LEASE DID NOT TERMINATE WHEN GAS WELL WAS SHUT IN AND SHUT-IN ROYALTY NOT PAID

摘要

Blackmon v. XTO Energy, Inc., No. 10-07-00345-CV, 2008 WL 5173492 (Tex. App.-Waco Dec. 10, 2008, no pet. h.) (not released for publication), upheld summary judgment for an oil and gas lessee, XTO, against its lessors' claim that its oil and gas lease expired when it shut in the lone producing gas well on the lease. While still owned by XTO's predecessor, XTO's Biggs # 1 Well, producing gas and holding the lease beyond its primary term, had been shut in for over a year when the gas purchaser refused to continue purchasing gas because of its high carbon dioxide content. Production resumed after XTO's predecessor-in-interest installed an amine processing unit to remove the excess carbon dioxide. Neither XTO nor its predecessor-in-interest ever made a shut-in royalty payment. The lessors contended the lease expired on two grounds: that the well was incapable of producing gas in paying quantities while it was shut in and that the lease's shut-in royalty payment provisions created a special limitation for which the lease automatically terminated on noncompliance.