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Bachler v. Rosenthal

Court of Appeals of Texas, Third District, Austin

November 14, 1990, Filed

No. 3-89-254-CV

Opinion

 [*647]  ON MOTION FOR REHEARING

JONES, Justice.

The opinion and judgment issued by this Court on August 8, 1990, are withdrawn, and this opinion is filed in place of the earlier one.

The lessors of an oil and gas lease, Ruth Edna Bachler and others 2 (lessors), brought suit against the lessees, Stanley H. Rosenthal and others 3 (lessees), seeking cancellation of the lease as a result of the lessees' alleged cessation [**2]  of production. The trial court granted the lessees' motion for summary judgment, and the lessors perfected this appeal. We will reverse the judgment.

 [*648] BACKGROUND

The lessors' predecessors-in-title entered into an oil and gas lease with appellee Leon Noack on December 31, 1968. Noack assigned the lease to appellee Rosenthal, who subsequently assigned an overriding royalty interest to Noack. The provisions of the lease pertinent to this action are as follows:

Paragraph 2:

Subject to other provisions herein contained, this lease shall be for a term of 5 years from this date (called "primary term") and as long thereafter as oil, gas or other mineral is produced from said land or land with which said land is pooled hereunder.

Paragraph [**3]  6:

[I]f after discovery and production of oil, gas or other mineral [on said land], the production thereof should cease from any cause, this lease shall not terminate if Lessee commences operations for drilling or reworking within sixty (60) days thereafter . . . .

(Emphasis added.) The lease was operated profitably beyond its primary term, and the lease term was thereby extended. Beginning in August 1986, physical production from the lease decreased (as did the price of oil), and for at least a short time ceased altogether. However, following reworking operations in November 1986 and again in March 1987, consistently profitable production was restored beginning in approximately April 1987.

Notwithstanding the restoration of profitable production, the lessors brought suit to cancel the lease, alleging that production had ceased and that more than sixty days had elapsed before reworking operations began. After filing general denials, the lessees filed motions for summary judgment, along with supporting affidavits, contending that the evidence conclusively established that production had never ceased. The lessors filed a written response. The trial court granted the lessees'  [**4]  motion.

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798 S.W.2d 646 *; 1990 Tex. App. LEXIS 2724 **; 114 Oil & Gas Rep. 354

RUTH EDNA BACHLER, JULIA CAROL PLETCHER, ROLAND E. BUSCH AND LELA KATHRYN BUSCH, APPELLANTS v. STANLEY H. ROSENTHAL, STEPHEN J. FORMAN AND MAURY B. FORMAN, AS INDEPENDENT CO-EXECUTORS OF THE ESTATE OF SOL FORMAN, DECEASED, AND LEON NOACK, APPELLEES

Subsequent History:  [**1]   Released for publication December 12, 1990. Rehearing Overruled December 12, 1990. Application for Writ of Error Denied March 6, 1991.

Prior History: From the District Court of Milam County, 20th Judicial District, No. 21,071, Honorable Charles E. Lance, Judge.

 This Opinion Substituted by Court for Withdrawn Opinion of August 8, 1990, Reported at 1990 Tex. App. LEXIS 1965.

Disposition: Reversed and remanded.

CORE TERMS

lease, lessees, summary judgment, lessors, ceased, terminated, oil, paying quantities, cessation, reasonably prudent, consecutive days, matter of law, reworking, barrels, trial court, circumstances, oil production, drilling

Civil Procedure, Summary Judgment, Burdens of Proof, General Overview, Judgments, Entitlement as Matter of Law, Genuine Disputes, Contracts Law, Types of Contracts, Lease Agreements, Energy & Utilities Law, Leases & Licenses, Habendum Clauses, Real Property Law, Landlord & Tenant, Landlord's Remedies & Rights, Power to Reenter & Terminate, Federal Oil & Gas Leases, Extensions & Terminations, Abandonment & Termination, Forfeiture Clauses