Court Opinion

ID: 3542657
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:54:11.304622+00
Date Added: 2024-06-11T14:22:06.623064
License: Public Domain

ON MOTION FOR REHEARING.                      (Filed June 2, 1938.)
On motion for rehearing the contention is made that because of[13]  the provision in the Consolidated Lease and Agreement which authorizes the Glacier Production Company to shut down wells whenever it deems it inadvisable or inexpedient to produce or sell gas from wells on the unit area by paying $200 per year for each well shut down, it is possible that all the gas from under the unit area might be drawn out of a well lying outside the area included in the Consolidated Lease and Agreement.
This court, in the absence of a pooling agreement, has held that when there is no market for gas, the drilling of offset wells would furnish no protection to the landowners whose land was being drained. (Severson v. Barstow, 103 Mont. 526,63 P.2d 1022.) If, however, the situation ever arises when the Glacier Production Company attempts to shut down wells while *Page 578 
at the same time it operates wells on other property which drains from the unit area, or operates other wells which could be shut down without injury to it, questions would then arise regarding the construction of the contract which are not directly involved here. The contract is not susceptible to a construction which would permit arbitrary or capricious action on the part of the operator and which would enable the company to take advantage of its own wrongful conduct or to perpetrate a fraud upon the state. In order to show that it was inadvisable or inexpedient to produce or sell gas within the meaning of the contract, it would be obliged to measure its action by the conduct of a reasonable person acting in good faith. (Waite v. C.E. Shoemaker  Co.,50 Mont. 264, 146 P. 736.)
Other points were raised on motion for rehearing, but they have been treated in the original opinion, to which we adhere.
The motion for rehearing is denied.