Gunn v. Stagg

197 So. 2d 125, 27 Oil & Gas Rep. 151, 1967 La. App. LEXIS 5654
CourtLouisiana Court of Appeal
DecidedMarch 21, 1967
DocketNo. 1962
StatusPublished

This text of 197 So. 2d 125 (Gunn v. Stagg) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gunn v. Stagg, 197 So. 2d 125, 27 Oil & Gas Rep. 151, 1967 La. App. LEXIS 5654 (La. Ct. App. 1967).

Opinion

SAVOY, Judge.

Plaintiff filed suit against defendant for specific performance pursuant to a written agreement between the parties [126]*126dated November 6, 1964, praying- to be decreed the owner of an undivided one-half interest in an oil, gas and mineral lease affecting certain property in Acadia Parish, Louisiana, and described in his petition.

Defendant filed an answer denying the material allegations of plaintiff’s petition, stating further that plaintiff had breached the contract of November 6, 1964. Then, assuming the position of plaintiff-in-re-convention, defendant stated that plaintiff (defendant-in-reconvention) had filed a lien against the property in dispute in the •sum of $3,387.58, together with legal interest, attorney’s fees and costs of recording; said lien purportedly representing ■expenses paid by plaintiff for the account ■of defendant on wells on the said property. Plaintiff (defendant-in-reconvention) filed •an answer to the reconventional demand, ■stating that the aforesaid lien was true :and correct, and prayed that the recon-■ventional demand be dismissed.

The contract of November 6, 1964, de-belares that defendant is the owner of two wells located on certain property which defendant has under lease from the owners. The wells were designated as C. M. Click and August Leonards No. 1, and C. J. 'Click and August Leonards No. 2-A with ten acres designated as units around each of said wells. The agreement states that plaintiff has re-worked both wells mentioned above and installed in said wells certain equipment which has been paid for, except a compressor unit with the necessary attachments.

Under the contract plaintiff obliged himself to commence drilling operations of another well on the leased premises on or before December 1, 1964, at a site selected by him, and to drill said well to a depth of 4,550 feet unless oil, gas or other minerals were discovered in paying quantities .at a lesser depth.

The controversial portion of the contract is contained in the following paragraphs of the agreement and read as follows :

“Second Party is to commence drilling operations upon another well at a location to be selected by him upon the leased premises on or before December 1st, 1964, and to pursue the drilling of said well with due and reasonable diligence to a depth of 4,550 feet unless oil, gas, or other minerals are found in paying quantities at a lesser depth.
“Before Second Party shall be required to commence drilling operations, First Party must exhibit to Second Party an oil, gas, and mineral lease owned by First Party covering, affecting, and relating to the above described land which is in full force and effect.
“Second Party is to pay all drilling and operating costs to the time that drilling operations are commenced on the first well, thereafter, First and Second Party are to share operating expenses equally.
“If Second Party should elect not to abandon the first well drilled hereunder, then Second Party shall on or before 60 days after the expiration of the primary term of the lease under which said well is drilled commence actual drilling operations for a second well upon the leased premises at a location to be selected by him and shall pursue the drilling of said well with due and reasonable diligence to a depth of 4,550 feet unless oil, gas, and other minerals are found in paying quantities at a lesser depth.
“When Second Party has drilled, completed, and/or abandoned the two wells provided for herein, at his own and sole cost and expense, then First Party shall assign to Second Party an undivided one-half interest in and to the lease or leases owned by First Party, as well as all wells, casing, tubing, tank batteries, or other equipment and improvements located upon said wells SAVE AND EXCEPT the compressor unit which is now installed upon said wells, which [127]*127is under a lease purchase agreement. When this unit shall have been paid for, it shall belong to the two parties in the proportion that they own the leases and wells.
“Before Second Party may abandon any well drilled hereunder, he must give First Party notice in writing of his election to do so, and First Party shall have five (5) days dated from such notice within which to elect to take the said well over and if he so elects, the well shall thereafter belong to First Party in full ownership with no further obligation toward said well on the part of Second Party.
“Should Second Party fail and neglect and refuse to drill the two wells as provided for herein, subject to the other provisions of this agreement, then, the lease, wells and all equipment, supplies, etc., shall irrevocably belong to First Party, except that Second Party does not own the compressor unit and First Party shall acquire only the interest therein held and owned by Second Party-
“The production from all wells already drilled or to be drilled upon the lease or leases now standing in the name of First Party shall belong to First and Second Party equally, commencing as of August 1st, 1964, and same shall continue in such fashion so long as this agreement is in force.
“Upon the completion of the wells by Second Party, First and Second Party shall execute another instrument acknowledging this condition or accomplishment and providing for a working agreement whereby Second Party is nominated as the operator. This shall be in the form generally employed in the Gulf Coast and shall provide for the Mid-Continent form of method of accounting.”

The record reveals that plaintiff drilled the first well, designated as A-3 Leonard, to a depth of 4,550 feet and abandoned it as a dry hole. This was done with the consent of the defendant.

On February 5, 1965, defendant wrote plaintiff a letter stating that in the absence of drilling operations, the primary term of the lease which he had with the landowners was to terminate on March 2, 1965, and that if plaintiff did not commence to drill a well by February 15, 1965, he would consider the lease terminated.

On February 9, 1965, plaintiff wrote defendant and stated that while he was willing to drill a second well, from the geological reports he had received, he was of the opinion that the second well would, if drilled, be a dry hole. Fie offered defendant $3,-000.00 if he did not have to drill the second well and released defendant from any interest in the lease except for the two reworked wells, Click and Leonard 1 and 1-A.

On February 16, 1965, plaintiff wrote defendant that he would commence drilling operations on well No. 2 on or before March 1, 1965. He commenced drilling operations on February 26, 1965. The well, A-4 Leonard, was drilled to the required depth of 4,550 feet without a show of oil, gas or other minerals in paying quantities.

Plaintiff gave proper notice prior to his-proposed abandoning of A-3 and A-4 Leonard well to defendant of his right to takeover the wells as per this agreement.

Defendant did not exercise this option as-to either well.

On March 23, 1965, attorney for plaintiff sent to defendant an act of assignment. On May 5, 1965, counsel for plaintiff wrote-defendant that unless he executed and returned the assignment within the next days, suit would follow.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Marcann Outdoor, Inc. v. Hargrove
140 So. 2d 815 (Louisiana Court of Appeal, 1962)

Cite This Page — Counsel Stack

Bluebook (online)
197 So. 2d 125, 27 Oil & Gas Rep. 151, 1967 La. App. LEXIS 5654, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gunn-v-stagg-lactapp-1967.