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Amber Oil & Gas Co. v. Bratton

Court of Appeals of Texas, Third District, Austin

May 28, 1986

No. 14,475

Opinion

 [*742]  Appellant Amber Oil & Gas Co. sued appellees David Bratton and Bratton Ranch Co. in the district court of McCulloch County seeking damages and a permanent injunction. After a bench trial, the district court rendered judgment for appellees. This Court will affirm the judgment.

Amber pleaded that it owned and operated an oil and gas lease covering five hundred twenty-five acres in McCulloch County [The Bratton Ranch]. Before the expiration of the primary term, Amber drilled a gas well and, because no market existed, the well was shut-in. Amber alleged that although it had made timely shut-in royalty payments to its "lessor," appellees denied it access to the ranch so that it was unable to develop its property.

Appellees pleaded ownership of the surface and one-half [**2]  of the minerals in the ranch, and, further, that they had not been paid any shut-in royalties. Accordingly, appellees claimed that Amber's failure to pay them one-half of the shut-in royalties resulted in a termination of the oil and gas lease as to their one-half mineral interest.

Upon request, the district court filed findings of fact and conclusions of law. The district court found, among other things, that Bratton's predecessors-in-title, Perry G. and Edith Kilcoyne, executed an oil and gas lease to Michael E. Lillis in 1975. Lillis assigned the oil and gas lease to Amber in 1978. No notice of this assignment was furnished the lessors. In 1979, the Kilcoynes deeded the surface and one-half of the minerals to appellees.

In July 1980, Amber drilled on the Bratton ranch. Some time in 1980, Amber hired Lillis to work for it at the well-site. Bratton told Lillis sometime in 1980 that he owned the surface of the ranch. On July 24, 1980, appellees gave written notice to Lillis of their purchase of the surface and one-half of the minerals. The district court made no finding whether Lillis forwarded  [*743]  this notice to Amber. In August and September 1980, Lillis signed Railroad [**3]  Commission forms indicating that he was Amber's "authorized representative." Amber completed the shut-in gas well on July 29, 1980. Pursuant to the shut-in royalty provisions of the oil and gas lease, Amber paid shut-in royalties to the Kilcoynes for several years, but did not pay appellees their shut-in royalties for their one-half interest in the minerals. In 1984, Amber tendered to appellees the shut-in royalties for 1984 and the previous three years. Appellees refused the tender and took the position that the lease had terminated as to appellees' one-half mineral interest. Because Amber did not timely pay shut-in royalties to appellees, the district court concluded and rendered judgment that the lease had terminated as to appellees' one-half mineral interest.

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711 S.W.2d 741 *; 1986 Tex. App. LEXIS 7984 **; 92 Oil & Gas Rep. 359

AMBER OIL AND GAS COMPANY, APPELLANT v. DAVID BRATTON, ET AL., APPELLEES

Prior History:  [**1]    FROM THE DISTRICT COURT OF McCULLOCH COUNTY, 198TH JUDICIAL DISTRICT, NO. 073-84, HONORABLE V. MURRAY JORDAN, JUDGE.

CORE TERMS

shut-in, royalties, lease, lessee, terminated, oil and gas lease, rental, one-half, mineral, district court, ranch, primary term, lessor

Contracts Law, Types of Contracts, Lease Agreements, General Overview, Energy & Utilities Law, Royalties, Leasehold Royalty Clauses, Leases & Licenses, Shut In Royalty Clauses, Federal Oil & Gas Leases, Extensions & Terminations, Abandonment & Termination