A company can move forward with plans to drill natural gas wells at the Rayzor Ranch development, a judge ruled Wednesday.

Denton County state district Judge L. Dee Shipman ruled in favor of Range Production Co. in its dispute with the Rayzor Ranch developer over whether the right to drill on the property expired this summer, said court coordinator Phyllis Morris. A final judgment had not been signed.

Officials with Allegiance Hillview LP, the group behind Rayzor Ranch, had argued that Range’s right to use the property ended when it missed a deadline to start drilling. Range officials said they missed the deadline for reasons beyond their control, including a city review process that took longer than expected.

Range, a subsidiary of Fort Worth-based Range Resources, sued Allegiance after Allegiance refused to extend the deadline.

The judge’s ruling removes the last hurdle to Range’s drilling plans at Rayzor Ranch, a mixed-use project under construction at Interstate 35 and U.S. Highway 380 in west Denton. The City Council approved a permit in October allowing up to five wells at the development’s southeast corner, but production couldn’t start while the lawsuit was pending.

Range attorney Andrew Sims said the company was preparing to begin drilling in keeping with its approved city permits. It will have to comply with a series of city-imposed conditions meant to address concerns over noise, traffic and potential environmental problems.

Sims issued a statement praising the judge’s ruling.

“The court treated all the parties, witnesses and attorneys with dignity and respect, and carefully and thoughtfully applied the law to the facts in reaching this decision,” he said. “The court was extremely well-prepared and well-versed in the issues that had to be decided, and consequently the parties received a thorough and fair trial.”

Allegiance officials are disappointed by the ruling and are meeting to decide how to respond, said Mark Winter, a company representative.

Allegiance attorney Richard Illmer did not return a message seeking comment.

Andrew Teeter, an area resident and former City Council candidate who organized multiple protests against the drilling, said the judge’s decision didn’t surprise him.

“I didn’t have my hopes up,” he said.

Teeter said he has no plans for more protests. His rallies focused on potential health, safety and environmental hazards for the area, which includes McKenna Park, homes and medical facilities.

“I’m still concerned about the environmental impacts, but I don’t think there’s too much we can do unless there was a strong, organized movement,” Teeter said. “But since there were conflicting views in the neighborhood, it was hard to bring people together.”

Council member Jim Engelbrecht, whose district includes the Rayzor site, said he had hoped the court would block the drilling.

“I still think that drilling this close to residences is not an appropriate action,” Engelbrecht said. “As I said before, you’re allowing a basically industrial use in a residential area, and I don’t think that’s as it should be.”

Engelbrecht voted with a majority of council members to approve the zoning permit allowing gas wells at the site, even though he said he personally opposed drilling there. Denying the permit would have exposed the city to costly lawsuits, because state law broadly protects the rights of mineral owners to access oil and gas, he said.

“We could have had to pay the [legal] damages and still had the wells,” Engelbrecht said. “This was a no-win situation as I saw it.”

The legal case centered on a land-use agreement between Allegiance Hillview and Rayzor Investments Ltd., the former owner of the expansive Rayzor Ranch property. Rayzor Investments sold the land for development but retained most of the mineral rights, and last year signed an oil and gas lease with Range.

The land-use agreement, signed in 2006 and updated in 2008, included a July 11, 2009, deadline to start drilling. But it allowed for extensions under circumstances including the city’s failure to issue permits — as long as the applicant “timely” submitted applications and “thoroughly” pursued their approval.

Range officials testified that they did their best to meet the deadline but faced multiple setbacks at City Hall, including a city error that delayed a public hearing before the Planning and Zoning Commission. Allegiance attorneys argued that Range officials simply waited too long to apply for permits, noting that they missed the deadline even though city planners agreed to expedite their application last spring.

Both sides in the dispute have millions of dollars invested in Rayzor Ranch. Allegiance has spent more than $100 million on the mixed-use development, while Range has spent roughly $2 million pursuing the gas wells, according to court testimony.

LOWELL BROWN can be reached at 940-566-6882. His e-mail address is lmbrown@dentonrc.com.