Court Opinion

ID: 9848800
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:27:34.03642+00
Date Added: 2024-06-11T09:18:47.485959
License: Public Domain

Mr. Justice HARNSBERGER
(dissenting).
The factual situation recounted by the majority opinion shows appellant True Oil Company was the owner of an interest in the Fleetwood lease insofar as the lease pertained to the Wi/£SW14 of Section 8. In other words, the lease-interest, as to 80 acres of the 320 acre tract, belonged to this appellant. As such interest-owner, this appellant had the right to commence drilling operations within the ten-year primary term of the Fleetwood lease and a duty to do so if this appellant desired to preserve its interest should the owner or owners of the remaining interest under the Fleetwood lease fail to commence drilling operations. So far as the lessor is concerned, this appellant’s commencement of drilling operations on any part of the leased lands within the primary period would extend the lease during continuous drilling operations. The dividing among several parties of the lessee-interest was not the act of the lessor and did not alter the single obligation of the leasing party or parties to commence drilling operations before expiration of the primary term if the lease as an entity was to be extended beyond the primary term.
Even if this appellant was without right to commence drilling operations upon that part of the leased premises in which this appellant had no lease-interest, the only party entitled to complain about such drilling would be the owners of that part of the lease-interest, and it is clear that the owners do not and did not complain. The deadline of the primary term was extended whenever a drilling operation was commenced, in good faith, before expiration of that primary term, on any part of the leased premises by either of the several owners of any interest in the leasehold.
The majority attacks this appellant’s timely commenced drilling operations because these operations were upon the 240 acre portion of the leased tract rather than being upon the 80 acre portion in which this appellant had an interest. However, the majority agrees that this appellant’s operations “were performed pursuant to a farm-out agreement being obtained from Sinclair [i. e., this appellant’s co-interest owner] and covering the remaining 240 acres held by it in the Fleetwood lease.” (Emphasis supplied.) This being true, inasmuch as the operations commenced were pursuant to an agreement with the owners of the leasehold interest in the 240 acres wherein the drilling operations of this appellant were commenced, this appellant’s operation and its location were consented to by the owners of that portion of the leasehold prior to commencement of the drilling operation.
The majority brushes aside any question of the statute of frauds, and there is no disagreement with this because this appellant had the right to protect its interest by drilling upon any part of the leased premises as long as the owner of the interest in such part did not object.
The crucial point of difference this dissent raises is that an interest-owner under a lease where there are other interest-owners, all being lessee parties under a single leasehold, cannot lawfully be deprived of the right, within the terms of the lease, to preserve its interest, and if, in the effort to preserve such interest, compliance is made with the requirements necessary to extend the lease’s primary term by commencement of drilling operations upon any part of the leased tract, the lease thereby becomes extended. In like manner, had the interest-owners of the 240 acre tract elected to commence their drilling operations upon this appellant’s 80 acre tract before expiration of the primary term, the whole leasehold would have been extended so long as this appellant did not object and permitted the operation.