Produced Water Ownership Case Analysis in Texas

This document is a technical report that discusses the recent Texas Court of Appeals decision in Cactus Water Services, LLC v. COG Operating, LLC, which addresses the ownership of produced water. The report outlines the legal dispute between surface owners and mineral owners regarding rights to produced water, a byproduct of hydrocarbon production. It details the majority opinion, which favored mineral owners, asserting that produced water is classified as waste under Texas law, thus falling under mineral ownership. The report also presents the dissenting opinion, which argued that the absence of explicit language in mineral leases regarding produced water implies ownership remains with surface owners. Additionally, the report provides background on the significance of produced water ownership in Texas, highlighting its increasing economic value due to technological innovations that allow for its reuse and treatment. The report concludes by assessing the implications of the ruling and the potential for further legal challenges as the matter progresses to the Texas Supreme Court.