Ward v. Helis

SIBLEY, Circuit Judge

(dissenting).

I cannot agree to the statement of the case made by the majority opinion, nor to t-he reversal of the judgment. The statement that Bernard well Number 3 “for many months actually produced more than three thousand barrels of oil per day” is unsupported by the record. During twenty months, six hundred days, 1,802,565 barrels were taken from the entire lease, an average of three thousand barrels per day, but wells No. 1, No. 3 and No. 4 were all producing it, and there is no evidence that No. 3 ever produced three thousand barrels any day. But what No. 3 did after the fifteen day test period named in the contract is unimportant. Whether it produced three thousand barrels or went dry would have no effect on the construction and application of the contract. Again, the attitude of Helis I do not think is fairly stated. He had men present at every test, who to be sure contended that it was only necessary to measure the oil produced through the %" choke on the well to make the required calculation, but did permit on the last test other chokes to be experimented with. As to Judge Hardin, he stated that he was considering an offer of employment by the seller in the apparently impending litigation. Helis correctly objected that he was disqualified to appoint the umpire, and also objected that there was no dispute about what the well could produce on a %" choke. The instruction given the umpire by Judge Hardin to “calculate the open flow capacity of the well” was not authorized by Helis, who always contended that the open flow had nothing to do with the matter. The difference between the parties is and has always been about the meaning of their contract.

THe one side contends that the calculation called for, towit “the average daily production for a period of fifteen days after completion * * * calculated on a %" choke according to the methods usually employed in gauging the capacity of oil wells” means that the well is to run for some hours on several of the fifteen days on a %" choke and from the results obtained a calculation is to be made of what the average production in barrels would have been for the fifteen whole days. The other side contends that the meaning is to measure what the well would produce through a %" choke for the fifteen days and from that calculate what it would have produced during the fifteen days if not choked at all. Either is a possible meaning. The evidence 'indicates that a very high gas pressure and a very light oil would have to be encountered for three thousand barrels to be forced through a %" choke in twenty-four hours, and it is argued that the parties could hardly have meant that. On the other hand it is testified without dispute that it is impossible to calculate what a well would flow if unchoked by ascertaining what it flows on a %" choke alone. So it would be equally improbable that the contract called for an impossible calculation of that sort. The last test resorted to the use of several chokes, and a noting of the increase of flow and decrease of pressure as the choke was enlarged, from which an opinion was formed that on a %" choke or larger three thousand barrels per day could be produced. But the contract does not call for opinions, but a calculation, and a calculation “according to the methods usually employed in gauging the capacity of oil wells.” These are the key words of the contract. If we learn what the usual method employed is, we know what the parties here meant. Appellants’ own expert witness Buck, who represented them at all the tests, testifies entirely without contradiction, thus:

“Q. What, is the usual accepted method of ascertaining the capacity of a well when it comes in in the Gulf Coast country? A. Along the Gulf Coast in Texas most wells are gauged through a choke, Southwest Texas %"chok-e, other parts of the State %" choke. * * *

“Q. How did you test tfm capacity of Bernard No. 3 well on a %" choke? A. By placing a %" choke in the tubing wing of the tree, closing the well off on the other wing of the tree, getting a back gauge on the battery of tanks, and-getting a front gauge over a period of time to see how much the well produced over a' period of time. * * *

“Q. Did you calculate the daily production on a %" choke-? A. The daily pro *524 duction was calculated by taking the first one hour flow and multiplying that by twenty-four; the second two hours flow and multiplying by twelve.

“Q. Isn’t that the usual and customary method employed in the oil industry in getting the capacity of an oil well with a %" choke? A. No, that is not. In gauging 'the capacity of a well on a %" choke the common practice would be a four hour flow, preferably a twelve hours flow; and still another,' taking the actual oil produced every twenty-four hours. There would be no calculation there at all, you have actual physical record of the number of barrels produced. * * *

“Q. What was the daily production calculated on a %" choke? A. On a %" choke on April 27 the well was producing at the rate of 51.79 barrels per hour — approximately 1233 barrels per day.

“Q. According to your calculation the daily production of the Bernard No. 3 well on a %" choke, in accordance with the usual method in gauging the capacity of oil wells, was this figure you have just mentioned? A. That is what’the well was producing that day through a %" choke, producing at that rate.”

No witness claimed that it was usual or customary to do what was afterwards done by direction of Judge Hardin, in an endeavor to form an opinion as to what a well would do on some other choke, or wide open. Buck on his first test did what was usual and customary in calculating the capacity of the well on a %" choke and found it to be 1233 barrels per day. The contract made no mention of using any other choke or ascertaining capacity when wide open. It speaks of calculation, but calculation ,is necessary whenever oil is flowed 'into a receptacle, depending on the size and shape of the receptacle, to ascertain the barrels flowed in a day; and another calculation is necessary to reach the average for fifteen days. If a tank of known capacity is available the calculation may be simpler, but such might not be on hand the first two weeks after oil is struck. The trial judge correctly held that Buck’s measuring the flow on a %" choke for certain hours on three several days and from that calculating the flow for twenty-four hours and averaging the results was the method usually employed and that called for by the contract.