Court Opinion

ID: 9761496
Source: CourtListenerOpinion
Date Created: 2023-08-29 01:44:04.271327+00
Date Added: 2024-06-11T07:29:24.020228
License: Public Domain

Dissenting Opinion by
DENTON, J.,
in which McGEE and BARROW, JJ., join.
DENTON, Justice, dissenting.
I dissent. I am convinced the majority opinion has not correctly construed the ha-bendum clause of the Samano oil and gas lease. The habendum clause reads:
2. Subject to the other provisions herein contained, this lease shall remain in force for a term of ten (10) years from this date, called “primary term,” and as long thereafter as oil, gas or other mineral is produced from said land, or as long thereafter as Lessee shall conduct drilling or reworking operations thereon with no cessation of more than sixty consecutive days until production results, and if production results, so long as any such mineral is produced.
The object and purpose intended by the parties must be considered when construing an oil and gas lease. Garcia v. King, 139 Tex. 578, 164 S.W.2d 509, 512 (1942). To determine intent, each provision must be accorded its reasonable, natural, probable meaning when considered in relation to the entire contract. McMahon v. Christmann, 157 Tex. 403, 303 S.W.2d 341, 344 (1957); Jones v. Killingsworth, 379 S.W.2d 362, 367 (Tex.Civ.App.—Tyler), rev’d on other grounds, 403 S.W.2d 325 (Tex.1964). The primary intent of the parties was to secure and continue production of oil and gas during and after the primary term. Samano argues when the lease was signed the parties knew that production would cease in the primary or secondary term. He submits the sixty day clause is to assure preservation of the lease following cessation of production and is intended to limit the time when the lessee must start operations if production stops after the primary term.
I do not agree with Samano’s construction of the habendum clause. The first phrase, “subject to other provisions herein contained,” does not bear on the issue because the lease contains no other terms relating to extension of the lease into the secondary term. The second phrase sets forth the primary term of ten years. The third phrase, “and as long thereafter as oil, gas and other mineral is produced from said land,” relates to extension of the lease beyond the primary term by production. This case involves construction of the fourth phrase, “or as long thereafter as lessee shall conduct drilling or reworking operations thereon with no cessation of more than sixty consecutive days until production results . . .. ” The word “or” in its ordinary use is disjunctive. Absent a compelling reason apparent from the context of the instrument, “or” should be read as disjunctive, not conjunctive. Shell Petroleum Corp. v. Royal Petroleum Corp., 135 Tex. 12, 137 S.W.2d 753, 758 (1940); Reynolds v. Park, 521 S.W.2d 300, 309 (Tex.Civ.App.—Amarillo 1975, writ ref’d n.r.e.); Morrison v. Swaim, 220 S.W.2d 493, 495 (Tex.Civ.App.—Eastland 1949, writ ref’d n.r.e.).
A disjunctive expresses an alternative. The “or” phrase parallels the preceding phrase; it relates to and modifies the phrase stating the primary term. Thus, there are two ways to extend the lease beyond the primary term — 1) production from the lease or 2) conduct of drilling or reworking operations at the end of the primary term which result in production.
The Sámanos urge that “cessation” refers to production in the secondary term. The word “cessation” appears in the drilling and reworking clause. In context, cessation refers to operations, not production.
The habendum clause provides two methods for extending the lease beyond the ten year primary term. These are production, or drilling or reworking operations at the end of the primary term which result in production, provided there is no cessation of operations for more than sixty consecutive days. The sixty day language is not intended to prescribe the maximum period of non-production in the secondary term during which the lessee must start drilling or reworking operations. I would hold the court of civil appeals correctly construed the ha-bendum clause.
*586Samano relies on four cases involving sixty day operations clauses. In Woodson Oil Company v. Pruett, 281 S.W.2d 159 (Tex.Civ.App.—San Antonio 1955, writ ref’d n.r. e.), an oil and gas lease was executed for a primary term of five years. A well was completed during the primary term and the lease was extended by production. Production ceased for more than sixty days during the secondary term and the lessors brought suit alleging the lease had terminated. The lease provided:
Subject to the other provisions herein contained, this lease shall be for a term of five (5) years from this date (called ‘primary term’) and as long thereafter as oil, gas or other mineral is produced from said land hereunder, or drilling or reworking operations are conducted thereon.
If at the expiration of the primary term, Lessee is conducting operations for drilling a new well or re-working an old well, or if after the expiration of the primary term, production on this lease shall cease, this lease nevertheless shall continue as long as said operations continue or additional operations are had, which additional operations shall be deemed to be had where not more than Sixty (60) days elapse between abandonment of operations on one well and commencement of operations on another well, and if production is discovered this lease shall continue as long as additional operations are had.
Id. at 162. Woodson Oil Company contended the cessation of production was temporary and it should have been entitled to a “reasonable” time to resume production. The court of civil appeals rejected this argument. It held the parties had stipulated the maximum period of temporary cessation and the lease had terminated because additional operations were not commenced within sixty days of cessation of production. Id. at 164-165. Although Woodson is factually similar to the present case, the lease provisions materially differ. The Woodson lease specifies the maximum period during which production could cease in the secondary term before additional operations had to be commenced. The Samano lease provides only for cessation of operations in progress at the end of the primary term and is silent as to cessation of production in the secondary term.
In Gulf Oil Corporation v. Reid, 161 Tex. 51, 337 S.W.2d 267 (1960), a gas well was begun several days before expiration of the primary term. It was completed in the secondary term, but production was not commenced because there was no pipeline connection. The well was capped and Gulf tendered shut-in gas payments to the lessor thirty-two days later. The lessor rejected the payments claiming the lease terminated because there was no production or tender of shut-in payments at the expiration of the primary term. Gulf sought to invoke two sixty days clauses to preserve the lease.1 The first became operative upon cessation of production after the primary term. Id. at 269. The second provides, if, at the end of the primary term, oil or gas is not being produced, but the lessee is drilling or re*587working, the lease will not terminate if no more than sixty days elapse between abandoning operations on one well and beginning operations on another. Id. This court held the lease terminated for lack of production and failure to tender shut-in payments timely. We further held neither sixty day clause applied because (1) there was never production and (2) there was never an abandonment. Again, the Reid lease made specific provision for cessation of production during the secondary term.
In Skelly Oil Company v. Harris, 163 Tex. 92, 352 S.W.2d 950 (1962), the facts are similar to Reid but involved different lease provisions. Drilling operations were commenced during the primary term and a well was completed in the secondary term. The well was capped awaiting pipeline connection. Production began forty-one days later. The lease provides in the event oil or gas is not being produced at the end of the primary term, but the lessee is engaged in drilling or reworking operations, the lease will be extended if operations were conducted with no cessation of more than sixty consecutive days.2 Id. at 950. This court held the lease extended by operations under the sixty day clause. Id. at 954. Duke v. Sun Oil Company, 320 F.2d 853 (5th Cir. 1963), was similar to Skelly. The Fifth Circuit, applying Texas oil and gas law, reached the same result as this court in Skelly. It held the sixty day clause extended the lease beyond the primary term for sixty days unless there is production or tender of shut-in payments. Id. at 861. The sixty day clause is an integral part of the habendum clause and is identical to the habendum clause in the Samano lease.
2. Subject to the other provisions herein contained, this lease shall remain in force for a term of ten years from this date, called primary term, and as long thereafter as oil, gas or other mineral is produced from said land, or as long thereafter as Lessee shall conduct drilling or reworking operations thereon with no cessation of more than sixty consecutive days until production results, and if production results, so long as any such mineral is produced.
In both Skelly and Duke drilling operations were in progress during the primary term but there was no production. At the end of the primary term the sixty day clauses operated to extend the lease into the secondary term. Neither case involved cessation of production in the secondary term. None of these cases support Sama-no’s argument that the sixty day language in the habendum clause operated to prescribe the maximum period of non-production in the secondary term before additional drilling or reworking operations had to be commenced in order to preserve the lease.
An oil and gas lease automatically terminates upon permanent cessation of production after expiration of the primary term. Amoco Production Co. v. Braslau, 561 S.W.2d 805, 808 (Tex.1978); Watson v. Rochmill, 137 Tex. 565, 155 S.W.2d 783, 784 (1941). When cessation of production is temporary, the lessee has a reasonable time to resume production unless the lease specifies the maximum period of non-production considered temporary. Amoco Production Co. v. Braslau, supra at 808; Watson v. Rochmill, supra at 784. What constitutes temporary cessation is a question of fact. E. g., Midwest Oil Corp. v. Winsauer, 159 Tex. 560, 323 S.W.2d 944, 948 (1959) (174 days); Stuart v. Pundt, 338 S.W.2d 167, 169 (Tex.Civ.App.—San Antonio 1960, writ ref’d) (3-4 months); Scarborough v. New Domain *588Oil & Gas Co., 276 S.W. 331, 336 (Tex.Civ.App.—El Paso 1925, writ ref’d w.o.j.) (4 months). The cases allowing a reasonable time to resume production, following a temporary cessation, involved leases that do not contain specific drilling or reworking clauses applicable when production ceases in the secondary term. The Samano lease does not specify the maximum period of non-production regarded as temporary during the secondary term. The sixty day language in the lease pertains only to cessation of operations in progress at the end of the primary term. I would hold Sun Oil was entitled to a reasonable period of time following cessation of production to commence operations to restore production.
The judgment of the court of civil appeals should be affirmed.
McGEE and BARROW, JJ., join in the dissenting opinion.

