Court Opinion

ID: 9685236
Source: CourtListenerOpinion
Date Created: 2023-08-24 14:26:52.087787+00
Date Added: 2024-06-11T18:18:03.564167
License: Public Domain

McGehee, C. J.
This is a suit in equity wherein the complainant, Roy Beery, obtained a decree for the cancellation of an oil, *674gas and mineral lease held by the defendant, Superior Oil Company, as a cloud upon his title to a 15/50th mineral interest in a 50-acre tract of land included in the 320-acre gas drilling Unit No. 39 of the Gwinville Gas Field in Jefferson Davis and Simpson Counties. The principal basis of the suit is that the ten-year primary term of the lease thereon had expired by its terms on December 29, 1949, and it is contended that there had been no production from said 50-acre tract of land thereunder. The decree also awarded unto the complainant the sum of $6,120.87, which represents 8/8ths instead of i/8th 0f i5/320ths of the market value of the gas produced from Superior’s Dale Well No. 1 on adjacent land in said Gas Drilling Unit No. 39, from the date of the first commercial production from the unit well on February 1, 1947, through November 30, 1950, less taxes and less 15/320ths of the cost of drilling, completing, equipping and operating said well during such period, as located on the adjacent tract of land belonging to L. F. Dale in the 320-acre gas drilling unit.
The oil, gas and mineral lease in question was executed on December 29, 1939, by Bruce Walker and wife to John D. Gholson on this 50-acre tract in which the appellee- Boy Beery now owns the 15/50th mineral interest, and the lease was transferred and assigned by Gholson during the year 1940 to the appellant, Superior Oil Company. Thereafter, on June 26, 1944, Bruce Walker and wife conveyed unto the appellee the said 15/50ths mineral interest in their 50-acre tract of land, subject to the outstanding oil,' gas and mineral lease then, held by the appellant.
The appellant’s lease provides that “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 hereunder.”
It will be observed from á reading of the foregoing-provision in the lease that there is no ambiguity therein. The primary term of the lease is stated in plain *675and unequivocal language. It therefore becomes unnecessary for the Court to resort to any contemporaneous construction thereof by the parties and to their subsequent conduct in regard to this provision of the contract or to the conduct of the lessee in its subsequent dealings with the appellee Beery. In the absence of ambiguity, we must apply the language of the provision in the contract as written and as agreed upon by the parties thereto, subject to the applicable statutes for the conservation of oil and gas and the orders, rules and regulations of the State Oil & Gas Board, promulgated and adopted pursuant to such statutes.
The appellant’s lease itself did not contain a pooling or force majeure clause. It was obtained of course subject to the police powers conferred upon the State Oil & Gas Board by Chapters 117, Laws of 1932, and 305, Laws of 1936, as was likewise the mineral deed from Bruce Walker and wife to the appellee, the lease having-been executed during- the year 1939 and the mineral deed in 1944, prior to the passage of Chapter 256, Laws of 1948.
The appellee sued specifically for the value of %th of 15/320ths of the gas produced from the Dale well from the time it came into commercial production on February 1, 1947, until December 29, 1949, the date on which the lease was to expire by its terms, and for 8/8ths of the gas produced by said well thereafter prior to the trial. However, the amended bill of complaint contained a general prayer for the award of such damages as the court should find the complainant was entitled to recover. The trial court, however, awarded to the complainant 8/8ths of 15/320ths of the market value of the gas produced by the unit well on Dale’s land on the basis that the 15/50ths of the 50-acre tract bears to the area of the 320-acre gas drilling unit from the time commercial production began therefrom, upon the theory that the law of co-tenancy was applicable to the situation since it was alleged that the gas had been produced from *676the unit well on the Dale tract under and by virtue of the authority of the pooling agreements signed by the co-tenants of the appellee in the 50-acre tract, who owned the remaining 35/50ths mineral interest therein, executed on January 28, 1948, and March 25, 1948, subsequent to the granting of- the permit to drill the Dale well, the filing and approval of the plat or map of the 320-acre gas drilling Unit No. 39, the pooling of the leases by the owners thereof pursuant to the orders of the Board of August 11, 1947, and September 11, 1947, and the granting and allocation of the allowables on December 9, 1947, effective December 26, 1947.
Although the appellee sued specifically for the market value of %th of the royalty on the basis of his mineral acreage in the 320-acre unit, prior to the expiration of the primary term of the lease and for 8/8ths of such value thereafter, he predicates his right to recovery upon one of three stated grounds: (1) that he was entitled to recover on the ground that the appellant, as lessee of the 50-acre tract, had violated its duty under its lease not to impair the value thereof, in that it had drained, and is still draining, gas from the 50-acre tract through the unit well on the Dale tract; (2) that the lessee falsely, fraudulently, wrongfully and unlawfully represented to the State Oil & Gas Board that all of the lands proposed to be included in gas drilling Unit No. 39 had been lawfully pooled, and that the lessee thus obtained a full gas allowable on the 320 acres, including the 50-acre tract in question; and (3) that he is entitled to the recovery sued for under the law of co-tenancy for the reason that Bruce Walker and his several vendees (other than his vendee Beery) of mineral interests in the 50-acre tract had executed the amendments to the lease of the appellant hereinbefore mentioned, on January 28, 1948, and March 25, 1948, whereby they authorized the said lessee to pool this lease with the other lessees in the 320-acre unit and to pool their undivided 35/50ths of the minerals under the 50-acre tract with those of other *677mineral owners and lessees in the drilling unit, and that it was pursuant to this authority that the appellant operated the unit well, obtained the allowables therefor and converted to its own use the appellee’s rightful portion of the production of gas from the unit well.
