Boone v. Kerr-McGee Oil Industries, 4830

Citation217 F.2d 63
Decision Date09 November 1954
Docket Number4832.,No. 4830,4831,4830
PartiesFern A. BOONE, John O. Peck, and O. L. Peck, Jr., Appellants, v. KERR-McGEE OIL INDUSTRIES, Inc., a corporation, and Phillips Petroleum Company, a corporation, Appellees. W. W. MARTIN, Curtis Williams, Executor of the Estate of C. D. Williams, deceased, Sam M. McDaniel, Harry Moyer, Mrs. P. B. (Hallie) Conlee, Appellants, v. KERR-McGEE OIL INDUSTRIES, Inc., a corporation, and Phillips Petroleum Company, a corporation, Appellees. J. D. LIGON, Appellant, v. KERR-McGEE OIL INDUSTRIES, Inc., a corporation, and Phillips Petroleum Company, a corporation, Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

J. D. DeBois, Duncan, Okl. (Hoel & Horton, Stillwater, Okl., on the brief), for appellants.

Jack T. Conn, Ada, Okl. (Kerr, Lambert & Roberts, Ada, Okl., for appellee, Kerr-McGee, Rayburn L. Foster, Harry D. Turner, Bartlesville, Okl., Cecil C. Hamilton and William H. McPherson, Oklahoma City, Okl., for appellee, Phillips Petroleum Company, were with him on the brief), for appellees.

Before PHILLIPS, Chief Judge, and BRATTON and HUXMAN, United States Circuit Judges.

HUXMAN, Circuit Judge.

Each group of appellants in the three cases on appeal here gave oil and gas mining leases to the appellee, Kerr-McGee Oil Industries, Inc., on portions of the West half of the Northwest Quarter of Section 11, Township 1 South, Range 3 West, in Carter County, Oklahoma, the exact description of which is not necessary to set out. The primary term of these leases was five years. Appellee, Kerr-McGee, held valid and enforceable oil and gas leases to the remaining portion of the above described real estate. The interest of appellee, Phillips Petroleum Company, is that of an over-riding royalty holder in the leases held by Kerr-McGee. On March 5, 1951, Kerr-McGee completed a gas well on the Northwest Quarter of the Northwest Quarter of the Northwest Quarter of Section 11, Township 1 South, Range 3 West, in what is known as the Goodwin Section of the Springer Formation. Thereafter Kerr-McGee perfected a pooling arrangement, pooling all the acreage in the above described real estate. This was done under a clause in appellants' lease, giving it the right so to do, which reads as follows:

"Lessee, at its option, is hereby given the right and power to pool or combine the acreage covered by this lease or any portion thereof with other land, lease or leases in the immediate vicinity thereof, when in Lessee's judgment it is necessary or advisable to do so in order to properly develop and operate said lease premises so as to promote the conservation of oil, gas or other minerals in and under and that may be produced from said premises, such pooling to be of tracts contiguous to one another and to be into a unit or units not exceeding 40 acres each in the event of an oil well, or into a unit or units not exceeding 640 acres each in the event of a gas well. Lessee shall execute in writing and record in the conveyance records of the county in which the land herein leased is situated an instrument identifying and describing the pooled acreage. The entire acreage so pooled into a tract or unit shall be treated, for all purposes except the payment of royalties on production from the pooled unit, as if it were included in this lease. If production is found on the pooled acreage, it shall be treated as if production is had from this lease, whether the well or wells be located on the premises covered by this lease or not. In lieu of the royalties elsewhere herein specified, lessor shall receive on production from a unit so pooled only such portion of the royalty stipulated herein as the amount of his acreage placed in the unit or his royalty interest therein on an acreage basis bears to the total acreage so pooled in the particular unit involved."

This pooling arrangement was effected only a few months prior to the expiration of the primary term of appellants' leases and, if valid, has the effect of extending and keeping them in force. Appellees, contending that the pooling of their leases with the remaining...

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19 cases
  • Colo. Interstate Gas v. Natural Gas Pipeline Co.
    • United States
    • U.S. District Court — District of Wyoming
    • May 29, 1987
    ...be illusory. Any rights NGPL possessed had to be exercised in good faith to effectuate the parties' intent. Boone v. Kerr-McGee Oil Indus., Inc., 217 F.2d 63, 65 (10th Cir.1954). The question is whether substantial evidence supports a finding that NGPL failed to exercise its contractual rig......
  • Pizza Management, Inc. v. Pizza Hut, Inc.
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    ...discretionary authority, upon one another, leaving each to depend on the good faith of the other. See, e.g., Boone v. Kerr-McGee Oil Industries, 217 F.2d 63, 65 (10th Cir.1954). By employing this doctrine, a court forces the parties to perform consistent with their intentions and expectatio......
  • Phillips Petroleum Company v. Peterson
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    ...106 Mont. 547, 81 P.2d 407, 422; Merrill, Covenants Implied in Oil and Gas Leases, 2d Ed., 1953 Supp. p. 157. Boone v. Kerr-McGee Oil Industries, 10 Cir., 1954, 217 F.2d 63. 16 Toomey v. State Board of Land Commissioners, 106 Mont. 547, 81 P.2d 407, 17 Act of May 11, 1938, 52 Stat. 347, 348......
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    ...In other words, the law presumes honest and fair dealing, and bad faith or fraud is never presumed and must be established affirmatively. Id. at 65 (footnote omitted). In Peterson, we further explained the good faith duty of oil and gas lessees in effectuating voluntary unitization A lessee......
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