Court Opinion

ID: 9862287
Source: CourtListenerOpinion
Date Created: 2023-09-25 01:06:11.646517+00
Date Added: 2024-06-11T11:24:59.496907
License: Public Domain

Culbertson, J., dissents. I am unable to agree with the views expressed in the majority opinion and most respectfully dissent therefrom. It is conceded by the parties, and is obviously the law, that under the lease title to oil and gas in the land remains in the lessors, and that the lessee is merely granted the right to go upon the premises to produce the oil and gas, and when the lessee’s operations terminate the lessors still own all the oil and gas which is left upon the land owned by them (Central Pipe Line Co. v. Hutson, 401 Ill. 447). It is also conceded that lessee’s right to produce is subject to expressed and implied covenants of the lease, and also, that one implied covenant is that the lessee will reasonably develop the premises and continue to operate so long as the enterprise can be carried on at a reasonable profit (Daughetee v. Ohio Oil Co., 263 Ill. 518). The basic conflict in the instant case, however, is in the manner of determination of whether under the terms of the lease, with a view to prudent operation and the rights of the lessors, oil may be driven from the land of the lessors, over the objection of the lessors, through a gas repressuring system, irrespective of the question of incidental benefit from collateral or adjoining repressuring systems. In volume 2 of Summers Oil and Gas (Perm. Ed.), sec. 414, p. 379, the author, in his monumental work on oil and gas, in discussing the basic issue states, “But the ultimate issue, that is, whether lessee has exercised reasonable diligence in development and protection of the land, must be decided by reaching a conclusion from all the facts presented. It is within the province of the Court or jury to make this conclusion, but the opinions of those skilled in such matters are of great value to the Court or jury. . . . The final decision as to whether the lessee has exercised reasonable diligence in drilling additional or protection wells, whether such diligence be measured by the reasonably prudent operator test or by the good faith judgment of the lessee, is a question of fact for the jury.” The ultimate fact as to whether or not prudent operation requires repressuring is, in the last analysis therefore, a question for the court. The court below was obviously guided by the case of Ramsey v. Carter Oil Co., 74 F. Supp. 481. In that case the facts were substantially the same as in the instant case and the court, although the overwhelming weight of expert testimony called for repressuring as a prudent means of developing the leased premises, held as a matter of law that the operation as proposed through repressuring could not be undertaken over objection of the lessor, and likewise concluded that it violated the implied covenant of the lease to prevent drainage of oil onto adjoining lands. The court in the Ramsey case stated specifically (at page 482), “The well now proposed to be made a gas re-pressuring well is one of the offset wells drilled by the defendant to prevent drainage in accordance with defendants duty to plaintiff. It would seem obvious that to abandon this well or close it down or to reconvert it into a repressuring well will remove from production a well drilled for and furnishing offset protection against drainage so long as oil is produced from this and offset territory. Defendant must prevent drainage and the moment it changes an offset well into a nonproducing well it violates that duty. ’ ’ The court further states in that opinion (at page 482), “The defendant has only one right under its lease and that is to remove the oil according to approved methods for the benefit of itself and its lessor. It has no right to drive it from plaintiff’s land by any method. To do so is clearly a trespass upon and a violation of plaintiff’s right and title to the oil in place. . . . It is not a question of whether that oil can otherwise be taken from the soil. Plaintiffs own the oil and they have a right to have it left in place and to be removed only by methods which will not deprive them of it. Any conversion of oil by the lessee by driving it away or otherwise is a clear invasion of plaintiff’s rights.” After discussing the fact that the lessor may actually benefit from the proposed repressuring method the court goes on to say (at page 483), “That may be well and true, but the oil that will migrate is their oil and the mere fact that they have other oil in other parts of their lands, which will be increasingly produced, does not alter the status of plaintiff’s basic rights. What plaintiffs are objecting to is, repressuring under a plan which deprives them of a part of their oil; and to this they have a right to object. They have a right to have the oil left in place until and unless re-pressuring can be done by a plan which will preserve to them all their oil, as well as increase production from the remaining land.” The court might well have added that if the parties desired to provide for repressuring as an incident of the lease they could very easily have done so. With the exception of the necessity of an express provision as to repressuring, I do not believe the statement of the court in the Ramsey ease could be improved upon, and I believe it is conclusive of the issues in the instant case. I agree with the court in the Ramsey case that it was not within the contemplation of the parties that the lessee could drive off substantial quantities of the lessor’s oil, and the granted right to produce in the lease did not include the right to cause such migration. It is conceivable that if the parties desired to provide such a right they could have incorporated it specifically in the terms of the oil and gas lease. In absence of such specific provision I believe that the judgment of the trial court in this cause was proper and should be affirmed. I feel that the majority opinion is wrong in that a covenant is implied which is contrary to the actual intention of the parties, and that courts could go far afield in reading into a lease of this character an implied covenant which is not necessarily or reasonably implied from the terms of the lease. It was a simple matter to set forth the requirements as to repressuring if that was the actual intention of the parties.