As to the first contention, the only assumed obligation found in the lease whereby the. lessee expressly agreed to protect the rights of the appellee and his co-tenants in the leased premises, that is to say the 50-acre tract, from drainage, is in the following words: “In the event a well or wells producing oil or gas in paying quantities should be brought in on adjacent land and within 150 feet of and draining the leased premises, Lessee agrees to drill such offset wells as a reasonably prudent operator would drill under the same or similar circumstances.”
The Dale well was drilled at a distance of approximately 1,000 feet from the 50-acre tract in question which is situated in the SWti of Section 28, and it would seem that no obligation implied by law to protect the leased premises from drainage was violated where the same lessee also held a lease on the Dale tract and drilled the well thereon under the express authority of the Dale lease, and where under the conservation laws of the State, subject to which the appellee had purchased his mineral interest, the lessee of the 50-acre tract was prohibited from drilling an offset well thereon. In other words, since no express provision of the lease from Walker to Gholson was violated, it would seem that there would be no liability on the first theory of the amended bill of complaint, since the obligation implied by law to protect against drainage is inapplicable where' the lawful rules and regulations of the State Oil & Gas Board for the conservation of oil and gas are complied with.
As to the second theory of liability relied on, it was necessary that the lessee who drilled the unit well should obtain an allowable for the entire 320 acres embraced *678in the unit since the lessee would become liable to all of the owners of the respective tracts therein for their portion of the gas produced, on the basis of the allowable for all of the land in the unit on an acreage basis. Then, too, the issue of fraud and misrepresentation in regard to the establishment of the unit became foreclosed and res judicata under the decision of Superior Oil Company v. Beery decided on June 9, 1952, and reported in ______ Miss......., 59 So. 2d 689, which involved an appeal to this Court from the Circuit Court of Jefferson Davis County, wherein the validity of the establishment of the gas drilling Unit No. 39 was challenged. Moreover, the appellant asserts, and the record shows that as an oil and gas lessee it is one of the three “owners” who procured the unitization of the unit area, and then owned the gas under the 50-acre tract subject to the right of the appellee as a mineral vendee of the lessor to collect annual rental under the lease prior to production, to collect a Vsth royalty from the production of gas from the land on the basis of his 15 mineral acres, and subject to his right to the reversionary interest in fee of the minerals in the event there had been no production from the land under the lease during the primary term thereof.
We shall discuss the third theory of liability herein-before mentioned later in this opinion, other than to the extent of now stating that neither the appellee nor his co-tenants in the 50-acre tract were co-tenants in the sense of being entitled to share in the production from the unit well on the Dale tract except upon the theory that the 50-acre tract has been legally unitized or pooled with the other tracts in the 320-acre gas drilling Unit No. 39.
This brings us directly to a determination of whether or not this provision of the lease was actually complied with under the facts and circumstances hereinafter stated, within the meaning of Chapter 117, Laws of 1932, and Chapter 305, Laws of 1936, when read in connection with the lawful orders, rules and regulations of the *679State Oil and Gas Board, promulgated during the year 1947, long prior to the expiration of the 10-year primary term of the lease in question on December 29, 1949.
The appellant also held the oil, gas and mineral lease on the Dale tract of land on which the well was completed on July 15, 1945, but due to the lack of pipe-line facilities to the Gwinville Gas Field, it so happened that this well, which later became the unit well for gas drilling Unit No. 39 was not placed in commercial production until February 1, 1947. Prior to the complete establishment of Unit No. 39, embracing the Dale tract of 160 acres, the Bruce Walker tract of 50 acres, and lands belonging to other separate owners, all of the %th royalty was paid by the appellant to Mr. Dale, as owner and lessor of the land on which the well had been drilled.
On August 11, 1947, the State Oil & Gas Board adopted a rule and regulation which provided for a spacing unit of 320 contiguous surface acres for gas wells in the Gwinville Gas Field. On that same day, the State Oil & Gas Supervisor, acting on behalf of the State Oil & Gas Board, requested the appellant, as driller and operator of the Dale well, to file with the Board a plat or map of the lands to be included in the 320-acre unit for production of gas by this producing well, and for which a permit to drill had been granted in appellant’s favor. This plat or map was accordingly filed on August 22, 1947, and was thereafter duly approved by the State Oil & Gas Board, together with the designation of such drilling unit.
On September 11, 1947, the State Oil and Gas Board adopted a state-wide rule and regulation which provided for gas drilling units of not less than 320 contiguous' surface acres, upon which no other drilling or producing well could be located. This rule recognized that the Board could grant an exception thereto, and also to the rule adopted on August 11, 1947, as aforesaid, in regard to the Gwinville Gas Field, if such an exception “is necessary to prevent waste or to prevent the confiscation *680of the property of the applicant.” However, for reasons hereinafter stated, the granting- of an exception would not have been justified on either of such grounds in the instant case. 1
At the time of the adoption of these orders of August 11, 1947, and September 11, 1947, the British Oil Producing Company and R. J. St. Germain, respectively, were also holders of oil, gas and mineral leases on different tracts of land covered by the plat or map that was ordered filed by the appellant, Superior Oil Company, and all of these oil, gas and mineral lessees were ordered by the Board to pool their leases, so as to develop 320 acres as a unit for the production of gas in the area to be embraced in gas drilling Unit No. 39.
These orders of the Board found and adjudicated as a fact the efficient drainage area of a gas, well in the Gwinville Gas Field to be 320 acres; they provided for the establishment of such drilling- units; they regulated the spacing of the wells; they provided the formula by which the well allowables would be determined, and allocated the same on an acreage basis; and they required that “the rights of all owners in the drilling unit upon which the well is located shall first be pooled. ’ ’ The term “owner” is then defined in the order of September 11, 1947, as “The person who has the right to drill into and to produce from a field or pool, and to appropriate the production either for himself, or for himself and another.” Pursuant to this order of the Board, an operating-agreement was duly entered into by these three lessees whereby the appellant was to operate the Dale Well No. 1 as the unit well on behalf of these owners of the leases, and also of course for the benefit of all parties interested as royalty owners in the lands involved.
