Court Opinion

ID: 9665651
Source: CourtListenerOpinion
Date Created: 2023-08-24 00:53:56.10114+00
Date Added: 2024-06-11T18:15:17.447424
License: Public Domain

McElroy, J.,
specially concurring:
I wish to concur in the able opinion of the Court in this case.
The opinion states: “The hypothetical ordinary, prudent operator test is the broad standard used to resolve many disputes between lessees and lessors.” I maintain that the equity rule of Phillips v. Millette also is a broad standard used to resolve many disputes between lessees and lessors. The prudent operator’s rule applies where profits of a well amount to more than the cost of drilling, therefore, it is a paying well. The equity rule of Millette is that, if a prudent operator could not afford to drill for oil and is draining quantities of oil *226from the lessor’s adjoining tract, he should pay him a royalty, for the simple reason that it is costing him less money to pay royalties than it would to drill on the leased land, since under the prudent operator test he would have lost money.
The equity rule adopted in the Millette cases simply means that implied covenants protect against drainage. Of course, the prudent operator rule would apply if it had been advantageous to the lessee to have drilled a well and made a profit.
There are cases in which it would not he advantageous for a prudent operator to drill because he would lose money, yet if he does not drill, he would be draining his adjoining lease, making himself richer, and at the same time making the lessor poorer. Therefore, under this equitable rule it is better for him to pay royalty because he is saving money by not having to drill a well. I believe that we should protect a lessor where it would not be advantageous for the lessee to drill.
I believe that each case should depend on the question of whether there has been sufficient proof to show that there is really a drainage from the lessor. If lessee is draining oil from an adjoining lease, and thereby gaining a profit by not having* drilled a well, equity and good conscience say royalty should be paid the lessor.
It is argued that there will be endless lawsuits filed. But each case must stand upon its own facts, and, if there is sufficient or conclusive proof that there is drainage, I believe it is best that the lessee should pay a royalty, even though the prudent operator rule will not impose liability.
The oil business is a big one. It costs money to drill wells, and there are times when the lessee may speculate and drill exploratory wells, and, if he is lucky, he makes a profit. But if he drains lands of his adjoining lessor, of course, he is still making a profit, but this gain is at the expense of his adjoining lessor.
*227In this case Monsanto did abont all it conld with reference to the lands in question. I concur in the majority opinion.
ON SUG-G-ESTION OF ERROR
Kyle, J.
Appellees suggest that our original opinion be clarified so that the parties may know whether this Court limited appellees to seek damages after April 25, 1961, from the 11,900 foot sand to the drainage covenant.  This Court did not intend to make any adjudication as to any of the rights of the parties after April 25, 1961. Therefore, if appellees desire to claim liability for damages for nondevelopment of the 11,900 foot sand after April 25, 1961, they may do so. As to liability therefor,, we express no opinion.
After a careful examination of the suggestion of error, we are of the opinion that it should be, and it is, overruled.
Suggestion of error overruled.
All Justices concur, except Arrington, J., who took no part.