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Samano v. Sun Oil Co.

Supreme Court of Texas

September 16, 1981

No. B-9969

Opinion

 [*580]  Samano and others (hereafter called Samano), as lessors of an oil and gas lease, sued Sun Oil Company and Tanya Oil Company (hereafter called Sun), as lessees, for a declaratory judgment that the lease had expired; because, during the secondary term, there was neither production nor any drilling or reworking operations for a continuous period of seventy-three days. The question presented by the case is whether a sixty-day limitation period for drilling or reworking operations was applicable to the secondary term of the lease. The trial court granted lessor, Samano, a summary judgment, holding that the lease had terminated. The court of civil appeals, with a divided court, reversed that judgment, 607 S.W.2d 46, holding that the sixty-day requirement in the drilling or reworking clause applied only to operations in progress at the end of the primary term. We reverse the judgment of the court of civil appeals and [**2]  affirm the judgment of the trial court.

Paragraph 2 of the Samano lease is an early habendum clause which also includes a continuous drilling or reworking clause. Paragraph 2 of the lease provides:

2. Subject to other provisions herein contained, this lease shall remain in force for a term of ten years from this date, called primary term, and as long thereafter as oil, gas or other mineral is produced from said land, or as long thereafter as Lessee shall conduct drilling or re-working operations thereon with no cessation of more than sixty consecutive days until production results, and if production results, so long as any such mineral is produced.

  [*581]  Samano and Sun executed the lease on March 29, 1934, so the ten-year primary term ended March 29, 1944. Production in paying quantities extended the lease beyond the primary term and until May 4, 1977, when production stopped. Sun did nothing to restore production until July 15, a continuous period of seventy-three days. Sun urges that the cessation of drilling or reworking operations for the seventy-three days was a temporary cessation.

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621 S.W.2d 580 *; 1981 Tex. LEXIS 341 **; 24 Tex. Sup. J. 553; 70 Oil & Gas Rep. 64

GEORGE SAMANO ET AL., Petitioners v. SUN OIL COMPANY ET AL., Respondents

Subsequent History:  [**1]  Rehearing Denied October 21, 1981.

CORE TERMS

lease, drilling, primary term, reworking, cessation, secondary, sixty days, habendum clause, lessee, oil, terminated, temporary, civil appeal, provisions, progress, mineral, ceased, modifiers, sixty-day, consecutive days, expiration, parties, lessor, refers, maximum period, clauses, cases, oil and gas lease, time limit, ten years

Contracts Law, Personal Property, Personalty Leases, General Overview, Energy & Utilities Law, Federal Oil & Gas Leases, Extensions & Terminations, Abandonment & Termination, Types of Contracts, Lease Agreements, Leases & Licenses, Forfeiture Clauses, Mining Industry, Mineral Leases