Eota Realty Co. v. Carter Oil Co.

74 So. 2d 30, 225 La. 790, 3 Oil & Gas Rep. 1876, 1954 La. LEXIS 1264
CourtSupreme Court of Louisiana
DecidedMay 31, 1954
Docket41437
StatusPublished
Cited by23 cases

This text of 74 So. 2d 30 (Eota Realty Co. v. Carter Oil Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eota Realty Co. v. Carter Oil Co., 74 So. 2d 30, 225 La. 790, 3 Oil & Gas Rep. 1876, 1954 La. LEXIS 1264 (La. 1954).

Opinion

MOISE, Justice.

The pleadings disclose that this is a suit brought by the Eota Realty Company, Inc., as owners of a certain tract of land in Rapides Parish, which seeks the cancellation of an oil, gas and mineral lease, dated September 19, 1940, which allegedly is past its primary term and which lease is claimed by defendants, Carter Oil Company and Phillips Petroleum Company. There was judgment in the district court cancelling the lease. Defendants have appealed.

The stipulation of fact discloses that on September 19, 1940, the Eota Realty Company, Inc. entered into an oil, gas and mineral lease with K. Hughes. This lease covered approximately 6,526 acres, but the controversy, as shown by the pleadings, relates to two non-contiguous tracts of land, *793 ■one containing 1,500 acres and the other 200 acres. '

H. M. Marr and Union Producing Company are the present assignees of the lease covering the 200 acre tract of land on which there is a producing well. Carter Oil Company and Phillips Petroleum Company are the owners of the lease covering the 1,500 acre tract, and for a period of ten years, production has not been secured. The Eota Realty Company, Inc. prevailed in the district court in having the 1,500-acre lease ■cancelled. From the stipulated facts of record, we obtain the information that the 200-acre tract and the 1,500-acre tract are the controversial issues in the suit.

The pertinent provisions of the lease are sections four and seven. Section four .reads in part:

“* * * Lessee, or any assignee hereunder, may at any time execute and deliver to lessor, or to the depository above named, or place of record, .a release or releases covering any portion or portions of the premises held by him, and thereby surrender this lease as to such portion or portions, and thereafter the rentals payable by him shall be reduced proportionately.”

.Section seven reads:

“In case of cancellation or termination of this lease from any cause, lessee shall have the right to retain, under the terms hereof, around each well producing, being worked on, or drilling hereunder one hundred sixty (160) acres around each such well in as near a square form as practicable, and in the event lessor considers that operations are not being conducted in compliance with this contract, lessee shall be notified in writing of the facts relied upon as constituting a breach hereof and lessee shall have sixty (60) days after receipt of such notice to comply with the obligations imposed by virtue of this instrument.”

These two above provisions are a part of the agreement and should be persuasive when applying the law to the facts of the case.

On January 24, 1951, attorneys for the Eota Realty Company, Inc. wrote to the Carter Oil Company and Phillips Petroleum Company a letter containing the following paragraphs:

“Eota Realty Company has instructed us to demand that you commence the drilling of a well in search of oil or gas on some part of the lands above described within thirty (30) days from this date, and thereafter to continue with the drilling of such well to the depth from which oil is produced in the Big Island Field, Rapides Parish, Louisiana, and thereafter, not with more than thirty (30) days elapsing between the completion or abandonment of one well and the commencement of operations for the drilling of another well, to continue with the development of *795 the lands upon which you claim the above referred lease until such lands which have been reasonably and adequately developed for the production of oil and gas.
'“Failing compliance by you with demand of Eota Realty Company for further development as above set forth, we are instructed and authorized by our client to institute suit for the cancellation of the lease claimed by you.”

On February 14, 1951, Carter Oil Company informed attorneys for the Eota Realty Company that:

“With all of the information which we have been able to assemble up to this time, it is our belief that a reasonably prudent operator would not now drill any additional wells on the acreage in question.”

Phillips Petroleum Company replied on February 23, 1951 requesting an additional period of thirty days for the commencement of actual drilling operations. Carter Oil Company likewise replied and stated that it did not believe that a well drilled on any portion of the leased land would result in paying production. On March 1, 1951, attorneys for Eota Realty Company again addressed the defendants by mail and stated:

“* * * we wish to advise that the time within which you are demanded by The Eota Realty Company to commence the drilling of a well on some part of the lands described in our letter is extended from thirty (30) days to sixty (60) days from January 26, 1951, which is the date upon which you received our letter of January 24.”

From the extension of the time granted in this letter, we believe that it is possible that plaintiff read Section 7 of the lease ■contract and thereupon extended the time limit thirty (30) additional days in order to make a full term of sixty days as provided in the lease.

On March 28, 1951, attorneys for Eota Realty Company refused a further extension of time and stated in a letter to Phillips Petroleum Company:

“* * * We, therefore, advise that in view of the fact that you have failed to comply with our demand for development, request is hereby made that you furnish to The Eota Realty Company, within ten (10) days a duly executed and recordable release of the oil and gas lease referred to in our letter of January 24, 1951 insofar as it covers the lands described in our said letter.”

This letter conformed with the provisions of LSA-Revised Statutes 30:102 which we shall discuss later.

On April 7, 1951, Eota Realty Company wrote Carter Oil Company and Phillips. Petroleum Company refusing to withdraw its demand for a release of the oil and gas lease, and suit for cancellation, was filed on April 9, 1951.

*797 Exceptions of improper cumulation of demands were sustained by the trial court. Plaintiff amended. Exceptions of no cause or right of action were overruled. The plea of estoppel was evidently referred to the merits.

Appellants contend that the district court erred in ordering the cancellation of the oil, gas and mineral lease as to only a part of the land covered and leaving the same in force as to another part of it.

The case of Le Blanc v. Danciger Oil & Refining Co., 218 La. 463, 49 So.2d 855, 857, relied on by defendants, involved a lease for a primary term of three years. Part of the leased land was assigned by the Commissioner of Conservation to form part of a forty-acre drilling unit. Plaintiff sued to have his lease cancelled insofar as it affected the land outside of the drilling unit. The following pronouncement of the decision shows the law ■of the case:

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Bluebook (online)
74 So. 2d 30, 225 La. 790, 3 Oil & Gas Rep. 1876, 1954 La. LEXIS 1264, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eota-realty-co-v-carter-oil-co-la-1954.