The 7th District Court of Appeals in Ohio recently addressed what elements a co-tenant must satisfy to adversely possess a severed oil and gas interest against his co-tenants. See, Tomechko v. Garrett, 2021-Ohio-1377. In Tomechko, the appellants were the owners of the surface and one-half of the minerals. The appellees were the heirs and devisees of the owners of the other one-half of the minerals. In 1989, the appellants’ predecessor-in-interest signed an oil and gas lease with Trans Atlantic Energy Corp. Trans Atlantic drilled two wells on the appellants’ property, which began producing oil and gas around 1991. In 2013 and 2014, the appellees signed leases with another oil and gas operator. Upon learning of the appellees’ interest in the oil and gas, Trans Atlantic’s successor-in-interest proportionately reduced the appellants’ royalty interest.
The Court first addressed the threshold issue of whether the appellees’ ancestors’ reservation of “minerals” in 1977 included oil and gas. The Court applied existing case law as well as ordinary rules of contract interpretation to resolve the issue. First, the Court acknowledged that the term “minerals” under Ohio case law generally includes oil and gas. Second, the Court reviewed the reservation clause at issue and concluded that the word “minerals” included oil and gas because (i) there was oil and gas activity in the area at the time the appellees’ ancestors made the reservation and (ii) there was no limiting language in the reservation clause evidencing an intent to restrict “minerals” to hard minerals.
Next, the Court analyzed whether the appellants adversely possessed the appellees’ oil and gas when they entered into an oil and gas lease in 1989, which leased all of the oil and gas under the property as to all depths. In order to establish adverse possession in Ohio, “a party must prove by clear and convincing evidence, exclusive possession and open, notorious, continuous, and adverse use for a period of twenty-one years.” However, a “tenant in common cannot assert title by adverse possession against his co-tenant unless he shows a definite and continuous assertion of adverse right by overt acts of unequivocal character clearly indicating an assertion of ownership of the premises to the exclusion of the right of the co-tenant.”
The Court held that the appellants adversely possessed the appellees’ oil and gas because they leased and produced the appellees’ oil and gas and the lessee paid the appellants for such production. Further, although the two wells drilled on the appellants’ property were only producing from shallow formations, the Court held that the appellants also adversely possessed the deep formations because “[a]dverse possession of the deep rights should follow the shallow rights due to the alteration of the surface and subsurface from drilling and removing the oil and gas.” In this case, the appellants adversely possessed the deep formations based on their “adverse possession of the shallow rights, the permeating nature of the drilling and production of oil and gas, and the lease with Trans Atlantic which provided for drilling to all strata.”