Court Opinion

ID: 7123856
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:57:18.143311+00
Date Added: 2024-06-11T16:14:11.982481
License: Public Domain

Rees, J.,
concurring: I wholeheartedly agree that the plaintiff s royalty interest is % of 3/ie — or Vs — of the unit production. This result is not affected by the fact that it happens that the sole producing well on the unitized 480 acres is located on one of plaintiff s two quarter sections included in the unit. The result would be the same if the sole producing well was located on the Krug quarter section. As the result of unitization, the entire 480 acres became subject to a Va royalty interest in the plaintiff, a V24 royalty interest in Krug and a 5k working interest in the defendant.
The majority’s opinion sets forth the unitization clause language found in each of the plaintiff s leases to G. R. Dillard. This language appears verbatim in Krug’s lease to Devlin. The majority alludes to this as “standard language of a Form 88 lease.” I find this to be possibly misleading. The latest catalog of forms printed by the Kansas Blue Print Company, Wichita, Kansas, presently available to me lists some thirty-three versions of the so-called Producers 88 lease. It has been aptly commented that:
“There is no such thing as a ‘standard’ oil and gas lease form. The reference to a ‘Producers 88’ form is meaningless.” Nordling, Landowners’ Viewpoints in Pipeline Right-of-Way and Oil and Gas Lease Negotiations, 52 J.B.A.K. 35 (1983).
Relying upon Cosgrove v. Young, 230 Kan. 705, Syl. ¶ 2, 642 P.2d 75 (1982), it is said in the majority opinion that
“[Rloyalty is that part of the oil or gas payable to the lessor by the lessee out of oil and gas actually produced and saved. It is the compensation to the lessor-provided in the lease for the lessee’s privilege of drilling and producing oil oi-gas.”
I cannot wholly agree. I have not yet altered my analysis as expressed in my dissenting opinion in Drach v. Ely, 10 Kan. *585App. 2d 149, 694 P.2d 1310, rev'd 237 Kan. 654 (1985). There I said:
“[A]n oil and gas lease is a hybrid instrument. [Citations omitted.] It is a license to enter and explore for oil and gas. [Citations omitted.] It is a grant with conditions. One of the conditions is a reservation to the lessor of a share in the production —• royalty. The right to royalty is reserved out of the lessor’s grant. The lessor’s right to royalty arises from his mineral interest ownership rather than arising from or originating with the lease. Cf. In re Estate of Sellens, [7 Kan. App. 2d 48, 51, 637 P.2d 483 (1981), rev. denied 230 Kan. 818 (1982)].
“. . . In general, bonus is the consideration paid by a lessee for the lessor’s execution of an oil and gas lease, a license to explore, develop and produce, and pursuant to which production, if achieved, is shared on an agreed basis with the lessor’s share free of production costs. Such lessor’s share is usually referred to as royalty. 8 Williams and Meyers, Oil and Gas Law, pp. 65, 656 (1982); In re Estate of Sellens, 7 Kan. App. 2d at 51.” 10 Kan. App. 2d at 162-63.
Obviously, my two points of “disagreement” with the majority’s opinion have no significant effect upon the resolution of this appeal. Again, the result announced by the majority opinion is absolutely correct.