On December 9, 1947, a 320-acre allowable for the production of gas was granted for gas drilling Unit No. 39, as requested by the appellant when it filed its plat or map on August 22, 1947, covering the SE1/^ of Section 29 and SW% of Section 28 in Township 9 North, Range *68118 West in Jefferson Davis County comprising the 320 contiguous surface acres. The order granting such allowable recited that the operators had filed the map or plat of the unit showing the acreage assigned to the same. The 320-acre allowable was allocated to the separately owned tracts on an acreage basis in the unit and the first monthly allowable was accordingly assigned and became effective on December 26, 1947, according to the orders of the State Oil & Gas Board in regard thereto. The foregoing acts of the State Oil & Gas Board and of the owners having the right to drill for the production of gas tinder their leases, completed the establishment of the said gas drilling Unit No. 39 and had the effect of unitizing the leases and pooling the same for the production of all gas thereafter from the well on the Dale tract of land.
When this unit had been thus established by the granting of the permit to drill, the filing of the plat or map of the lands to be included in the unit and the approval thereof, the pooling of the leases by the owners as required by the State Oil & Gas Board, and the granting of the 320-acre allowable and allocating the same to each separate tract of land therein on an acreage basis, in compliance with a valid exercise of the police powers of the State through the agency of the State Oil & Gas Board for the conservation of oil and gas, the owners of the leases, Superior Oil Company, British American Oil Producing Company and E. J. St. Germain, were thereafter, deprived of the right to drill a well on any other tracts of land on which they held leases, other than the well on the Dale tract. While they were required to permit all of the other leases than the one on the Dale tract to expire by their terms, there was substituted for the right that they otherwise had to drill their leases the right to participate in the production of the unit well on the Dale tract and to receive the same proportion of the gas that they would have been entitled to receive if the well had been on a *682tract on which they held a lease instead of the tract on which the Dale well was located. Thus it followed that the appellant, Superior Oil Company, was required to permit its lease on the Bruce Walker 50-acre tract to expire on December 29, 1949, unless the same was continued in force by the production of gas from the said 50-acre tract through the unit well on the adjacent Dale tract.
Likewise, there was substituted for the right of the appellee and his co-tenants in the 50-acre tract in which he'owned 15/50ths of the minerals, to have a well drilled thereon during the 10-year primary term of the lease held by the appellant thereon, the right to receive the same amount of gas from the unit well as he would have been allowed to receive under the proration authorized by Chapter 305, Laws of 1936 if a well had been drilled on the 50-acre tract prior to the expiration of such primary term on December 29, 1949. This fact is uncontroverted in the record.
We recognize that as held in the case of Armstrong v. Bell, 199 Miss. 29, 24 So. 2d 10, and 3 Summers Oil & Gas, Permanent Ed. 486, Section 601, and in the cases of Koenig v. Calcote, 199 Miss. 435, 25 So. 2d 763, and Bailey v. Federal Land Bank, 207 Miss. 764, 43 So. 2d 375, the appellee had the right to receive the annual rents prior to production under the lease as provided for in his mineral deed from Bruce Walker and wife; the right to receive any royalties from production under the lease; and the reversionary fee interest in the minerals in place, to the extent of 15/50ths of the 50-acre tract in the event there was no production under the lease of the appellant during the life thereof. But the question here is whether or not the 50-acre tract was placed in production prior to the expiration of the primary term of the appellant’s lease thereon in virtue of the unitization and pooling of all of the leases in Unit No. 39 and the allocation of the *683320-acre allowable to each tract embraced in the unit on an acreage basis, prior to December 29, 1949.
All of the oil, gas and mineral lessees in the unit have received their pro rata %ths of the gas produced by the Dale well from and after the time the leases were unitized and pooled in the manner hereinbefore stated, and on the basis that their leased acreage bears to the 320-acre drilling unit. Likewise, all of the mineral or royalty owners, other than the appellee who refused the same except for compensation, have received their %th royalty from the production of the unit well on the basis that their acreage bears to the 320-acre drilling unit. Moreover, all of these mineral or royalty owners, other than appellee, have recognized the right of the State Oil & Gas Board to unitize their interests, and at the request of the oil, gas and mineral lessees they signed, without additional compensation, pooling agreements consenting to the development of their acreage as a unit along with that belonging to other mineral owners, and they thereby undertook to consent to the pooling of their mineral acreage with that of other mineral owners and the oil, gas and mineral lessees.
Included among those who thus signed what were termed amendments to the original oil, gas and mineral leases were the co-tenants of the appellee in the 50-acre tract, who owned 35/50ths of the minerals in place under the 50-acre tract, subject to the original oil, gas and mineral lease held by the appellant thereon. But in our opinion, the subsequent execution of this pooling agreement by the co-tenants of the appellee on January 28, 1948, and March 25, 1948, after the unitizing or pooling of the leases in the unit had been completed, was an unnecessary procedure in view of the fact that we later held in the cases of Superior Oil Company v. Foote on June 9, 1952, reported in.........Miss.........., 59 So. 2d 85, and Griffith, et al. v. Gulf Refining Co., 215 Miss. 15, 60 So. 2d 518, decided October 6,1952, and Hassie Hunt Trust, et al. v. Proctor, et al., 215 Miss. 84, 60 So. 2d 551, decided Octo*684ber 13,1952, that those having the exclusive right to drill for and produce oil or gas represent the royalty owners in the drilling and spacing of wells in compliance with the rules and regulations of the State Oil & Gas Board.
