IN THE DISTRICT COURT FOR GRADY COUNTY MAR 09 2026
STATE OF OKLAHOMA
BLUE CEDAR ENERGY, LLC,
Plaintiff,
v.
BCE-MACH, LLC,
Defendant.
MICA HACKNEY, Court Clerk
By: VANESSA MARTY Deputy
CASE NO.: CJ-2024-81
PETITION
Plaintiff Blue Cedar Energy, LLC, for its claims against Defendant BCE-Mach LLC, alleges and states as follows:
JURISDICTION AND VENUE
1. Plaintiff Blue Cedar Energy, LLC, is an Oklahoma limited liability company.
2. Defendant BCE-Mach LLC is a Delaware limited liability company with its principal place of business in Oklahoma and a registered agent address of 1833 S. Morgan Road, Oklahoma City, Oklahoma 73128.
3. This Court has subject matter jurisdiction over this action because the causes of action sound in tort and arise under the laws of the State of Oklahoma.
4. This Court has personal jurisdiction over Defendant because Defendant maintains its principal place of business in Oklahoma and conducts substantial and continuous business operations within this State.
5. Venue is proper in Grady County, Oklahoma, pursuant to 12 O.S. § 131(2) because Plaintiff seeks damages for injury to land, and the damage occurred in Grady County.
FACTS
6. Plaintiff is the operator and working-interest owner of the Boyer 2-26D Well, producing from the Osborne, Mississippi Lime, and Hunton formations under valid oil-and-gas leases covering Section 27-9N-6W, Grady County, Oklahoma.
7. The Boyer 2-26D Well was completed on or around May 8, 2008.
8. On approximately July 15, 2023, Defendant’s predecessor drilled and completed the Silver Spur 34_27-9N-6W 2MHX, an offset well adjacent to Plaintiff’s lease. The Silver Spur 34_27-9N-6W 2MHX was completed in the Mississippian common source of supply.
9. Defendant is the operator of the Silver Spur 34_27-9N-6W 2MHX, a multiunit horizontal well with a surface location of Section 3-8N-6W, Grady County, Oklahoma, and a bottom hole location of 27-9N-6W, Grady County, Oklahoma.
10. Under Oklahoma Corporation Commission (“OCC”) Rule OAC § 165:10-1-21, wells must be located at least six hundred (600) feet from any other producible oil or gas well completed in the same common source of supply.
11. During the permitting process, Defendant initially included Plaintiff’s lease area within its application for an exception to the six-hundred-foot spacing requirement. Defendant later dismissed or withdrew Plaintiff’s lease from that exception request, thereby confirming that its operations would remain subject to the standard spacing limitation of OAC § 165:10-1-21 as to Plaintiff’s lease.
12. Defendant’s well was approved by the OCC and drilled subject to this spacing requirement. No spacing exception or waiver was obtained to allow fracturing or drainage within the six-hundred-foot distance from Plaintiff’s lease or well.
13. On or about July 2023, Defendant conducted a multi-stage hydraulic-fracturing treatment on its offset well.
14. Immediately following Defendant’s fracturing operation, Plaintiff observed a significant decline in pressure and production from its Boyer 2-26D Well that had not previously occurred.
15. Based on information available from well data, pressure tests, and publicly filed completion reports, the fracturing operation extended closer than six hundred feet to the Boyer 2-26D Well and communicated with its reservoir, causing pressure depletion and loss of production.
16. Such communication was within the six-hundred-foot spacing zone prohibited by OAC § 165:10-1-21 and by Defendant’s approved completion plan.
17. Between July 2023 and 2025, representatives of Plaintiff and Defendant discussed the production decline and possible cross-communication. Defendant’s representatives stated that the issue could be “worked out” or “resolved” without litigation.
18. In reliance on those assurances, Plaintiff delayed filing suit while attempting to resolve the matter informally.
19. When it became clear that the issue would not be resolved, Plaintiff promptly filed this action.
20. Since the July 2023 fracturing operation, Plaintiff has made numerous efforts to re-establish or restore normal production from the Boyer 2-26D Well but has been unable to do so, and the well continues to exhibit sustained loss of pressure and production attributable to Defendant’s operations.
CAUSES OF ACTION
COUNT I: TRESPASS
Plaintiff restates and realleges the foregoing allegations and incorporates the same herein by reference. Plaintiff further alleges and states as follows:
21. Upon information and belief, Defendant’s hydraulic-fracturing operation caused fractures, fluids, and proppants to extend into or communicate with the subsurface estate underlying Plaintiff’s leasehold and the Boyer 2-26D Well.
22. Such physical intrusion occurred without Plaintiff’s consent and interfered with, and continues to interfere with, Plaintiff’s exclusive right to possess, use, and control its leasehold, wellbore, and subsurface estate.
23. Defendant’s conduct deprived and continues to deprive Plaintiff of its right to exclude others from entering or using its subsurface property.
