Harry Bourg Corp. v. Union Producing Co.

197 So. 2d 172
CourtLouisiana Court of Appeal
DecidedJune 6, 1967
Docket6966
StatusPublished
Cited by9 cases

This text of 197 So. 2d 172 (Harry Bourg Corp. v. Union Producing Co.) 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
Harry Bourg Corp. v. Union Producing Co., 197 So. 2d 172 (La. Ct. App. 1967).

Opinion

197 So.2d 172 (1967)

HARRY BOURG CORPORATION, Plaintiff-Appellant,
v.
UNION PRODUCING COMPANY et al. Defendants-Appellees.

No. 6966.

Court of Appeal of Louisiana, First Circuit.

March 13, 1967.
Rehearing Denied April 17, 1967.
Writ Refused June 6, 1967.

Blake G. Arata, of Doyle, Smith & Doyle, New Orleans, H. Minor Pipes, Houma, for appellant.

John T. Guyton, of Hargrove, Guyton, Van Hook & Ramey, Shreveport, Milling, Saal, Saunders, Benson & Woodward, New Orleans, Ellender, Wright & Wurzlow, Houma, for appellees.

Before LANDRY, ELLIS and BAILES, JJ.

BAILES, Judge.

Plaintiff instituted this action to cancel a certain oil, gas and mineral lease of which the defendants, Union Producing Company and Texas Gulf Producing Company, are the lessees. Plaintiff is the owner of the lands covered by this lease. Following trial on the merits, judgment was rendered in favor of defendants. Plaintiff has appealed suspensively and devolutively from this adverse judgment.

In order to more fully understand the situation and circumstances in which the parties hereto were involved at the time the stage was set for this litigation, a brief review of prior events seems desirable.

As the result of certain unspecified differences and disputes between plaintiff's ancestor in title, Harry Bourg, and the two defendants herein, the said Harry Bourg instituted suit against the defendants to *173 cancel the oil, gas and mineral lease owned by defendants. This suit was filed in Terrebonne Parish, however, it was later removed to the federal court. Subsequent to the institution of the litigation by Harry Bourg, in fact, on October 27, 1958, the parties thereto mutually agreed upon a full and complete settlement of their controversy. They entered into a compromise agreement one paragraph of which has given rise to the present suit.

The part of this compromise agreement that is pertinent to this litigation is paragraph numbered 3, which provides:

"3. In lieu of any other obligation which Union or Texas Gulf may owe to Harry Bourg or Harry Bourg Corporation to further develop the premises covered by said Bech Lease, Union and Texas Gulf shall, within six (6) months from the date hereof, commence operations for the drilling of an additional well at a location to be selected by them either upon said Bourg Lands or upon the following described property (hereinafter called `Buckley-Bourg Lands') situated in Terrebonne Parish, Louisiana, to-wit:
Township 19 South, Range 17 East: Section 77, SE¼ of NW¼ N½ of SW¼; and SW¼ of SW ¼; Township 20 South, Range 16 East: Section 1, All; Township 20 South, Range 17 East: Section 6, W½ of W½; and NE ¼ of NW¼;
and, upon completion or abandonment of said well, shall continue to conduct additional drilling operations on said Bourg Lands or said Buckley-Bourg Lands, or on lands pooled therewith, with not more than six (6) months elapsing between the completion of one well (in case such well were a commercial producer), or not more than one (1) year from the abandonment of one well (in case such well were a dry hole), and the commencement of operations for the drilling or reworking of the same or another well upon said lands, or on lands pooled therewith; provided, however, that Union and Texas Gulf may, in lieu of drilling any one of such wells, execute and record a release of all of their rights, titles, and interest in and to one hundred sixty (160) acres of said lands, which release shall be treated for all purposes of this paragraph as if a commercial producer had been drilled and completed as of the date operations for the drilling of such well were to have been commenced hereunder. All such wells shall be drilled with due diligence, in a workmanlike manner, and in a bona fide effort to discover oil, gas or other mineral, and shall be drilled to a depth at which it could reasonably be expected to encounter oil, gas or other minerals in paying quantities, or to such lesser depth at which heaving shale, fomal formation, excessive salt water flow, or other formation or condition which makes further drilling impracticable according to approved operating practices, should be encountered."

The obligation contracted by the defendants in this compromise agreement, as shown in paragraph 3 supra, was, within six months of October 27, 1958, to commence the drilling of an additional well at a site to be selected by defendants on the described lands. If this well was a commercial producer, another well was to be drilled within six months of the completion date of the first well, and successively within like periods of time wells were to be drilled; however, if any of the wells proved to be dry holes, then instead of within a six month period, the defendants were obligated to commence the drilling of another well within a one-year period. In lieu of drilling such wells within such prescribed periods of time, whichever period proved applicable, the defendants could elect to release from the operation of its oil, gas and mineral lease 160 acres of land. Such release would be considered equivalent to *174 drilling and completing a commercial producer.

The defendants began performance under the terms and conditions of this agreement by drilling a well known as No. 6 Bourg Well, and it was completed as a producer on July 14, 1959. The next drilling commenced on January 13, 1960, and this well was known as No. 1 Bourg Well, and was completed as a producer on April 23, 1960. The defendants continued to meet the time schedule with the last well completed on September 8, 1962. This well was completed as a producer, which meant that, according to the time schedule, the next date for the performance under the agreement must commence by March 8, 1963.

The evidence shows that instead of the defendants drilling another well by March 8, 1963, they moved the necessary equipment on to the location of No. 1 Bourg Well and performed certain work, thereon which, according to their position was a reworking of the well to cause it to produce gas from the 14,550 feet, after the original production from sand at 14,800 feet ceased. Production from this well commenced after the defendants placed a cement plug above the Bourg Sand Zone at the 14,800 level and moved up in the hole and performed the necessary perforations at the 14,500 foot sand

It is the plaintiff's position in this litigation that under the provisions of the compromise agreement above quoted, and the above recited facts that on or prior to March 8, 1963, the defendants had the option to either commence the required "additional drilling operation" or to execute and record the partial release of acreage in the manner provided in order to maintain the lease in effect as to nonproducing acreage.

The defendants' contention is simply this: That they had the option of either drilling another well or of reworking an existing well. This position is based on that portion of the agreement which provides: "* * * and the commencement of operations for the drilling or reworking of the same or another well upon said lands, * * *."

What we have before us for decision is whether the reworking operation conducted by the defendants on the No. 1 Bourg well shall be deemed compliance with the conditions and stipulations of the compromise agreement. From our consideration of the agreement, the question to be decided can be narrowed to a determination of whether the work performed by the defendants was a "reworking" of the well.

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Cite This Page — Counsel Stack

Bluebook (online)
197 So. 2d 172, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harry-bourg-corp-v-union-producing-co-lactapp-1967.