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, 2012 ABQB 62 The oil and gas industry splits petroleum and natural gas rights by substances to create severed estates in gas and petroleum but it also splits rights along the vertical axis into different formations.Split rights may be created along the vertical axis for several reasons.In some cases the Crown or other lessor initiates the severance in order to encourage exploration (e.g.

The second blog discusses Nexxtep’s successful application to the ERCB to have it redesignate the vertical well that was at issue in this case (ERCB Decision 2009-050) and Talisman’s unsuccessful application to obtain leave to appeal that decision: 2010 ABCA 258.The effect of this decision was to shut-in the vertical well pending resolution of the ownership issue – this decision.This post focuses on Justice Poelman’s decision on the merits in relation to a set of preliminary issues that Justice Kenny set down for trial: 2010 ABQB 452.These issues were principally two, first, did Nexxtep acquire any rights to production from the vertical well under the terms of the PSA, as properly interpreted, and second, assuming it did, should the terms of the PSA be rectified to restore these rights to Talisman?As it happens, Justice Poelman dealt with a third issue since he went on to consider Nexxtep’s damages claim on the assumption that Nexxtep was entitled to succeed on the first two issues.

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