock waves created by explosive charges set off in holes in the earth or from vehicle-mounted vibrators. XTO Energy utilizes seismographic surveys to conduct its geophysical operations in the South Nesson 3D Phase II area. Without a survey of the Schmidt property, Geokinetics is unable to commence its exploration activities on that tract of land.

In January 2009, Schmidt granted Cougar Land Services written permission to conduct seismographic exploration on the Schmidt property, including the right to ingress and egress for such purposes. Schmidt placed certain conditions on his permission, including a 48-hour notice period. Schmidt was paid $2,800 in exchange for the agreement.

On behalf of XTO Energy, Geokinetics applied for and was granted a "geophysical exploration permit" by the North Dakota Industrial Commission which grants XTO Energy and its contractors the right to conduct geophysical exploration activities in and under certain lands in North Dakota, including the Schmidt property. See N.D.C.C. § 38-08.1-04.1(1) ("A person may not engage in geophysical exploration activities in this state without having first obtained a geophysical exploration permit from the [North Dakota Industrial Commission]."). On September 11, 2009, pursuant to N.D.C.C. § 38-08.1-04.1(5)*fn1 , Cougar Land Services gave notice to Schmidt that it would be commencing geophysical operations on the Schmidt property. On September 23, 2009, before Erickson Contract Survey entered the Schmidt property to commence its surveying operations, Erickson Contract Survey called Schmidt to provide him with the 48-hour notice that Schmidt requested in the January 2009 agreement with Cougar Land Services. Schmidt did not object.

On or about September 28, 2009, Erickson Contract Survey entered the Schmidt property and commenced its surveying operations. The surveying operations included placing survey flags on the Schmidt property to identify the exact locations of where the receivers and source instruments are to be placed when the seismic operations begin.

On October 7, 2009, Erickson Contract Survey employees and others noticed that the stakes which had previously been placed on the Schmidt property had been removed, thus inhibiting the seismographic operations. Erickson Contract Survey called Schmidt to inquire why the stakes had been removed, and Schmidt informed Erickson Contract Survey that he would seek a court order to prevent XTO Energy and its contractors from proceeding with the geophysical operations. After that phone call, XTO Energy and its contractors have not entered the Schmidt property.

On October 15, 2009, XTO Energy filed a complaint in federal court in which it brought a claim for declaratory judgment and a claim for injunctive relief. XTO Energy contends that Schmidt has delayed its surveying activities and if XTO Energy is not allowed immediate access to the Schmidt property, XTO Energy may have to exclude the Schmidt property from its operations entirely. XTO Energy contends that if it is forced to exclude the Schmidt property from its operations, XTO Energy's survey will be missing data it agreed to provide to Erickson Contract Survey for oil and gas exploration activities in the area. XTO Energy also contends that the lack of geophysical data will have a detrimental effect on the operations for the South Nesson 3D Phase II; that the mineral owners and oil and gas leasehold owners of the Schmidt property will suffer harm; and that adjacent mineral owners and oil and gas leasehold owners will also suffer harm due to the lack of sufficient ...


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