The appellants, owners of surface and non-petroleum mineral rights on 'Split Title Lands' originally granted by the Canadian Pacific Railway, appealed a decision regarding the ownership of hydrocarbons.
The CPR had reserved 'petroleum' rights when selling the lands.
The Supreme Court of Canada held that the reservation of petroleum divided ownership based on the phase of the hydrocarbons under initial conditions at the time of the contract.
The petroleum owner is entitled to all hydrocarbons in liquid phase prior to human intervention, regardless of whether they evolve into gas phase upon recovery.
The appeal was dismissed.
