Texaco, Inc. v. Lettermann

Court of Appeals of Texas

Texaco, Inc. v. Lettermann

343 S.W.2d 726, 14 Oil & Gas Rep. 427, 1961 Tex. App. LEXIS 1745

CourtCourt of Appeals of Texas

DecidedFebruary 6, 1961

Docket7020

StatusPublished

Cited by34 cases

This text of 343 S.W.2d 726 (Texaco, Inc. v. Lettermann) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Texaco, Inc. v. Lettermann, 343 S.W.2d 726, 14 Oil & Gas Rep. 427, 1961 Tex. App. LEXIS 1745 (Tex. Ct. App. 1961).

Pincite

Opinion

DENTON, Chief Justice.

This suit was instituted by Annie Letter-mann and others, appellees and plaintiffs below, against Texaco, Inc. and Kerr-McGee Oil Industries, Inc., in the nature of a declaratory judgment proceeding. The case involves the construction of an oil and gas lease which contained a lease pooling clause, executed by appellees and their predecessors in title, as lessors, to Texaco, Inc., as lessee. Both plaintiffs and defendants below filed motions for summáry judgment. All the material facts involved in this controversy were stipulated and agreed upon by the parties. From a judgment granting ap-pellees’ motion for summary judgment, based upon appellees’ allegations in count No. 1 of their first original amended petition, the appellants duly perfected this appeal.

Because of the complexity of the problems presented here, we deem it expedient to set out the facts of the case in some detail.

On September 28, 1938, appellees, or their predecessors in title, executed an oil and gas lease to Phillips Petroleum Company covering the N½ of Sec. 22, Block M-2, A. O. Campbell Survey in Moore County, Texas. The lease’s primary term ended December 28, 1948 and contained a consolidation or lease pooling clause. This lease was subsequently assigned to the Texaco Company, now Texaco, Inc., one of the appellants here. On April 30, 1948, which was prior to the termination date of the lease and after Texaco became lessee, the termination date of the lease was extended to December 28, 1958. On September 10, 1952, Paragraph 8 of the lease (the lease pooling clause) was amended to permit a consolidation of a gas leasehold estate into a unit not to exceed 644.4 acres rather than 640 acres as provided for in the original lease. The lease pooling clause as amended reads as follows1:

“8. The lessee is expressly granted the right and privilege to consolidate the gas leasehold estate or any part or parts thereof created by the execution and delivery of this lease with the gas leasehold estate or any part or parts thereof in lands adjacent or contiguous to the land herein described. Provided that in no event shall such consolidated leasehold estate exceed an area of 644.4 acres: ’ and in the event lessee exercises such right -and privilege the consolidated gas leasehold estate shall be deemed, treated and operated just as though the gas leasehold estates so consolidated were covered and included in this lease originally, and in such event the royalties payable hereunder shall be prorated, and paid to the respective ■ lessors in the proportion that such lessors’ acreage in the consolidated estate bears to the total acreage .in such -consolidated gas leasehold estate, and a producing well on any portion of the consolidated estate shall operate to continue the entire leasehold estate- in the whole of the same for so long as gas is produced therefrom.”

In January, 1953, Phillips Petroleum Company was owner of an oil and gas lease executed by Olive M. Neal et al. as lessors, covering the SE14 of Sec. 22, Block M-2 in the same survey of Moore County, Texas. At the same time, Phillips Petroleum Company and Kerr-McGee, one of the appellants here, were the joint owners of a similar lease executed by G. M. Thaten et ux., as lessor, covering the SW}4 of the same section. These three oil and gas leases cover the entire Section 22 and each of the leases contained a pooling clause.

*728 On January 2, 1953, Texaco, Phillips and Kerr-McGee executed and duly recorded a consolidation agreement pooling these three leases in a single gas leasehold estate covering the 644.4 acres in Section 22. This designated unit will be referred to as the 1953 Unit. During the month of January, 1953, a well was commenced on the of Sec. 22 but the well was not productive and it was plugged and abandoned on February 21, 1953.

The primary term of the oil and gas lease covering the SE(4 of Sec. 22 ended February 12, 1953 and the primary term of the lease covering the SWJ4 of Sec. 22 ended February 25, 1953. These two leases were not renewed or extended. The record shows that the two leases were released by the respective lessors by an instrument dated February 28, 1953. On November 27, 1957, the three named lessees executed an instrument which purported to terminate and rescind the consolidated gas leasehold unit here designated as the 1953 Unit.

Prior to November 27, 1957 and subsequent to February, 1953, Texaco became the owner of oil and gas leases covering the SW54 of Sec. 22, the W½ of Sec. 431, Block 44 of the same survey, and 77 acres out of the Charles Aderholt Survey in addition to the lease of the N}^ of Sec. 22 previously acquired by them. On November 27, 1957, Texaco executed and duly recorded an instrument designating a consolidated gas leasehold estate covering the south 80 acres of the Wi/á of the Ni/2 of Sec. 22, the SW14 of Sec. 22, the Wy2 of Sec. 431 and the 77 acres out of the Charles Aderholt Survey. This designation containing 638.1 acres will be referred to as the 1957 Unit. In January, 1958 Texaco commenced the drilling of a well on the south 80 acres of the Wi/2 of the Ni/£ of Sec. 22. This well was completed as a producing gas well on February 14, 1958 and has continued to be a producing gas well in paying quantities. It is to be noted that this 1957 Unit gas well is located on the appellees’ tract and is also within the acreage designated as the 1957 Unit.

Prior to April, 1959 and subsequent to February, 1953 Kerr-McGee, appellant, became the owners of oil and gas leases covering the SE14 of Sec. 22 and the E14 of Sec. 431. On April 7, 1959 the said Kerr-McGee and Texaco, Inc., designated a consolidated or unitized gas leasehold estate covering the NE14 and the N14 of the NW}4 of Sec. 22 (lease owned by Texaco) and the SE14 of said Sec. 22 and the E14 of Sec. 431, except the south 80 acres of the Ej/⅞ of Sec. 431 (the leases on the latter two tracts were owned by Kerr-McGee). This designation containing 643.3 acres will be referred to as the 1959 Unit.

On May 13, 1959 Kerr-McGee commenced the drilling of a well on the SEJ4 of Sec. 22 and it was completed on June 20, 1959 as a producing gas well in paying quantities. This well also continues to be a producing gas well in paying- quantities. This well is located on acreage within the purported 1959 Unit, but not on acreage under appellees’ lease. For clarification the three designated units described above are outlined and attached as exhibits.

Appellees alleged their various causes of action in three counts with counts Nos. 2 and 3 being alleged in the alternative. We shall briefly summarize appellees’ various positions as alleged in the three counts as we understand them.

In count No. 1, appellees contend: that Texaco did not have power or authority to rescind the 1953 Unit; that once Texaco executed the 1953 Unit designation, Texaco exhausted the right to further consolidate the Ni/4 of Sec. 22 with any other land; that by voluntarily abandoning the 1953 Unit by executing the termination instrument in November, 1957 the appellants are barred from exercising any right, authority, privilege or power with respect to the 1953 Unit; that the purported 1957 and 1959

*729

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