Court Opinion

ID: 3825317
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:58:35.835125+00
Date Added: 2024-06-11T13:50:58.885519
License: Public Domain

I concur in the opinion of the court in this case; but I desire to set forth my own views somewhat more fully than they are expressed in that opinion; and in doing so I shall assume that the facts stated and the reasoning in that opinion will be borne in mind by the reader of this, as this is merely supplementary. All the italicization following herein is my own. I think the words "to complete this contract" in section 6 of the same should be construed to mean to complete thecontracting oil company's right, and the right of itssuccessors or assigns, to hold the estate and take oil from theland in accordance with the stipulation of sections 6 and 7 of this contract "as long" (after the fixed term of one year) "as oil or gas, or either of them, is produced from said land," as provided in section 3 of the contract; and, of course, this construction includes the view that the provision of section 6 that "if said territory proves to be productive, then the party of the second part to complete this contract shall drill as many as eight wells on said premises, and said wells shall be drilled with due diligence and dispatch, having in view theinterest of both parties hereto, and so as to produce all theoil and gas that may be reasonably produced from saidpremises," is, in respect to the qualification of the requirement of "due diligence and dispatch" by the provision that the interest of both parties is to be considered in determining what is such "due diligence and dispatch," subject to the limit of one year upon the term for which the contracting oil company, its successors and assigns, may hold the estate without regard to the continuity of the production of oil or gas therefrom by compliance with the terms of the contract in other respects. The first and all subsequent producing wells might have failed during the first year of the estate in question without affecting the oil company's right to hold the estate and continue to the end of the year to drill for oil and gas thereon; but, after that time, it appears that the right to hold the estate depends upon the continuity of the production, and it seems that the only practical purpose of specifying a term of one year was to limit the time for a minimum amount of development work, i. e., the minimum number of wells to be drilled.
Why did this contract not merely specify that when the existence of oil and gas is found in paying quantities on the premises the oil company should, within a reasonable time thereafter, drill as many wells as might be necessary to exhaust, as far as practicable, that supply, "having in view the interest of both parties"; and then, instead of specifying one year, why did this contract not further provide merely that if the premises proved productive after the first, or any specified number of wells was drilled, "this lease shall remain in force as long as oil or gas, or either of them, is produced from the land by the oil company, its successors, or assigns," etc.?
The answer is that the parties intended to fix a minimum amount of development work and a more definite period within which such minimum amount of development work should be done; and the contract in this case specifies eight wells as the minimum amount of development work and one year as such more definite period for this work.
Section 6 of this contract specifies eight wells to be drilled; and, if the mutual interest of the parties is to determine the number or fix the time for such work after the premises were discovered to be productive by the drilling of the first well at the time required, no good reason appears for specifying either eight wells as the number or a more definite term of the estate than "as long as oil or gas, or either of them, is produced," etc.
It seems reasonably certain that eight wells are not specified as both the maximum and the minimum number to be drilled; but this number is evidently specified as a minimum, not the minimum for the entire term of the lease, as more wells might be required either under an implication of the law that the number of wells should be sufficient to practically exhaust the supply or under the provision for offset wells, but the minimum to be drilled within one year.
I think the opinion of the court is correct.