Odom v. Union Producing Company

141 So. 2d 649, 243 La. 48, 16 Oil & Gas Rep. 716, 1962 La. LEXIS 514
CourtSupreme Court of Louisiana
DecidedApril 30, 1962
Docket45651
StatusPublished
Cited by30 cases

This text of 141 So. 2d 649 (Odom v. Union Producing Company) 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
Odom v. Union Producing Company, 141 So. 2d 649, 243 La. 48, 16 Oil & Gas Rep. 716, 1962 La. LEXIS 514 (La. 1962).

Opinions

HAMLIN, Justice.

This action was brought for the cancellation of an oil, gas, and mineral lease covering certain described lands in Sections Thirty-Two and Thirty-Three, Township Twenty-Three North, Range Six West, Claiborne Parish. From a judgment of the trial court rejecting their demands at their costs, plaintiffs appealed to the Court of Appeal, Second Circuit; they acquiesced in that part of the judgment of the trial court affecting Section Thirty-Three, but [51]*51they pursued their appeal with respect to Section Thirty-Two. The Court of Appeal ordered the cancellation of the lease, insofar as it bore upon Section Thirty-Two. In the exercise of our supervisory control (Art. VII, Sec. 11, La.Const.l921-LSA), we directed certiorari to said Court of Ap-i peal for review of its judgment.

The following plat, copied from the Appendix of relator’s brief, shows the sections involved in this litigation and the wells; thereon.

The facts of record are ably recited by the Court of Appeal in its opinion (129 So.2d 530), and only those necessary for our decision will be reiterated.

On March 10, 1947, plaintiff J. Holbert Odom (he died after filing the present action, and his heirs were substituted as parties plaintiff) and A. B. Greer (Odoni later acquired Greer’s interest in the land),, lessors, and Union Producing Company,, lessee, executed an oil, gas, and mineral' lease (La. 14 A Rev. with Pooling Provision 1M 4-46, prepared by Union Producing Company for its use in this area and furnished by said company), covering approximately one hundred and thirty-eight (138) [53]*53-acres in Claiborne Parish, for a- primary-term of ten years from May 26, 19471 and • as long thereafter as oil, gas, sulphur or other minerals or any of them were produced from the land by the lessee or the •obligations in lieu of production were fulfilled. The plat, supra, shows that ninety-•eight acres of the Odom property were lo-cated in Section Thirty-Two and forty .acres were located in Section Thirty-Three.

On December 31, 1956, effective from and after January 1, 1957, the Commissioner of Conservation of the State of Louisiana issued Order #291-A, establishing •drilling units for the Taylor Sand of the •Colquitt Field of Claiborne Parish. One •of the units so established by the order was the South Half (S/2) of Section 33, Township 23 North, Range 6 West, containing ■320 acres, more or less, in Claiborne Parish, Louisiana, known as Union Producing ■Company et al. Tigner Unit. This unit in•cluded forty acres covered by the aforementioned lease, being the SW/4 of the •SW/4 of Section 33. Production was secured on this unit but not on plaintiff’s land; the well was spudded in on March 4, 1957, and drilling continued thereafter until it was plugged back and completed on May 6, 1957 in the Taylor Sand as ¿'producer of gas with associated liquid hydrocarbons. The well was then shut' in, but it was thereafter placed on production on July 27, 1957.2 In view of the holding of Delatte v. Woods, 232 La. 341, 94 So.2d 281, plaintiffs conceded that the lease, insofar as it affected the SWJ4 of SWi4'.of Section 33, was preserved by the operation on this unit. 1 ' ’

Preparations for the drilling of Union Producing Company et al. Tigner Unit No. A-l Well, located in the SE/4 of NF/4 of Section 32, Township 23 North, Range 6 West, were commenced on February 27, 1957; the well was spudded in on March 3, 1957, and drilling continued thereafter with due diligence until the well was drilled to a total depth of 9030 feet, whereupon it was plugged back and completed as producer of gas and associated liquid hydrocarbons in the Taylor Sand. The Tigner No. A-l Well was shut in but was thereafter connected to Arkansas Louisiana Gas Company’s pipe line on July 27, 1957, when production was commenced. By an instrument dated May 15, 1957, filed for Registry on May 20, 1957, Union Producing Company filed a declaration of unitization, des[55]*55ignating a unit containing 230 acres. This acreage embraced the lands of plaintiffs located in Section 32; the Tigner No. A-l Well was not situated on their property.3 On June 11, 1957, Union Producing Company wrote to Mr. J. H. Odom, informing him that a check for $21.30 was enclosed,4 being full payment of shut-in royalty for the period from April 24, 1957 to July 24, 1957, Tigner “A” Unit Well No. 1, located in the NEJ4 of Section 32.

On May 27, 1957, attorneys for J. H. Odom wrote to Union Producing Company demanding a release of the lease, alleging that it had expired under its own terms and that the demand was being made in accordance with LSA-R.S. 30:102.

In á reply of June 7, 1957, Union Producing Company stated, “All of the land covered by this lease, which is located in Section 33, Township 23 North, Range 6 West, is included in a forced unit created by the Department of Conservation on December 31, 1956, by its Order No. 291-A of that date. All of the land covered by this lease and located in Section 32, Township 23 North, Range 6 West, is included in a voluntary unit declared on May 15, 1957, as amended by instrument dated May 23, 1957, both the original unit declaration and the amended declaration having been executed pursuant to the provisions of the said lease.”

After a further exchange of correspondence, in which Union Producing Company declined to surrender the lease, the present, action was filed on July 29, 1957.

Plaintiff contended that the lease expired' by its own terms as to the land located in. Section 32 because this portion of the lease-was severed from the remainder when the land in Section 33 was placed in a pooled;' unit, which we shall designate as the Conservation Unit. Conceding that the 'decision of Delatte v. Woods, supra, had' the effect of keeping in force and effect - the-lease as to the portion of the land in Section 33, plaintiff contended that the lease-was divided and that anything outside the-Conservation Unit—even though it fell within the lease—was not so affected. Plaintiff relied on Paragraph 14 of the lease, which shall be quoted infra. Plaintiff argued that the Tigner Unit No. A-l Well,, which we shall hereinafter designate as-being in the voluntary unit, was not equivalent to production within the primary term of the lease.

The trial court stated that it understood the law to be that “the production in the-unit well in which the lands leased in Sec. 32 are located was a sufficient compliance-with the terms of the lease and of the legal requirements to keep all property within the-unit in position to share the fruits from that unit; but, previous to that, the produc[57]*57tion on the unit which included the leased lands in Sec. 33 had the effect of keeping the lease itself in full force and effect.”

In speaking of the voluntary unit, the trial court stated that its holding would be different in this case “if it were brought to the attention of the Court that what is called a producing well on a unit is not an actual fact, and that the payment of shut-in royalties is a mere subterfuge for the purpose of holding the lease in force.” The trial court further said that its failure to follow the logic of plaintiff’s position was due to the fact that “we have the conviction that there are several premises on which the plaintiff’s position is based, which we believe are erroneous.

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Bluebook (online)
141 So. 2d 649, 243 La. 48, 16 Oil & Gas Rep. 716, 1962 La. LEXIS 514, Counsel Stack Legal Research, https://law.counselstack.com/opinion/odom-v-union-producing-company-la-1962.