In the Foote case, supra, the appeal was from an order of the State Oil & Gas Board which undertook to “integrate” the interests of all lessees and mineral owners in the units there involved, the order having been rendered in a proceeding under Chapter 256, Laws of 1948, as amended by Chapter 220, Laws of 1950. But as a jurisdictional prerequisite for the Board to entertain the petition for integration, it was required that there should be two or more separately owned tracts of iand embraced within an established drilling unit, and it was therefore necessary for the Board to find and adjudicate that the units had been theretofore duly and legally established. The Board did so find and we affirmed its action in so doing. We then pretermitted a decision of the question of whether or not the effect of the integration, which, according to all definitions to be found in standard dictionaries, means the same thing as to unitize or to pool, would be to extend the primary term of the lease, or whether the expiration of the date of the primary term prior to “compulsory” integration would have the effect of entitling the mineral owner, on whose tract of land no well had been drilled and was in production thereon, to receive 8/8ths of the gas instead of Vsth after the expiration of the primary term of the lease which the mineral owner had given, or subject to which he had bought minerals under the lands described therein.
We are now confronted with the necessity of deciding this precise question in the instant case. In this connection, we are of the opinion that where the lands were unitized by the lessees and the leases were pooled, and the establishment of a gas drilling unit was completed under the authority of Chapter 117, Laws of 1932, Chap*685ter 305, Laws of 1936, and the orders, rules and regulations of the State Oil & Gas Board thereunder, the procedure had the same effect as would result from the integration of the mineral interests and the leases under the subsequent statutes of 1948 and 1950. In other words, we are of the opinion that if the lands in a drilling unit are unitized for the purpose of conserving oil and gas and of preventing waste and the drilling of unnecessary-wells, and for the protection of the correlative rights of all persons included in the unit, all interests are thereby unitized; that they are thereby pooled; and that they are thereby integrated; that is to say, that to unitize is to pool, and that to pool the leases, as authorized by these'two former statutes and the rules and regulations promulgated by the State Oil and Gas Board pursuant thereto, is to integrate the interests of the respective parties involved in the unit.
At any rate, this Court held in the case of Green, et al. v. Superior Oil Company, et al., ...... Miss......., 59 So. 2d 100, decided May 26, 1952, that where the wells were drilled and production begun on the units under the statutes in effect prior to Chapter 256, Laws of 1948, the applicable legislation is Chapter 117, Laws of 1932 and Chapter 305, Laws of 1936. All of the proceedings had and done in the instant case up to and including the making of the first monthly allowable and the effective date thereof was prior to the expiration of the primary term and during the year 1947, and therefore long prior to the expiration of the lease here involved, on December 29, 1949; and hence the governing statutes are those of 1932 and 1936, as held in the case of Green, et al. v. Superior Oil Company, et al., supra. In other words, we think that the decision in the Green case went a long way toward deciding the issue now before us. It cited the case of California Company v. State Oil & Gas Board, 200 Miss. 824, 27 So. 2d 542, 28 So. 2d 120, which held that “the 1932 and 1936 statutes had the effect of vesting in the Board the power to prescribe rules for the *686spacing of oil and gas wells, and to regulate the drilling for and the production of oil and gas. ’ ’ And in the Green case, the Court further stated: “We also think that the same statutes by necessary implication authorize the Board to establish drilling units.”
If the Board had the authority to establish drilling units and to require the oil, gas and mineral lessees to pool their leases, we think that it inevitably follows that each lessee is entitled to participate to the extent of %ths of the production from the unit well on the basis that its leased acreage bears to the 320-acre drilling unit, less their pro rata share of the expense of drilling and operating the well and severance taxes, and that this cannot be true if all of the mineral owners in the unit other than Dale are given 8/8ths of the production of gas after the primary term of their leases expire, and on the basis that such mineral owner’s acreage bears to the entire unit area. For instance, if the appellee is permitted to recover 8/8ths of 15/320ths of the value of the production of the gas from the Dale well, then the appellant would receive nothing from the appellee’s 15 mineral acres,, nor could the British-American Oil Producing Company and B. J. St..Germain, as oil, gas and mineral lessees receive %ths of the production of the gas from the unit well on the basis that their leased acreage bears to the 320-acre unit, if their lessors could claim 8/8ths after the expiration of the primary term.
Moreover, unless the 160-acre tract on which the Dale well is located could share on behalf of Dale %th of 160/320th of the gas drained from the 50-acre tract, upon the theory that the 160 acres has been unitized and pooled with the 50-acre tract, then he would be entitled under the law of capture to %th of all the gas produced from the well on his 160 acres.
Thus, it will be seen that the correlative rights of the British-American Oil Producing Company and B. J. St. Germain, as lessees of other tracts in the unit, and those *687of the appellant as the lessee of the 50-acre tract, and the royalty rights of all mineral owners, other than appellee, could not otherwise be protected and enforced; and that the result would be that the police powers of the state which are authorized to be exercised by the State Oil & Gas Board under Chapter 117, Laws of 1932, and Chapter 305, Laws of 1936, and under such reasonable orders, rules and regulations as the State Oil & Gas Board may adopt, would necessarily have to yield to the alleged right of the appellee to take 8/8ths of 15/320ths of the gas produced from the unit well on the ground that no well was drilled on the 50-acre tract, prior to the expiration of the primary term of the lease thereon, even though there is substituted for the right of the appellee to have had a well drilled on the 50-acre tract during the primary term of the lease the equivalent right of receiving the same amount of gas from the unit well that he would have been entitled to receive had a well been drilled on the 50-acre tract prior to the expiration of such primary term.