24. Each day that the subsurface communication or pressure depletion persists constitutes a continuing trespass and continuing injury to Plaintiff’s property.
25. As a result of the Defendant’s trespass, Plaintiff has suffered damages including, but not limited to, loss of production and revenue, depletion of reservoir pressure and recoverable reserves, diminution in the value and utility of its leasehold and well, and loss of the right to exclusive possession and control of its mineral estate.
26. Because Defendant’s subsurface communication and pressure depletion continue to interfere with the Boyer 2-26D Well, Plaintiff continues to lose production and reservoir pressure despite repeated efforts to restore normal operations.
27. The decline has persisted since July 2023 and shows no sign of stabilizing.
28. Unless Defendant’s ongoing conduct is addressed, the damage to the well and reservoir will continue and may permanently reduce recovery from the formation.
29. Plaintiff therefore seeks injunctive relief requiring Defendant to abate the continuing trespass by ceasing or modifying operations that contribute to ongoing pressure loss or subsurface communication and by taking reasonable measures to prevent additional interference with Plaintiff's property.
COUNT II: PRIVATE NUISANCE
Plaintiff restates and realleges the foregoing allegations and incorporates the same herein by reference. Plaintiff further alleges and states as follows:
30. Plaintiff owns and operates the Boyer 2-26D Well and holds valid leasehold and operating rights in the mineral estate underlying Section 27-9N-6W, Grady County, Oklahoma.
31. Defendant owed a duty to conduct its drilling and completion operations in a manner that did not unlawfully interfere with or impair neighboring property rights, including compliance with applicable OCC regulations and the obligations of a reasonably prudent operator.
32. In or about July 2023, Defendant conducted multi-stage hydraulic-fracturing operations on its Silver Spur 34_27-9N-6W 2MHX Well in close proximity to Plaintiff's lease and producing well.
33. Defendant failed to perform its duties and engaged in unlawful and unreasonable conduct by designing and executing fracturing operations that caused subsurface communication and pressure depletion in the reservoir underlying Plaintiff's lease.
34. As a result of Defendant's conduct, Plaintiff's Boyer 2-26D Well experienced an immediate and substantial loss of reservoir pressure and production that had not previously occurred.
35. Defendant's conduct made Plaintiff insecure in the use of its property by materially impairing Plaintiff's ability to operate its well, including by causing continuing loss of production
and by allowing water, sand, and other foreign materials to invade or migrate into the Boyer 2-26D wellbore.
36. The ongoing invasion of water and sand and the resulting production losses have interfered with Plaintiff's normal well operations, increased operating and remediation costs, and reduced the productive capacity and economic value of the well.
37. The interference caused by Defendant's conduct has substantially and unreasonably diminished Plaintiff's use and enjoyment of its property, including the productive capacity, economic value, and operational stability of the Boyer 2-26D Well.
38. The nuisance is continuing in nature. Since July 2023, Plaintiff has continued to lose production and has experienced ongoing wellbore interference, including recurring water and sand intrusion, attributable to Defendant's fracturing operations, despite reasonable mitigation efforts.
39. The ongoing interference remains capable of abatement through remedial measures, modified operations, or cessation of conduct contributing to the continued pressure loss and subsurface communication.
40. Each day that Defendant's conduct continues to make Plaintiff insecure in the use of its property constitutes a continuing nuisance and a continuing injury.
41. As a direct and proximate result of Defendant's continuing private nuisance, Plaintiff has suffered and continues to suffer damages, including but not limited to loss of production and revenue, impairment of reservoir pressure and recoverable reserves, loss of use and enjoyment of its well and leasehold, increased operating and remediation costs, and diminution in the value and utility of Plaintiff's mineral estate.
42. Unless Defendant’s nuisance is abated, Plaintiff will continue to suffer ongoing harm and faces the risk of permanent damage to its well and reservoir.
43. Plaintiff is therefore entitled to compensatory damages, injunctive relief requiring abatement of the nuisance, and such other and further relief as the Court deems just and proper.
COUNT III: NEGLIGENCE
Plaintiff restates and realleges the foregoing allegations and incorporates the same herein by reference. Plaintiff further alleges and states as follows:
44. Defendant owed a duty to conduct its drilling and completion operations in a reasonably prudent manner and in accordance with applicable OCC regulations, including OAC § 165:10-1-21, which requires wells to be located not less than six hundred (600) feet from any other producible well in the same common source of supply.
45. Defendant’s well was approved and drilled subject to that spacing requirement, and no exception or waiver was obtained as to Plaintiff’s lease.
46. Defendant undertook multi-stage hydraulic-fracturing operations in approximately July 2023 immediately adjacent to Plaintiff’s lease.
47. Based on available data and subsequent production declines, Defendant’s fracturing operations were conducted closer than the required six-hundred-foot distance and caused communication with Plaintiff’s wellbore or reservoir.
48. Such operations failed to conform to the standards of a reasonably prudent operator under similar circumstances.
49. As a direct and proximate result of Defendant’s hydraulic fracturing in violation of OAC § 165:10-1-21, Plaintiff suffered loss of reservoir pressure, diminished production, and related economic damages.
