Odom v. Union Producing Company

129 So. 2d 530
CourtLouisiana Court of Appeal
DecidedMay 30, 1961
Docket9440
StatusPublished
Cited by10 cases

This text of 129 So. 2d 530 (Odom v. Union Producing Company) 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
Odom v. Union Producing Company, 129 So. 2d 530 (La. Ct. App. 1961).

Opinion

129 So.2d 530 (1961)

J. Holbert ODOM, Plaintiff-Appellant,
v.
UNION PRODUCING COMPANY et al., Defendant-Appellee.

No. 9440.

Court of Appeal of Louisiana, Second Circuit.

March 10, 1961.
Rehearing Denied April 12, 1961.
Certiorari Granted May 30, 1961.

Meadors, Shaw & Meadors, Homer, for appellant.

Wilkinson, Lewis, Wilkinson & Madison, Shreveport, for appellee.

Before HARDY, AYRES and BOLIN, JJ.

*531 AYRES, Judge.

This is an action for the cancellation of an oil, gas and mineral lease, because of the expiration of its primary term without drilling or other operations having been conducted on, or production secured from, the leased premises or on lands in a unit of which the leased lands comprised a part.

The principal defense is that, during the primary term of the lease, and while it was maintained in full force and effect by the payment of delay rentals, the Commissioner of Conservation, by an appropriate order, established a drilling and production unit in which was included a portion of plaintiffs' property covered by defendant's lease; that pursuant to that order, a well had been drilled on lands in the unit although not on lands covered by this particular lease; and that said well was completed as a producer of gas and condensate during the primary term. From these facts it was contended by the lessee that the lease was maintained in full force and effect beyond its primary term as to the lands covered by the lease outside, as well as inside, the unit.

From an adverse judgment, plaintiffs appealed.

A brief résumé of the facts as relate to this particular defense is essential to an understanding and prerequisite to a discussion of the proposition submitted. On March 10, 1947, plaintiffs' ancestors in title, J. Holbert Odom and A. B. Greer, and the defendant, Union Producing Company, entered into an oil, gas and mineral lease, whereby Odom and Greer leased to the defendant the following-described property, to-wit:

South half of southeast quarter (S½ of SE¼) less ten (10) acres off the west end; south half of northeast quarter of southeast quarter (S½ of NE¼ of SE¼) and eight (8) acres described as commencing at the northwest corner of the southeast quarter of the southeast quarter (SE¼ of SE¼), Section 32, thence run west 170 yards, thence north 220 yards, thence east 170 yards, thence south 220 yards to the starting point, all in Section 32; and southwest quarter of southwest quarter (SW¼ of SW¼), Section 33; all in Township 23 north, Range 6 west, Claiborne Parish, Louisiana, consisting of 138 acres, more or less,

for a primary term of ten years from May 26, 1947, "* * * and as long thereafter as oil, gas, sulphur or other minerals or any of them is produced from said land by Lessee or the obligations in lieu of production are fulfilled."

Odom subsequently acquired the interest of Greer in the leased lands. After the institution of this action, Odom died and his heirs were made and substituted parties plaintiffs in his stead.

These lands were in the area and vicinity of Colquitt Field of Claiborne Parish. One of the sands found to be productive in that field was known as the Taylor Sand. A drilling unit of 320 acres, known as the "Tigner Unit," comprising the

South half (S½) of Section 33, Township 23 north, Range 6 west,

was created by an order of the Commissioner of Conservation, bearing No. 291-A, dated December 31, 1956, and effective January 1, 1957, which pooled and unitized the separately-owned tracts and other property interests in the unit. Included in the unit was the

Southwest quarter of southwest quarter (SW¼ of SW¼) of said Section 33,

owned by plaintiffs and covered by defendant's lease.

Pursuant to, and consistent with, the aforesaid order of the Commissioner, defendant made preparations for and spudded in a well on the northeast quarter of the southwest quarter (NE¼ of SW¼) of said *532 unit on March 4, 1957. This well was completed May 6, 1957, as a producer of gas and condensate from the Taylor Sand and was immediately shut in for lack of pipeline facilities, and remained shut in until July 27, 1957, when it was placed in production.

The rule is well established in the jurisprudence of this State that the drilling and production of oil from a unitized area constitute an exercise and user of the mineral rights throughout the entire unit and operate as a substitute for performance of drilling obligations contained in a mineral lease covering any property or tract located in the unit. Delatte v. Woods, 232 La. 341, 94 So.2d 281; LeBlanc v. Haynesville Mercantile Company, Inc., 230 La. 299, 88 So.2d 377; Union Oil Company of California v. Touchet, 229 La. 316, 86 So.2d 50.

In view of the holding in the Delatte case that a shut-in well on a unit established by the Department of Conservation constituted development of the unit, plaintiffs concede that the lease, so far as it affected the southwest quarter of the southwest quarter (SW¼ of SW¼) of Section 33, was preserved by the operations conducted on the unit.

A general rule is moreover established in the jurisprudence that the obligation of a lessee under an oil and gas lease to drill a well is indivisible in its nature and that, likewise, the lessor's corresponding obligation to deliver the land is also indivisible; and that, where the obligation of one of the parties is to be fulfilled entirely, the obligation of the other must be also fulfilled in whole. Such was the observation of the Supreme Court in Hunter Co. v. Shell Oil Co., 211 La. 893, 31 So.2d 10, wherein it was held that, where an oil, gas and mineral lease covers land both within and without an integrated, consolidated, and force-pooled unit established by the Commissioner of Conservation during the primary term of the lease, and, where production in paying quantities is secured, while the lease is in effect by the payment of delay rentals, from a well within the pooled unit, but not on any portion of the leased land, such production maintains the lease in effect beyond its primary term as to that part of the land leased which lies outside the unit. See, also, LeBlanc v. Danciger Oil & Refining Co., 218 La. 463, 49 So.2d 855; Crown Central Petroleum Corporation v. Barousse, 238 La. 1013, 1022, 117 So.2d 575, 578; Smith v. Carter Oil Co., D.C., 104 F.Supp. 463.

Plaintiffs, however, contend that the aforesaid general principles are inapplicable to the facts of the instant case by reason of the language employed in the lease to the effect that any pooling or unitization of only a portion of the property leased results in a division of the lease and of its obligations.

The provisions of the lease relied upon by plaintiffs, contained in paragraph 14, read as follows:

"Lessee is hereby granted the power and right, at its option and without Lessors' joinder or further consent, at any time while this lease is in force, either before or after production, to combine and pool the lease, mineral and royalty rights in all the lands covered by this lease or any portion thereof with any other land, lands, lease, leases, mineral and royalty rights or any of them, adjacent, adjoining or located within the immediate vicinity of this lease, whether owned by Lessee or some other person, firm or corporation so as to create by such combination and pooling one or more drilling or production units.

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Bluebook (online)
129 So. 2d 530, Counsel Stack Legal Research, https://law.counselstack.com/opinion/odom-v-union-producing-company-lactapp-1961.