Haby v. Stanolind Oil & Gas Co.
| Decision Date | 30 April 1954 |
| Docket Number | No. 476.,476. |
| Parties | HABY et al. v. STANOLIND OIL & GAS CO. |
| Court | U.S. District Court — Northern District of Texas |
Scott Snodgrass, J. Truett Smith, San Angelo, Tex., for plaintiffs.
Lon Sailers, Turner, Rodgers, Winn, Scurlock & Terry, Dallas, Tex., for defendant.
The Stanolind Oil & Gas Company secured a lease on certain lands in Reagan County, Texas, for exploration and production of oil under three different tracts. Under the terms of the lease, the drilling of one tract would protect the lease on the other two tracts.
The question presented in this case is whether an oil and gas lease, without a "force majeure" clause, that has its well shut in by a conservation order by the Railroad Commission of Texas, and which does not produce for a period of time after the expiration of the primary term of the lease terminate because of such cessation of production.
I think it must be conceded that such leases are entered into with the knowledge that their operation and production will be regulated and controlled by subsequent regulations by the Railroad Commission of Texas, and both parties are bound by such regulations and have their respective interests affected thereby.
While the defendant was producing oil from the first well which it drilled on the first tract within the time prescribed by the lease, the Railroad Commission of Texas entered a shut-down order on all of the Spraberry sand wells because of gas wastage. Such an order was declared illegal by the Supreme Court of Texas.
The court must take knowledge of the fact that the Railroad Commission of Texas is the state regulatory body over the operation and production of the oil and gas industry in Texas, and is charged with the duty of preventing waste in such operations. Title 102, Rev.Civ.Statutes of Texas, Vernon's Ann.Civ.Stat.Art. 6004 et seq.
The well on the first tract having come in a producer within the time prescribed continued to produce from September, 1951 to April 1, 1953, at which time the defendant shut in the well pursuant to the order of the Railroad Commission. This order was effective on April 1, 1953. This order of March 25, 1953 was held to be void by the Supreme Court of Texas on June 10, 1953, in Railroad Commission of Texas v. Rowan Oil Company, 259 S.W.2d 173. Even though the Supreme Court had so decided the Commission had fixed the allowable of the well at zero, and, therefore, the well was still shut in.
Subsequent orders of the Commission of July 1st, and July 15th, provided that a well could produce only if the casing head gas was put to a legal use and then described four such uses. The testimony in this case shows...
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