Joint Operating Agreement: Preferential Right to Purchase; Relationship Between the Operator and Non-Operating Working Interest Owners

摘要

Bays and PenSa execute a joint operating agreement ("JOA") naming Bays the operator of the wells at issue in this lawsuit, and they enter into an Area of Mutual Interest letter agreement ("AMI Agreement"). Bays sues PenSa asserting ten claims for relief. Bays seeks partial summary judgment as to certain of the claims and counterclaims related to Bays' operation of the jointly owned wells and properties. The parties agree that Oklahoma law governs their disputes. The District Court is ruling on Bays' motion for partial summary judgment. PenSa asserts that its affirmative election to not participate in the subject well did not result in the relinquishment of PenSa's interest because Bays failed to commence operations on the well by the August 19,2006 deadline under the JOA. While the drilling location was built on June 13, 2006, Bays did not set casing until September IS, 2006. There was little activity during the intervening three month period, so PenSa asserts that Bays did not commence operations in good faith. The court rejects that contention and finds that a lessee has commenced a well if it has conducted operations on the land in good faith preparation for the drilling of a well for oil or gas and has continued the operation in good faith and with diligence. Bays additionally argues that Bays cannot be considered to be in a non-consent status because PenSa proposed the wells in question too late, in violation of a requirement in the AMI Agreement stating that it was the intent of Bays and PenSa that no well be proposed more than 30 days prior to the anticipated spud date.