50. The violation of OAC § 165:10-1-21 constitutes negligence per se, as the rule was enacted to protect the correlative rights of adjoining operators and to prevent physical and economic waste.
COUNT IV: PUNITIVE DAMAGES
Plaintiff restates and realleges the foregoing allegations and incorporates the same herein by reference. Plaintiff further alleges and states as follows:
51. Defendant was aware that its approved well was subject to the OCC’s spacing rule, OAC § 165:10-1-21, requiring that wells in the same common source of supply remain at least six hundred (600) feet apart.
52. During the permitting process, Defendant initially sought an exception to that spacing requirement for the area adjoining Plaintiff’s lease. Defendant later dismissed or withdrew its request for exception approval, thereby acknowledging that its operations would remain bound by the six-hundred-foot limitation.
53. Despite that dismissal or withdrawal and its knowledge of the restriction, Defendant proceeded to design and execute a multi-stage hydraulic-fracturing treatment whose modeled and actual stages extended toward and within the restricted six-hundred-foot zone adjacent to Plaintiff’s Boyer 2-26D Well.
54. Defendant undertook those completion activities with conscious knowledge that doing so risked physical interference with Plaintiff’s well and depletion of its reservoir, and in reckless disregard of the rights of others, including Plaintiff.
55. Alternatively, Defendant’s conduct was intentional and malicious, in that it knowingly disregarded the spacing rule and Plaintiff’s property interests in order to maximize its own production and economic advantage.
56. As a direct result of Defendant's conduct, Plaintiff suffered actual harm and economic loss as previously described.
57. Under 23 O.S. § 9.1, Plaintiff is thus entitled to an award of punitive damages sufficient to punish Defendant and to deter similar misconduct in the future.
COUNT V: EQUITABLE ESTOPPEL
Plaintiff restates and realleges the foregoing allegations and incorporates the same herein by reference. Plaintiff further alleges and states as follows:
58. After the July 2023 fracturing operations and the subsequent decline in production from the Boyer 2-26D Well, representatives of Defendant and Plaintiff engaged in repeated discussions concerning the damage and possible resolution of the matter.
59. During those discussions, Defendant's representatives indicated that the issues could be worked out.
60. Plaintiff relied on those statements in good faith and delayed filing suit while attempting to resolve the dispute informally.
61. Upon information and belief, Defendant made such assurances knowing that Plaintiff possessed a valid claim arising from the July 2023 fracturing operation and knowing that Defendant did not, in fact, intend to reach a settlement.
62. Upon information and belief, Defendant's purpose in making these assurances was to delay litigation to its own advantage, to allow time for the statute of limitations to run, and to discourage Plaintiff from pursuing judicial relief.
63. Plaintiff lacked full knowledge of Defendant's true intentions or the extent of its injury and had no reasonable means of discovering those facts until later.
64. Defendant’s conduct and representations were reasonably calculated to, and did, induce Plaintiff to delay the commencement of this action.
65. By reason of that conduct, Defendant is equitably estopped from asserting any statute-of-limitations defense in this case.
RELIEF REQUESTED
WHEREFORE, Plaintiff Blue Cedar Energy, LLC, hereby demands a trial by jury on all issues so triable and respectfully requests the following relief:
A. Award Plaintiff compensatory damages in an amount to be proven at trial, including but not limited to:
• Loss of production and revenue;
• Depletion of reservoir pressure and recoverable reserves;
• Diminution in value and utility of Plaintiff’s leasehold and well;
• Loss of the right to exclusive possession and control of its mineral estate; and
• Loss of use and enjoyment of Plaintiff’s well and leasehold;
B. Award Plaintiff punitive damages as authorized by 23 O.S. § 9.1 for Defendant’s reckless disregard for, or intentional and malicious violation of, Plaintiff’s property and correlative rights;
C. Award Plaintiff injunctive relief requiring Defendant to abate the continuing nuisance and trespass by ceasing or modifying subsurface operations within Defendant’s control that contribute to ongoing pressure depletion, subsurface communication, or interference with Plaintiff’s well, including, if necessary, enjoining fracturing or related operations within six hundred (600) feet of Plaintiff’s lease, and requiring reasonable remedial measures to prevent continued interference with Plaintiff’s property;
D. Award Plaintiff prejudgment and post-judgment interest as allowed by law;
E. Award Plaintiff its reasonable attorney’s fees and costs as permitted by law or contract; and
F. Grant such other and further relief as the Court deems just and proper.
Respectfully submitted,
Brady L. Smith, OBA #30727
Harry “Skeeter” Jordan, OBA #32437
Brady Smith Law, PLLC
One Leadership Square, Ste. 1320
211 N. Robinson Ave.
Oklahoma City, OK 73102
Telephone: 405.293.3029
[email protected]
[email protected]
ATTORNEYS FOR PLAINTIFF
