Court Opinion

ID: 9688638
Source: CourtListenerOpinion
Date Created: 2023-08-24 17:59:16.455402+00
Date Added: 2024-06-11T18:18:40.857274
License: Public Domain

McCALEB, Justice
(dissenting).
I cannot agree that the provisions of the lease in this case are substantially the same as those in Wilcox v. Shell Oil Company, 226 La. 417, 76 So.2d 416, or that the language embodied in the lease authorizes the conclusion that the right given to the lessee to unitize must be exercised before the commencement of drilling and production from the unit.
As I see it, the only paragraph of the lease having any bearing on the right of the lessee to unitize is paragraph 4, which plainly confers upon the lessee the right to create the unitized area “at its option”. There is nothing in that paragraph, or in any other part of the lease for that matter, which either directly or by innuendo makes the right to pool the acreage conditioned *167upon the establishment of the unit prior to development. On the contrary, paragraph 4 expressly stipulates that it may be done “when in Lessee’s judgment it is necessary or advisable to do so in order properly to develop and operate said leased premises in compliance with orders, rules and regulations of State and Federal governmental authority, or when to do so would, in the judgment of Lessee, promote the conservation of oil and gas from said premises”. (Italics mine.)
The clause in paragraph 4 of the lease, relied on by counsel for lessor as exhibiting that the unit must be created before drilling and production does not, in my opinion, sustain this position. That provision reads:
“The entire acreage so pooled into a tract or unit shall be treated for all purposes except the payment of royalties as if it were included in this lease, and drilling or reworking operations thereon and production of oil and gas, or either of them, from any stratum or strata so pooled shall be considered for all purposes except the payment of royalties as if the operations were on and production were from the land covered by this lease whether or not the well or wells be located on premises covered by this lease.”
Counsel points to the conjunction “and”, which I have above italicized, and argues that drilling and production is essential in order for the unitization of the leased property to become effective. This is true but it does not restrict in any manner the time when the unit may be formed or warrant the conclusion that unitization must take place prior to drilling and production.
I respectfully dissent.