Court Opinion

ID: 5040390
Source: CourtListenerOpinion
Date Created: 2021-10-01 06:35:07.671213+00
Date Added: 2024-06-11T08:18:34.878054
License: Public Domain

ON MOTION FOR REHEARING
Appellees have filed their Motion for Rehearing setting out twenty-one (21) assignments of error. The first fourteen of these are directed at our holding that the Murpheys by executing the unit ratification, ratified or revived the Murphey lease and ratified the Declaration of the Atlantic-Milner Unit and agreed or recognized that Atlantic was the working interest owner in the Murphey tract. They contend the Murphey ratification was not sufficient to ratify or revive the Murphey lease, which under Jones vs. Killings worth had terminated on April 22, 1962, and that the Murpheys ratified the unit but did not ratify the lease because the unit and not the lease is described in the exhibit attached to the unit agreement,1 We do not agree.
Section 3.3 of the Unit Agreement provides in part:
“3.3 Amendment of Leases and Other Agreements. The terms and provisions of the various leases, agreements division and transfer orders, or other instruments covering the respective Tracts or the production therefrom are hereby amended only to the extent necessary to make them conform to the terms and provisions of this agreement, but otherwise are to remain in full force and effect. * * ”
By virtue of this provision the Murpheys not only specifically ratified the lease but amended it as well.
Section 3.1 of the Unit Agreement provides as follows:
“3.1 Oil and Gas Rights Unitized. Subject to the terms and conditions of this agreement, all the Oil and Gas Rights of the Royalty Owners in and to the lands included within the unit area on Exhibit A, whether or not described or identified in Exhibit B, and all of the Oil and Gas Rights of the Working Interest Owners in and to said lands are hereby unitized insofar as said respective Oil and Gas Rights pertain to the Unitized Formation, all to the same extent as if the right to search for, develop, operate and produce from the Unitized Formation had been included in a single lease executed by all the Royalty Owners, as lessors, in favor of all the Working Interest Owners, as lessees, and as if said lease had been subject to all of the terms and conditions of this agreement.”
When the Murpheys signed the unit ratification they amended their lease to conform with the above paragraph. They committed their reversionary mineral interest to the unit.
We stated in our original opinion that ratification of the unit by the Murpheys recognized and approved the pooling of the Murphey 66.5 acre tract with the Hunt-Milner tract into the 160 acre Atlantic-Mil-ner unit. Section 3.4 of the Unit Agreement provides as follows:
“3.4 Continuation of Leases, Term Mineral Interests and Term Royalties.
*216Unit operations, as herein defined, conducted with respect to the Unitized Formation on any part of the Unit Area, including drilling operations on or production from any part of the Unitized Formation, shall, except for the purpose of determining payments to Royalty Owners, he considered as operations upon or production from each Tract and such Unit Operations or production shall continue in force and effect each lease or term mineral interest, or term Royalty Interest just as if such Unit Operations had been conducted and a well had been drilled on and was producing from each such tract.”
It appears that the above provision renders it immaterial whether the Murpheys ratified the 160 ac. Atlantic-Milner Unit. The Murpheys agreed that production from or operations upon any part of the unit would be considered as production from or operations upon each tract and would therefore contimie in force each lease in the unit.
We did not make clear in our original opinion that by the order of May 23, 1962, the Railroad Commission prescribed units of 160 acres. But in any event, we believe under the facts and authorities set out in our original opinion together with the quoted portions of the Unit Agreement set out above that the Murpheys ratified and amended their lease; that they ratified the field-wide unit; that Atlantic ratified the field-wide unit and committed the working interest to the unit; that the Murphey lease was maintained in effect after being ratified by virtue of the provisions of the unit agreement.
With reference to the matter of intent on the part of the Murpheys in signing the ratification, we briefly will review the record. The lease terminated on April 22, 1962, and then two and one-half years later the Murpheys executed the ratification. Then on December 8, 1965, the Supreme Court opinion in Jones v. Killingsworth, which gave rise to this case, was delivered, with Motion for Rehearing denied on April 20, 1966. Almost five years after the termination of the lease, and two and one-half years after the Murpheys signed the ratification, to-wit; May 9, 1967, this case was filed. The record does not disclose that the Murpheys did anything toward collecting their claimed part of the proceeds from production as a working interest owner for the two and one-half year period after they signed the ratification. The Murpheys did not comply with the provisions of the Unit Agreement which required working interest owners to advise the unit operator in writing the names and addresses of its representatives, pay or cause to be paid all production, severance, gathering and other taxes, and to reimburse unit operator for owner’s share of unit expense. It appears the Murpheys did intend to ratify the lease. A reasonably prudent man would most likely have taken some step to collect approximately 40% of the production attributable to one of the units for two and one-half years if he thought he owned the interest.
Appellees’ Motion for Rehearing is overruled.

. Emphasis added throughout.