Opinion ID: 886317
Heading Depth: 1
Heading Rank: 4

Heading: issues

Text: ¶ 43 Whether the District Court erred in determining that Sandtana's late tender of rentals caused the subject oil and gas leases to terminate as to all undeveloped sections. ¶ 44 We determined in the previous issue that a producing well had been drilled in Section 19 of the leased lands thereby requiring, under the Pugh clauses, that annual rentals be paid on all of the leased lands outside of Section 19 in order to extend the leases on those lands beyond the primary term. It is undisputed that the annual rentals were not paid until two days after the primary term ended. ¶ 45 It has long been the dominant rule in Montana (and other producing states) that time is of the essence in oil and gas leases, and failure to pay rentals on time results in immediate and automatic termination of the lease. See Clawson v. Berklund (1980), 188 Mont. 48, 53, 610 P.2d 1168, 1171. Consequently, because Sandtana failed to pay rentals in a timely manner, Sandtana's leases expired by their own terms as to all of the leased lands except Section 19. ¶ 46 Accordingly, we hold that the District Court was correct in determining that Sandtana's late tender of rentals caused the subject oil and gas leases to terminate as to all undeveloped sections. ¶ 47 Affirmed. JIM REGNIER, PATRICIA COTTER and W. WILLIAM LEAPHART, concur.