Opinion ID: 441733
Heading Depth: 2
Heading Rank: 1

Heading: Camp Bonds, Esq.

Text: Bonds, Matthews & Bonds P.O. Box 1906 Muskogee, Oklahoma 74401 Re: J.E. Devine Lease--Garfield County 18 SW/4 Section 13 and NW/4 Section 24, Township 20 North, Range 3 West Dear Mr. Bonds: 19 Pursuant to our telephone conversation this week, this letter sets out Ladd's understanding of the settlement between Ladd Petroleum and Mr. J.E. Devine regarding Mr. Devine's request for additional development on the oil and gas leases covering the SE/4 of Section 13 and the NW/4 of Section 24-20N-3N, Garfield County, Oklahoma. 20 Ladd agrees on or before September 15, 1976 that it will commence the drilling of a 6,000' Mississippi test to be located in the SW/4 SW/4 of Section 13. To evidence Ladd's intent to drill this well, I am enclosing a copy of the drilling contract. Should Ladd fail to commence this well, it agrees that it will release the oil and gas leases in question insofar as said leases cover the W/2 SW/4 of Section 13 and the E/2 NW/4 of Section 24. 21 Ladd further agrees on or before December 1, 1976 to commence the drilling of a Mississippi test to be located in the E/2 NW/4 of Section 24. If Ladd fails to timely commence such test, it agrees to release the oil and gas lease covering the E/2 NW/4 of Section 24. 22 Ladd further agrees that it will grant to Mr. Devine the right to meet any offer made by a bona fide purchaser for the sale of the oil and gas leases covering the above described quarter sections at any point in time that Ladd receives such an offer that is acceptable to it. Mr. Devine shall have thirty (30) days after receiving notice of such pending sale in which to advise if he wishes to acquire the leases for the offered terms. 23 It is Ladd's further understanding that Mr. Devine shall not cause legal action for development to be brought against Ladd so long as the terms of this letter are complied with by Ladd.If the terms set forth herein are contrary to our discussions and agreement, please advise immediately. 24 Very truly yours, 25 /s/ John Reid, Jr. 26 John Reid, Jr. Assistant Manager--Land 27 R., Vol. II, Plaintiff's Exhibit 2-H (emphasis added). 28 The letter of September 2, 1976, to John Reid, Jr., from A. Camp Bonds reads as follows: Ladd Petroleum Corporation 830 Denver Club Building Denver, Colorado 80202 29 Attention: Mr. John Reid, Jr. Assistant Manager--Land Re: J.E. Devine Lease--Garfield County SW/4 Sec. 13 and NW/4 Sec. 24, T20N, R3W Dear Mr. Reid: 30 I have your letter of August 27, 1976, with enclosures and have discussed the contents thereof with Mr. J.E. Devine and it appears that it is in accord with our agreement. 31 We are quite anxious to have prompt information as to the results of the well which we hope is now in the process of being drilled and trust you will forward this information to us when it is available. 32 We do not wish to complicate matters and we're certain it is not your intent, nor is it Mr. Devine's intent, to indicate that this is in settlement of any payment due for location of the wells on the property, or for damages to the surface, or compensation for lots. Mr. Devine advises that on your well location you, without apparent necessity, cut several terraces and he hopes these can be repaired before undue damage in the event of excessive rains. These matters can all be determined at a later date. 33 Yours very truly, A. CAMP BONDS 34 Id., Plaintiff's Exhibit 2-I (emphasis added). 35 We view the language of the August 27 letter as clearly obligating Ladd to additionally develop the west half of the lease by commencing a test well in the Mississippi formation in and under the SW/4 SW/4 of Section 13. If Ladd had failed to live up to its end of the agreement, the lease would have been released only as to the W/2 SW/4 of Section 13. Ladd now asks us to hold, however, that because it fulfilled its obligation under the agreement, it is relieved of any further drilling responsibilities regarding the entire quarter section. Such a holding would be contrary to the express language of the agreement and the intention of the parties. Further, and most important, we read the fifth paragraph of the August 27 letter as unambiguously foreclosing Devine's right to bring legal action against Ladd regarding development of the lease on the west half of the property since such a waiver is conditioned only upon Ladd's compliance with the terms of that letter. We therefore hold that by the unambiguous language of the 1976 settlement agreement, the parties intended to settle their dispute over the west half of the lease only. 4 36 In his present cause of action, Devine is contesting Ladd's alleged failure to fulfill its lease obligations only as they apply to the Skinner Sand formation in and under the east half of the southwest quarter of section thirteen. At least facially, Devine has a right to raise such a specific claim because of the eighty-acre spacing unit scheme mandated by the Oklahoma Corporation Commission. Because of the subject matter of Devine's present claim and the clear intention of the parties as expressed in the 1976 settlement agreement, we must hold that the trial court erred in finding that the agreement effectively foreclosed Devine's cause of action. The decision of the trial court regarding its interpretation of the 1976 settlement agreement is reversed and the case is remanded for a decision on Devine's claim for damages based on the alleged failure of Ladd to develop the lease and to protect it from drainage in the east half of the southwest quarter of section thirteen. 37 REVERSED AND REMANDED.