Citations
- 589 F.2d 944
Full opinion text
TALBOT SMITH, Senior District Judge.
The controversy before us concerns the rate chargeable by the Petitioner, Murphy Oil Corporation (Murphy), for the sale of gas from the San Juan Basin area of New Mexico. Murphy, the seller, pursuant to § 4(d) of the Natural Gas Act, filed for a rate increase. The proceeding below involves the Commission’s disposition of Murphy’s requested increase. The Commission held that the lower of two arguably applicable rate schedules controlled, the monetary difference between the two under the circumstances amounting to a sum in excess of a hundred thousand dollars. We affirm the Commission.
Murphy was the lessee under a number of oil and gas leases in New Mexico when, in 1959, it executed a “farmout” agreement with International Oil Corporation (International). This agreement provided substantially that International would be assigned the leases, would drill the wells, and would have the right to produce and market any gas discovered. Murphy would receive an overriding royalty interest of Vis of the production and would retain a reversionary interest in the form of an option to convert its royalty interest to a full working interest of Vs upon “pay-out,” that is, when all the costs of drilling had been recovered by International. International subsequently drilled the wells and Murphy assigned the gas leases to it.
On May 9, 1960, Southwest Production Company (Southwest), the successor to International, executed a gas purchase contract with El Paso Natural Gas Company (El Paso). This gas purchase contract covered the “Seller’s interest in all gas produced” from the subject wells. Immediately thereafter, Southwest applied to the Commission for a certificate of public convenience and necessity, which authorized the sale of gas in interstate commerce to El Paso when it was issued in 1961.
In 1971, Beta Development Company (Beta), the successor to Southwest, notified Murphy that “pay-out” had occurred, i. e., of its recovery of all costs connected with the well drilling. Murphy accordingly exercised its option and converted its overriding royalty interest to a lA working interest. Murphy substantially adopted the terms of the 1960 gas purchase contract with El Paso for a one year period and sought from the Commission a certificate of public convenience and necessity for its working interest. The certificate was issued by the Commission late in 1971. Although there is some controversy over whether the Commission treated this certificate application as that of a new producer or as that of a successor in interest, the certificate clearly states that it is issued
without prejudice to any findings or orders which have been or may hereafter be made by the Commission in any proceeding now pending or hereafter instituted by or against Applicant. Further, our action in this proceeding shall not foreclose or prejudice any future proceedings relating to the operation of any price or related provisions in the gas purchase contract herein involved.
On April 1, 1972, following the issuance of this certificate, Murphy entered into a long term gas purchase contract with El Paso.
The instant proceeding began in 1975, when Murphy filed a notice of a proposed rate increase with the Commission. Murphy was seeking to take advantage of a Commission order that established a higher “new” gas rate of 35