The right substituted in favor of the appellee, as above stated, has the effect of not taking away any valuable right of the appellee in violation of due process of law; whereas, on the other hand, if the oil and gas lessees are not permitted to share in the production of gas from the unit well on the basis that their leased acreage bears to the entire 320-acre unit, they are deprived of a constitutional right in violation of due process of law in that they were forbidden under the conservation laws of the State, as declared by the statutes last above mentioned and under the orders, rules and regulations of the said Oil & Gas Board adopted pursuant thereto, to drill a well on their leased acreage in the unit — a right granted unto said lessees under and by virtue of the contract provisions of their leases. They were required to pool their leases by the State Oil & Gas Board under the statutes and the orders, rules and regulations aforesaid, *688and they had to do this whether their leases contained a pooling clause or not, because only one of the lessees could drill a well on any tract contained in the 320 acres in compliance with the public policy of the State for the conservation of its natural resources.
But it is urged by the appellee that the lessees could have protected themselves against this contingency by inserting a pooling clause in the respective leases, or by purchasing the right to pool from the mineral owners as an amendment to each original lease, or that they could have inserted in the original lease a force majeure clause. But we are of the opinion that the lessees were given the right to pool their leases, and were in fact required to do so, by the statutes involved and by the orders, rules and regulations of the State Oil & Gas Board thereunder; and that it was a reasonable exercise of the police powers of the state when the said Oil & Gas Board, the delegated agency of the legislature, adopted its spacing rule on September 11, 1947, requiring that “the rights of all owners in the drilling unit upon which the well is located shall first be pooled”, and then defining the term “owner” in the said order as “The person who has the right to drill into and produce from a field or pool, and to appropriate the production either for himself, or for himself and another.”
The observation last above made is true as a reasonable conclusion, because the State Oil & Gas Board usually has jurisdiction of oil, gas and mineral lessees when they undertake to drill an oil or gas well in the State, since they are thereby engaged in local activities and are subject to the jurisdiction of the Board, whereas it frequently occurs that the royalty owners in an oil or gas field in this State usually reside in a number of different states, and it would be difficult for the Board to require them to do anything in regard to observing the conservation laws in the development of an oil or gas field. Moreover, such mineral or royalty owners by the *689execution of the oil and gas leases have divorced themselves from the operations for the production of oil or gas, reserving unto themselves only the right to receive the annual rental provided for in the lease, the royalty to accrue under the lease, and the reversionary interest in fee in the event there is no production from the land during the life of such lease.
It was insisted at the bar either in this case or the companion case of Superior Oil Company v. Alfred Foote, et al., No. 38,562, which has been considered along with the instant case, that the land or mineral owner whose property is under an oil, gas and mineral lease, is entitled to have a well drilled on the particular tract of land covered by the lease, as contemplated by the lease contract. Such right is only nominal at most, however, when it does not appear that it would be any advantage or convenience to the land or mineral owner to have the well located on his land instead of on an adjacent tract, and when he is given the right to receive the same amount of oil or gas from the unit well on the adjacent tract as he would have been allowed to receive under proration if a well had been drilled on his tract during the primary term of the lease. In other words, his damage, if any, resulting from failure to drill on his land under such circumstances would be de minimis. Moreover, in the case of Pace, et al. v. State, ex rel. Nice, Attorney General, et al., 191 Miss. 780, 4 So. 2d 270, this Court recognized that it would be to the disadvantage of a 99-year lessee of sixteenth section lands for an oil, gas and mineral lessee of a sixteenth section to have the right of ingress and egress to the leased premises to explore for oil and gas and to develop the land for the production thereof, and the Court declared that the surface lessee would be entitled to compensation for the damage that may he sustained to his surface rights on account thereof.
It follows from what is said in the foregoing paragraph that a land or mineral owner is not deprived of any *690valuable property right in violation of due process of law because of the failure to produce oil or gas from his tract of land by a well thereon, when he is allowed to receive the equivalent thereof from a unit well on adjacent land in furtherance of the public policy of the State in the conservation of its natural resources. We recognize that in the absence of such laws enacted in the exercise of the police powers of the State, the appellee would have been entitled to the reversionary interest in his minerals after December 29, 1949, if no production of oil, gas or other mineral was had from a well on his mineral acres. But Chapter 305, Laws of 1936, made it the “duty of the Board to prorate and regulate the gas well production from each common source of supply . . ., for the protection of public and private interest, and to adjust the correlative rights and opportunities of each owner of gas in a common source of supply ...” These conservation laws and regulations are based upon the theory that an individual having a right under given circumstances may exercise even the higher right of giving up the asserted right in the interest of the public welfare. Such was the philosophy of the moratorium statutes under which holders of mortgages and deeds of trust, giving unto them the right to foreclose in the default of a payment of an indebtedness, were denied the right to do so upon compliance with certain requirements not provided for in the contract of security.
 An attribute of sovereignty, such as the police power of the state to conserve its natural resources, needs no constitutional sanction for its valid exercise; it is a power inherent in the existence of a government.
As to whether or not the reversionary interest in fee in and to the 15/50ths of the minerals under the 50-acre tract became vested in the appellee at the expiration of the 10-year primary term of the lease in question because of the failure of the lessee to produce oil, gas or other mineral from the tract prior to December 29, 1949, it *691should be observed that the theory of the conservation laws in the spacing of gas wells is that one gas well will efficiently drain a 320-acre unit. Moreover, it is alleged in the amended bill of complaint that the Dale well was in fact draining gas from the 50-acre tract prior to December 29, 1949, which is the equivalent of alleging that it was producing gas from said tract. The precise contention of the appellee, however, is that it was not producing gas under the lease thereon, hut we are of the opinion that when leases on various tracts of land are pooled in a unit, the gas from each separate tract is being produced by the unit well so far as the particular tract is concerned under and by virtue of the lease thereon, and that likewise the gas from each of the other tracts in the unit is being produced by such well under and by . virtue of the lease on each of such tracts, all of which have been pooled into a whole or unitized; and that therefore the gas, the value of which is sued for in this case, was being produced prior to the expiration of the primary term of the lease under and by virtue thereof.
