After years of appellate maneuvering, the Texas Supreme Court has ruled in Cactus Water Services v. COG Operating and answered the long-asked question of who owns produced water. On June 27, 2025, the Texas Supreme Court determined that a “deed or lease using typical language to convey oil-and-gas rights, though not expressly addressing produced water, includes that substance as part of the conveyance whether the parties knew of its prospective value or not.”
The Cactus Water Services case has been closely followed through the appellate rounds given technological advances that “have given new purpose to produced water as a potentially lucrative commodity.” Historically, produced water was treated as a waste byproduct with companies having to spend millions in disposal costs – generally through reinjection. But now, as the oil and gas industry ever evolves, reusing or recycling produced water has created new opportunities for the once-disposed of matter.
Naturally, this leads to the question of ownership – who owns the produced water when a conveyance document is silent on the topic? Is it water, which typically remains part of the surface estate? Or is it a “valuable substance” that was intended to be conveyed to the mineral owner?
In determining that produced water is part of the mineral estate, Justice Devine in delivering the Texas jurisprudential quote of the year writes that “produced water is not water” and despite its characteristics the matter is “a horse of an entirely different color.”
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