Oil and Gas Leases: Continuous Operations Clause

摘要

In 1976 Bargsley executes a 320-acre lease. He drills three gas wells and one oil well that produce until the late 1980s or early 1990s. The oil field equipment is never removed even though the 1976 lease terminated. In 1996, Bargsley executes a second lease on the premises with a one-year primary term and a continuous operations savings provision that allows the lease to be extended beyond the primary term should the lessee be engaged in drillilng operations or that there be no greater than a 60-day period beteween the completion or abandonment of one well and the beginning of operations on another. Bargsley asserts that in November 1997 he re-commenced various operations on one of the existing well bores that satisfies the habendum clause of the lease. Pryor is a subsequent lessee of the same acreage. Pryor brings this action seeking a determination that the 1996 Bargsley lease has terminated. The trial court grants Pryor's motion for summary judgment. Held: affirmed in part and reversed and remanded in part. The court finds that as a matter of law the Bargsley activities are not drilling operations because they were not operations preliminary to the actual work of drilling. Additionally there is no summary judgment evidence that Bargsley ever commenced the drilling of a new well. The parties agree that there is a fact issue as to whether or not there is sufficient production to satisfy the habendum clause.