Opinion ID: 2101186
Heading Depth: 1
Heading Rank: 2

Heading: the larsen lease

Text: On June 4, 1949, Alfred Larsen and Sarah Larsen, husband and wife, executed and delivered an oil and gas lease to Stanolind Oil and Gas Company. The lease, which was for a primary term of ten years, covers the oil and gas leasehold estate in and under approximately 720 acres of land in Burke County. That land is legally described as follows:  Township 163 North, Range 90 West Section 22 SE ¼ Section 23 W ½, W ½ SE ¼, SE ¼ SE ¼ Section 24 SW ¼ SW ¼ Section 25 W ½ NW ¼ The # 1 Alfred Larsen well was spudded in on the Northwest Quarter of the Southeast Quarter (NW ¼ SE ¼) of Section 22 on July 24, 1958, and was completed as a producing well on August 22, 1958. It is a Madison well in the Stony Run Field and was drilled to a depth of 5,600 feet. Except for the # 1 Alfred Larsen well, no other wells have been drilled on the lease. The well is a stripper well in an 80-acre spacing unit. The present operator of the well is the defendant Earl Schwartz. The appellees [Larsens] acquired the oil and gas estate by virtue of a contract for deed from Alfred Larsen and a subsequent warranty deed dated February 16, 1980. No minerals were reserved in the conveyance. On March 29, 1956, Stanolind assigned to Hunt Oil Company [Hunt] its interest in the Southeast Quarter (SE ¼) of Section 22 and the West Half (W ½) of Section 23. On May 22, Hunt assigned all of its interest to I.J. Wilhite, insofar as the lease covered the East Half of the Southeast Quarter (E ½ SE ¼) of Section 22 and the East Half of the Southwest Quarter (E ½ SW ¼) of Section 23 to a depth of 6,110 feet. Hunt reserved a one-sixteenth of the seven-eighths overriding royalty. On October 13, 1958, Hunt assigned to Wilhite all of its remaining interest in the lease [the West Half of the Southeast Quarter (W ½ SE ¼) of Section 22 and the Northwest Quarter, West Half of the Southwest Quarter (NW ¼, W ½ SW ¼) of Section 23] down to a total depth of 5,775 feet. Hunt reserved an overriding royalty of three-sixty-fourths of the seven-eighths and all rights below 5,775 feet. Hunt assigned all of its remaining interest to the defendant, Prosper Energy Corporation, on December 30, 1977. Thus, Prosper has no working interest in the # 1 Alfred Larsen well, which was drilled to a depth of 5,600 feet, but only an overriding royalty based upon production from the well. Further, as far as the deep rights are concerned, Prosper has only a 25 percent working interest. None of the other working interest owners were joined in the lawsuit insofar as it sought to cancel the oil and gas lease as to the deep rights. As in the Olson lease, there has been no exploration or development of the leasehold since the # 1 Alfred Larsen well was drilled in 1958. The appeals in these cases were taken by Vern Lund and Prosper Energy Corporation. Earl Schwartz did not appeal. The issues raised by appellants in these appeals are identical: (1) Did the trial court err in finding that there had been an abandonment of the undeveloped portions of the leaseholds, and (2) Did the trial court err in failing to rule on the plaintiffs' claims of breach of implied covenants and in not ordering judgment in favor of the lessees on that issue? In its memorandum opinion, the district court found that there had been an abandonment of those portions of the above described leases outside of the spacing units on which the producing wells were located and ordered the leases over these undeveloped portions of the lands canceled.