. Subject to the other provisions herein contained, this lease shall be for a term of Five (5) years from this date (called primary term) and as long thereafter as oil, gas or other mineral is produced from said land hereunder, or as long as drilling or reworking operations are being conducted on said land as is hereinafter provided.
If cessation of production occurs at any time after the expiration of the primary term, then this lease shall not terminate if Lessee, until production is again procured, does not allow more than sixty (60) days to elapse between the cessation of production and the commencement of additional drilling or reworking operations in a bona fide effort to again obtain production, and successive attempts may be made so long as not more than sixty (60) days are allowed to elapse between the completion or abandonment of one well and the commencement of operations on another until production is again obtained. If, at the expiration of the primary term, oil, gas or other mineral is not produced from the land then covered hereby, but Lessee is then engaged in operations for drilling or reworking operations on some part of the land hereunder, this lease shall not terminate if Lessee does not allow more than sixty (60) days to elapse between the abandonment of one well and the commencement of drilling or reworking operations on another until production is obtained.

. Subject to the other provisions herein contained, this lease shall be for a term of ten years from this date (called ‘primary term’) and as long thereafter as oil, gas or other mineral is produced from said land or land with which said land is pooled hereunder.
If at the expiration of the primary term, oil, gas or other mineral is not being produced on said land, or on acreage pooled therewith, but Lessee is then engaged in drilling or reworking operations thereon or shall have completed a dry hole thereon within sixty (60) days prior to the end of the primary term, the lease shall remain in force so long as operations are prosecuted with no cessation of more than sixty (60) consecutive days, and if they result in the production of oil, gas or other mineral, so long thereafter as oil, gas or other mineral is produced from said land or acreage pooled therewith.