While the appellee does not sue specifically for the benefits resulting from the unitization or pooling of the leases, and does not concede that he ratifies the same, he does sue for 15/320ths of the value of the gas upon the stated ground that to such extent he has been damaged in that the gas produced by the unit well in part has been drained from the 50-acre tract. It is unnecessary for us to hold that the bringing of the suit had the effect of ratifying the unitization or pooling of all of the mineral interests in the unit, or that we base our decision upon any theory of ratification, but we think that the facts alleged and proved do sustain the theory that the gas, -the value of which is sued for as damages to the complainant, was in fact drained or produced from the 50-acre tract through the unit well, and that all of the lands in the unit were placed in production under the theory and philosophy of the conservation laws, and also *692in reality, prior to the expiration of the primary term of the lease in question.
We are not unmindful of the holding of the numerous authorities cited by the appellee to the effect that the Court must give effect, to the terms of the lease as written, but for the many reasons hereinbefore stated we have reached the conclusion that there was no failure of production of gas from the 50-acre tract under and by virtue of the lease thereon prior to the expiration of the primary term thereof. None of the mineral owners whose interests are involved in the unit are entitled to any portion of the production of gas from the Dale well except upon the theory that it was producing gas from their several tracts of land under and by virtue of the oil and gas conservation laws. The extent of their participation in the production from the unit well is controlled by the terms of the leases on each respective tract which declare the extent to which they are entitled to participate in any production. Beyond question, it is true that Dale would be entitled to %th of all the production from the unit well unless his land has been pooled with the other tracts in the unit, since the State Oil & Gas Board has not recognized the unit except as embracing 320 acres. No factual basis is disclosed in the record that would have justified the granting of exceptions as to any particular tract in the unit since the same is composed of two quarter sections which make a perfect unit of 320 contiguous surface acres, and no complaint is made as to the size or shape of the unit as approved and established, or as to the location of the unit well thereon.
In the ease of Griffith, et al. v. Gulf Refining Company, supra, the appellants were mineral owners and had signed no pooling agreements. The Gulf Refining Company held a lease on 250 acres and obtained an allowable upon that acreage to drill and develop the same as a unit. Griffith and others were mineral owners *693under 90 acres thereof and the Gulf Refining Company-drilled its well on the remaining 160 acres and sought to deny to the appellants, Griffith and others, the right to participate in the production of the well on the 160 acres in which they held no mineral interest. The Court held that the appellants were entitled to participate in the production of the well on the basis that their mineral interest bears to the 250-acre drilling unit. It is true that the Court did not hold that this was the extent of the right of the appellants, Griffith and others, that being all they sued for, but the Court did recognize that all persons owning the mineral interests in an established drilling unit were entitled to participate in the production from the unit well, on the basis of their respective acreage. Such was the right of the appellee in the instant case, and the remaining question still is whether this was the full extent of his right or whether he is entitled to 8/8ths of 15/320ths or % thereof.
In the case of Hassie Hunt Trust, et al. v. Proctor, et al., 215 Miss. 84, 60 So. 2d 551, the appellant, Hassie Hunt Trust, drilled a producing oil well on the north 30 acres of a 40-acre tract on which 30 acres it held an unquestioned lease, whereas the appellees, Proctor and others, held a lease on the south 10 acres of the 40-acre tract. There was no pooling agreement, but the Court held that when the appellant drilled on the 30 acres and obtained an allowable on the 40 acres as a drilling unit it became liable to account to the appellees for %th of %ths of the production from the 40 acres, less ^th of the cost of drilling, equipping and operating the well and less !4th of the operator’s %ths of the severance taxes.
It is true that neither of these two cases involved the question of the right of a mineral owner to receive 8/8ths of the production after the expiration of the primary term of a lease, but the point is that the Court nevertheless allowed Griffith and others in one case, *694as mineral owners, and Proctor and others in the other case, as lessees, a part of the production upon the ground that the unit well was producing gas from their portion of the land in each instance, even though it was located on an adjacent tract; and that is the issue we have before us in determining whether or not there was production from the 50-acre tract in question while the same was under a lease.
- The Court cites the case of Placid Oil Company v. North Central Texas Oil Company, 19 So. 2d 616, from the Supreme Court of Louisiana, in the Griffith and Hassie Hunt Trust eases, supra. That case involved a dispute over the ownership of the %th royalty. Briefly the facts were that Parten owned the royalty in Tract A and the North Central Texas Oil Company owned the royalty in Tract B. Each tract was under lease to Hunt Oil Company and contained forty acres. The spacing rules provided for 80-acre drilling units consisting of two adjacent 40-acre tracts. The lessee applied for a permit to drill and filed a plat of the 80-acre drilling unit comprising both Tracts A and B. The permit was issued and the well was drilled on the tract owned by Parten. He claimed all of the royalty because the well was on his tract and there was no pooling order as to the royalty and no voluntary agreement. The Court held that the royalty owners in each tract were entitled to their share of the production from the unit well. The lessee had been ordered by the Commissioner of Conservation to combine the two 40-acre tracts and the Court held that the effect of the Hunt Oil Company obtaining the permit to drill and the order of the Board to combine the two tracts into a unit “was in fact a unitization of the two 40-acre tracts”, and the Court further said:
“The effect of the order was to substitute for the right of every owner of a mineral interest in a tract of land having an area less than 80 acres — to receive all of his proportionate share of any oil or gas that might *695be produced from the Bodcaw sand through a well drilled upon the land in which he owned the mineral interest —the right to receive only his proportionate share of any oil or gas produced from the Bodcaw sand through a well drilled upon an 80-acre drilling unit embracing the land in which he had his mineral interest.”
