Ardis v. Texas Co.
Ardis v. Texas Co.
Opinion of the Court
This is a suit to annul part of a mineral lease on the ground that there has been no development with respect to a part of the property leased, and in the event the prayer for annulment is not granted then for damages for failure to develop the property fully.
It appears that, in 1912, J. B. Ardis, the plaintiff herein, was the owner of certain land situated in the parish of Red River. The land in question is intersected by the Texas & Pacific Railroad, which, at that point, runs north and south. Whether the railroad company owns the fee to the strip which it occupies, or whether it owns only a servitude, attached to that strip, does not appear.
On the last day of December, 1912, Ardis sold to R. A. Calhoun the land in question, but retained the mineral rights in and to the same. In this deed, the land conveyed is described and referred to as if it consisted of two tracts, one situated on the east side of the railroad and containing 222.29 acres, and the other on the west side, and containing 229.86 acres. In May, 1913, Ardis granted a mineral lease on the land in question to the Producers’ Oil Company. In this lease, the land let is referred to, in describing it, as consisting of two tracts, one east and the other west of the railroad, as in the deed to Calhoun. This lease was later transferred to the Texas Company, the defendant herein.
Not long after the execution of the lease, and before it was thought cause had arisen for its forfeiture, the lessee, or its assignee, began drilling for oil and gas. The first well was completed on July 17, 1914, proved successful, and produced in the beginning 200 barrels of oil a day. Between the date of the completion of the first well and June 13, 1916, 16 additional wells were drilled. The initial production of these wells, each taken singly, ranged from 10 to 1,440 barrels a day. The numoer of wells drilled a year, during the foregoing period, ranged from 5 to 7. From the time of the completion of the first well, in July, 1914, up to October, 1919, which was a few days prior to the institution of this suit, there were delivered to plaintiff, as royalty due under the lease, 94,847 barrels of oil, or the proceeds thereof, amounting to $81,258.77. All of the foregoing wells were drilled on the tfcact lying east of the railroad, and no effort was made to drill on the tract lying west of it. The initial production of the wells drilled shows that, as the development appreciably approached the western part of the east tract, there was a decline in production, which, upon the whole, was very marked and noticeable.
About the time this suit was filed plaintiff could have leased his rights in the tract situated west of the railroad for $50 an acre. He made demand on the defendant to surrender the lease on the western tract, or else to develop that tract, but defendant refused to do either. This suit then followed for the purpose of obtaining the annulment of the lease on the west tract on the ground of failure to explore for oil and gas thereon, and, should the court not grant that prayer, then to obtain judgment against the Texas Company for $11,493, as damages for failure to develop the tract.
One of plaintiff’s contentions is that the land upon which the lease was granted consists of two independent tracts, separated from each other by the strip occupied by the Texas & Pacific Railroad Company, and this fact is used by plaintiff in support of his position that the land westvof the railroad should have been explored for oil and gas, as well as that east of it. While it is possible that the railroad company does not own the fee
For the reasons assigned, the judgment appealed from is affirmed, appellant to pay the costs.
Reference
- Full Case Name
- ARDIS v. TEXAS CO.
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- 6 cases
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- Syllabus
- (Syllabus by Editorial Staff.) 1. Mines and minerals In a suit to cancel an oil lease for failure to develop a portion of the tract leased which was separated from the portion actually developed by a railroad traek and right of way, where it appeared that the two bodies of land had been leased as one tract, but described separately, development of one of them was a compliance with the contract as to the entire lease. 2. Mines and minerals Where 17 producing wells had been /drilled on leased property, but all on one of two tracts and the wells drilled in the portion lying toward the tract not developed were less productive than the others, held, that the development was sufficient to prevent cancellation, there being no danger of others drawing from the undeveloped land any oil or gas beneath its surface.