J & L Oil Co. v. KM Oil Co.

247 So. 3d 147
CourtLouisiana Court of Appeal
DecidedFebruary 28, 2018
DocketNo. 51,898–CA
StatusPublished
Cited by7 cases

This text of 247 So. 3d 147 (J & L Oil Co. v. KM Oil 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
J & L Oil Co. v. KM Oil Co., 247 So. 3d 147 (La. Ct. App. 2018).

Opinion

COX, J.

*148J & L Oil Company filed suit against defendants, KM Oil Company, LLC, Haymary, Inc., Big M Oil Company, and Feist Properties, LLC (collectively referred to as "Defendants") for impinging upon J & L's oil, gas, and mineral lease (hereinafter referred to as "OGML"). Both J & L and Defendants filed motions for summary judgment. In a written ruling, the district court denied J & L's motion for summary judgment and granted Defendants' motion for summary judgment. J & L appeals the granting of Defendants' motion for summary judgment. For the following reasons, we affirm.

FACTS

This suit arises out of the production of oil from a tract of land (hereinafter referred to as the "Feist Land") located in Section 25, Township 21 North, Range 15 West, Caddo Parish, LA, comprising 55 acres, more or less, more particularly described as follows:

The South Half of the Northwest Quarter (S/2 of NW/4), less the West 825 Feet thereof, Section Twenty-Five (25), Township Twenty-One (21) North, Range Fifteen (15) West, Caddo Parish, Louisiana.

The following instruments establish the parties' interests in the Feist Land:

*149A. OGML (hereinafter referred to as the "1951 Lease") Eunice W. Feist, et al (Lessors) Executed 11/19/1951 Imperial Agency Corp. (Lessees) Recorded 1/28/1952 "[T]his lease ... shall give the Lessors no rights to strata lying below Twenty-Five Hundred (2500) Feet mean Gulf level, all rights below that level are being retained by Lessor[.]" B. Assignment of OGML Imperial Production Co. (Assignor) Effective 1/1/19661 Miriam Ann Trahan (Assignee) Recorded 1/3/1966 Document shows an assignment of interest in the 1951 Lease. C. Assignment of OGML Miriam Ann Trahan, et al2 (Assignor) Executed 6/7/1999 Jimmy Courtney, et al3 (Assignees) Recorded 7/20/1999 Document shows an assignment of interest in the 1951 Lease. D. OGML4 Feist Properties, LLC (Lessor) Executed 5/27/2008 KM Oil Company, LLC (Lessee) Recorded 5/28/2008 "[T]his lease covers the right to explore and produce ... minerals only from the interval located between a depth of 2,500 feet below the surface of the earth and a depth of 3,500 feet below the surface of the earth, called the "Leased Interval[.]" E. Assignment of OGML KM Oil Company, LLC (Assignor) Executed 5/28/2008 Haymary, Inc. (Assignee) Recorded 5/28/2008 Document shows an assignment of 2/3 interest in the 2008 OGML. F. Extension OGML Feist Properties, LLC (Lessor) Executed 5/25/2009 KM Oil Company, LLC (Lessee) Recorded 6/5/2009 Document extends the term of the 2008 lease and amends the allowable depths. "[I]t is agreed that the Leased Interval shall be amended from 2,500-3,500 feet to 2,000-3,500 below the surface of the earth." * * *

[Editor's Note: The preceding image contains the references for footnotes1 ,2 ,3 ,4 *150].

This suit is dependent upon the wording of Article 6 in the 1951 Lease,5 which provides, in pertinent part:

The consideration of this lease is the unconditional obligation of Lessee to commence the actual drilling of a well on some portion of the leased premises on or before January 1, 1952... to a total depth of at least 1700 feet[.] Failure to comply strictly with this obligation shall ipso facto terminate this lease[.]
Thereafter this lease may be kept in full force and effect only by continuous drilling, by which is meant the beginning of a second well within Thirty (30) days after completion or abandonment of the first well, and beginning of a third like well within Thirty (30) days after the completion or abandonment of the second well, and beginning of a fourth like well within Thirty (30) days after completion or abandonment of the third well, and the beginning of a fifth like well within Thirty (30) days after the completion or abandonment of the fourth well-so that lessee shall drill and complete diligently five (5) wells within the time limits fixed herein.
[I]t being agreed and understood that the failure to drill any successive well (after the first well is completed or abandoned) within the prescribed time for the commencement of that successive well under the continuous drilling schedule set forth in the preceding paragraph shall ipso facto terminate, cancel and forfeit this lease, and Lessee shall have no right to resume drilling, and all its rights in this lease shall cease; provided, however, that if five (5) wells are timely drilled within the allotted time for each well, and all are completed as commercial producers, then all of the land leased shall be bound by this lease as long as all of the five (5) wells remain producers in paying quantities. But if less than five (5) wells are timely drilled, or five (5) wells are timely drilled and one or more cease to produce in paying quantities, then in either event any such well completed and remaining a producer in paying quantities is to hold only five (5) acres in a square with the well in the center thereof so long as said well produces in paying quantities. Any well which fails to produce in paying quantities shall not have the effect of holding any portion of this lease in force as to any of the acreage described.

J & L, KM, and Haymary each assert the ability to produce oil between the depths of 2,000-2,500 feet on the Feist Land.

Five wells were drilled by Imperial on the Feist Land within the time limits stipulated in the 1951 lease. According to Exhibit F submitted by Defendants, J & L drilled a total of 11 wells from 1/16/1952 through 7/15/1967. The same exhibit states that on the Feist Land in 2015, J & L

*151allegedly produced three barrels of oil for the months of February and March, one barrel for the month of April, and three barrels for the month of May. However, as per Defendants' Exhibit F, there has not been a disposition of oil since January of 2015, when 77 barrels of oil were sold. The exhibit does not state which party or company sold the oil.

Defendants' Exhibit F further stated the following information was found in Lease Facility Inspection Reports at the Louisiana Office of Conservation:

1. The Feist No. 006 well had a report dated June 26, 2015. The well sign was mis-located and the Well No. 5 sign was on the Well No. 6. There was also a reported oil spill by the landowner, and a minor spill was observed from a flow line leak of approximately 2.5 barrels of oil. The operator has restored the surface.
2. There is another Lease Facility Inspection Report covering the Feist No. 004 well dated 8/26/2014. This well seems to be P&A as there was no well at the well site location.
3. Lease Facility Inspection Report No. 45177 dated July 30, 2014, concerns the Feist 003 Well. This well shows to be producing as a status 10, but it is not producing.

KM & Haymary drilled two wells to depths near 3,000 feet under the 2008 Lease. There was no mineral production from either well.

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

Related

Cite This Page — Counsel Stack

Bluebook (online)
247 So. 3d 147, Counsel Stack Legal Research, https://law.counselstack.com/opinion/j-l-oil-co-v-km-oil-co-lactapp-2018.