But especially in point is the case of Hardy v. Union Producing Company, (La.) 20 So. 2d 734, wherein the Court said: “Plaintiffs’ argument is not tenable because the defendants in reality have not failed to perform any obligation of their contract. There was no obligation resting upon the defendants to drill a well during the primary term of the lease in the circumstances of this case according to a reasonable interpretation of the contract. If the contract should be annulled, plaintiffs could not drill a well on their 47-acre tract of land because it forms a part of the 640-aere drilling unit on which a well drilled by the Southern Production Company, Inc., is producing gas in paying quantities. Plaintiffs, as the owners of the leased premises, are entitled to receive the same revenue as they would receive if the well located in the Northeast Quarter of the Northwest Quarter of Section 11 was located on their 47 acres in Fractional Section 10. In other words, if the well of the Southern Production Company, Inc., was located on plaintiffs’ 47-acre tract of land in Fractional Section 10, the production would be prorated among all the owners of the mineral rights in the drilling unit in the same proportion in which the production is now being distributed. . . .
“So in this case, the clause in the lease requiring defendants to drill a well on the'leased premises within the primary term of five years is not applicable where a well producing gas in paying quantities has been drilled on land within the drilling unit of which the leased land forms a part and where the lessee is prohibited by orders of the Department of Conservation from drilling a well on the leased premises. In other words, the right *696of defendants to drill a well on the 47-acre tract covered by the lease was in effect taken away from them by the orders of the Commissioner of Conservation, with, however, the right reserved to them, as well as to the plaintiffs, to share in the production of the gas produced from the unit in proportion to their ownership. Defendants’ hands were literally tied as the result of the orders issued by the Commissioner of Conservation and they could do nothing whatsoever to prevent the primary term of the lease from expiring without drilling a well thereon. ’ ’
We think that whether a drilling unit has been established under constitutional provision or under valid statute's of the Legislature and the orders, rules and regulations enacted and adopted pursuant to the constitutional police power of the State, the effect of the unitization or pooling of leases should be the same. Moreover,  it is the duty of the Court to give our conservation statutes, and the measures adopted thereunder by a state agency created by the Legislature to carry out the public policy of the State, such a construction as would reasonably render the same constitutional and vqlid. The Court sustained their constitutionality on the former appeals involving this and other gas drilling units in the Gwinville Gas Field. Unless requiring oil and gas lessees to pool their several leases in a given area and to develop the area as a unit with only one producing well thereon has the effect of unitizing or pooling the respective interests of the mineral owners in the area, then the requirement for the pooling of the leases cannot be upheld as constitutional'unless such action has the effect of placing all of the lands in the unit in production and extending the primary terms of the leases. Otherwise, only the lessee on the tract on which the producing well is drilled could receive any benefit from the leases in the unit.
In the instant case, the appellant, Superior Oil Company, expressly concedes in the concluding paragraph of *697its original brief that a judgment should be entered here in favor of the appellee, Roy Beery, for y8th of 15/320ths of the market value of the gas produced from the Dale well from the date of first commercial production on February 1, 1947, to November 30, 1950, less severance taxes paid thereon, and we must therefore assume that the appellant would further concede that the appellee is entitled to the same relief from and after November 30, 1950, as to the gas being produced from the Dale well. But compare Wood Oil Company, et al. v. Corporation Commission, et al. (Okla.) 239 P. 2d 1023.
The appellant contends that it has been willing at all times to settle with the appellee according to its above concession, but it madé no tender of this portion of the gas except on condition that the appellee would sign an amendment to the original lease, and this portion of the gas was not unconditionally tendered unto the appellee in the pleadings. We are of the opinion that the defendant, Superior Oil Company, could not have relieved itself of the cost in the trial court proceedings without having made an unqualified tender of the amount to which it now concedes the complainant was entitled to receive.
From the foregoing views, it follows that the decree of the trial court in cancelling the appellant’s claim under its lease and awarding the complainant 8/8ths of 15/320ths of the gas produced from the Dale well from and after the same came into commercial production was error, and that the cause should be reversed and remanded in order that it be ascertained what sum of money the complainant is entitled to receive on the basis of yyh of 15/320ths of the gas from and after commercial production on February 1, 1947, by the unit well.
But it is strongly urged on behalf of the appellee that to thus limit the portion of gas that he is entitled to receive from the date the unit well came into commercial production, and throughout the period that the same may remain in production, is to hold that the State Oil *698& Gas Board had the power and authority prior to the enactment of Chapter 256, Laws of 1948, to force him to pool his mineral interest with other such interests in the established unit, and that there is no provision in the prior statutes whereby such power and authority is expressly conferred upon the Board. In response to this contention, it may be said that it is likewise true that neither the Acts of 1932 nor 1936 expressly authorized the establishment of gas drilling units as large in area as 320 acres or that the oil and gas lessees in such an area could be required to pool their leases and develop the area through production from only one well.  Nevertheless, we upheld the right of the Board to exercise such authority as a necessary incident to the prevention of the waste of gas and to protect the common source of supply thereof under the 1932 Act, and to prorate and regulate the gas well production from each common source of supply for the protection of public and private interests, and to adjust the correlative rights and opportunities of each owner of gas in a common source of supply under the Act of 1936, when we decided the cases of Green, et al. v. Superior Oil Co., ...... Miss......., 59 So. 2d 100; Superior Oil Company v. Beery, ...... Miss......., 59 So. 2d 689; Superior Oil Company v. Foote,......Miss. ......, 59 So. 2d 85; Superior Oil Company v. Morgan, et al., ...... Miss......., 59 So. 2d 105; Superior Oil Company v. Foote,......Miss......., 59 So. 2d 844, and Hutchins, et al. v. Humble Oil & Refining Company, ......Miss......., 59 So. 2d 103.
In the Green case, supra, we said: “In California Company v. State Oil & Gas Board, 1946, 200 Miss. 824, 27 So. 2d 542, 28 So. 2d 120, this Court held that the 1932 and 1936 statutes had the effect of vesting in the Board the power to prescribe rules for the spacing of oil and gas wells, and to regulate the drilling for and production of oil and gas. We also think that the same statutes by necessary implication authorized the Board to estab*699lish drilling units. This interpretation is supported by the California Company ease, where the court implied the power to provide for the spacing of wells. See also Cities Service Gas Company v. Peerless Oil & Gas Company, 1950, 203 Okla. 35, 220 P. 2d 279, affirmed in 340 U. S. 179, 71 S. Ct. 215, 95 L. Ed. 190; . . .” And what we are now holding is that the effect of the establishment of a drilling unit of a given area and the prevention of the drilling of more than one well thereon is to necessarily pool the rights of the oil and gas lessees and all of the mineral rights in such area, because any other result would mean that only the oil and gas lessee that drilled the unit well could receive any portion of the ysths of the gas produced therefrom, and only the owners of the minerals under the particular tract on which the well is drilled could receive any portion of the royalties from production, since it is only upon the theory that all other interests of the oil and gas lessees and of all other royalty interests have been pooled with the Dale tract that they can participate in the production from the Dale well.
However, it is further urged that the oil and gas lessees could pay the royalty owners enough to get them to voluntarily agree to the pooling of their mineral interests. But this contention overlooks the fact that the operation of a unit well for production of gas in a given area would be left to the will and pleasure of the mineral owners, some of whom may not be willing to agree to anything at any price. We think that when the Court, in the cases above enumerated, upheld the orders of August 11, 1947, and September 11, 1947, the last of which orders defined an ‘ ‘ owner ’ ’ who could be required to pool, as “The person who has the right to drill into and to produce from a field or pool, and to appropriate the production either for himself, or for himself and another,” it then followed that we must go further and hold that  requiring the oil and gas lessees to pool *700their leases in an established unit has the effect of extending the primary term of snch leases, (a question that we pretermitted in those cases), since we are confronted with the fact that a well can be drilled only on one tract covered by a lease in the unit; that the pooling of the leases also has the effect of pooling the mineral interests of the royalty owners, for the reason that in no other way can the constitutional rights of the other oil and gas lessees in the unit be protected. As hereinbefore stated,  no valuable right will be thereby taken from the mineral owner since there is substituted for his right to have a well drilled on the tract under which he owns his minerals the right to receive the same portion of gas from the unit well that he would have been entitled to receive if a well had been drilled on his acreage, or on the tract in which he owns an undivided mineral interest, during the primary term of the lease; and it appears that Chapter 256, Laws of 1948, as amended by Chapter 220, Laws of 1950, merely spelled out how and by what procedure the several interests in an established drilling unit could be unitized, pooled or integrated from and after the enactment of these two later statutes, and which statutes do not affect the instant case.
Moreover, under these two later statutes if the owners of two or more separately owned tracts cannot agree, then the right is given to the State Oil & Gras Board to “integrate” the several interests, and in such event there is no defense available to the objector if the unit has been legally established and one of the owners of a separately owned tract in the unit is unwilling to agree to his mineral interest being unitized, pooled or integrated with the others.
Under the conservation laws hereinbefore discussed, an oil and gas lessee in a proposed drilling unit may obtain an exception to the general spacing rule where the granting of such an exception would prevent waste or the confiscation of the property of the applicant, but in *701the instant case neither of the oil and gas lessees requested that an exception be granted, and it does not appear from the record that an exception would have been justified on the grounds above stated. 'We do not think that it was contemplated that the owner of an undivided mineral interest in one of the several tracts involved in a unit would be entitled to have an exception granted and a well drilled on the tract for the benefit of his undivided interest where his co-tenants in the tract are exercising their right to receive a portion of the production from the unit well. Again we say that the appellee cannot claim a portion of the value of the total production from the 50-acre tract without according to Dale the right to receive a portion of the gas drained from the 50-acre tract. This cannot be if the appellee receives 8/8ths of the gas produced from his mineral interest therein.
Moreover, we rejected the contention (by a failure to respond thereto on Suggestion of Error) in the case of Hassie Hunt Trust, et al. v. Proctor, et al., supra, that Proctor and others could have petitioned for an exception as to the 10 acres on which they held a lease in a 40-acre oil • drilling unit there involved, there being no reason for the granting of such an exception. Nor did we hold in the case of Griffith, et al. v. Gulf Refining Co., et al., supra, wherein the appellants were mineral owners, that an exception should have been obtained for a well on the 90-acre tract which was a part of the 250-acre unit on which the permit for a well had been issued to drill as a unit.
This opinion has been prolonged to great length, both because of the importance of the questions involved and the necessity for studying nearly seven hundred pages of briefs and a voluminous record in this and the companion case with the view of obtaining the benefit of the thought and research given to each case by all of the several firms of attorneys interested. Naturally, it has *702been impossible to discuss herein more than a few of the cases relied on in the briefs, but we have undertaken to discuss the controlling issues in the light of all the cases deemed to be of most value and in the light of the views of the participating judges as expressed in conference.
Reversed and remanded.
Roberds, Kyle, Holmes, Arrington, Ethridge and Lotterhos, JJ., concur. Lee, J., dissents. - Hall, J., who considered himself disqualified, took no part.