Siemon v. Lyon

SCHOTTKY, J. pro tem.

This is an appeal from a judgment quieting the title of respondents against appellant as to rights claimed by appellant under an oil and gas lease.

[351]

The complaint alleged in substance that appellant, as lessee, was required to commence the drilling of a second well on the leased land within three months following the completion of the first well; that the lease further provided that in the event any of the conditions of said lease were violated and lessee should fail to remedy same within thirty days after written notice so to do, then, at the option of the lessor, the lease should forthwith terminate as to all of said land except ten acres surrounding such producing well; that appellant lessee violated the terms of said lease in failing to commence a second well upon said premises as required by said lease within three months after completion of the first well; and that the required thirty-day notice was given.

The answer denied any breach and alleged that the first well was not yet completed but was still being worked on in an attempt to place it on steady production.

The covenants of the lease as to the drilling of the second well are expressed in paragraphs 7 and 8 of the lease as follows:

“7. If the Lessee shall elect to drill on said land as aforesaid, and oil or gas shall not be obtained in paying quantities in first well drilled, the Lessee shall, within three (3) months after the completion or abandonment of the first well, commence on said land drilling operations for a second well, and shall prosecute the same with reasonable diligence until oil or gas is found in paying quantities, or until the well is drilled to a depth at which further drilling would, in the judgment of the Lessee, be unprofitable; and the Lessee shall in like manner continue its operations until oil or gas in paying quantities is found, but subject always to the terms and conditions hereof and with the rights and privileges to the Lessee herein given.

“8. If oil or gas is found in paying quantities in any well so drilled by the Lessee on said land, the Lessee, subject to the provisions hereof and to the suspension privileges hereinafter set forth, shall continue to drill additional wells on said land as rapidly as one string of tools working with reasonable diligence can complete the same, until there shall have been completed on said land as many wells as shall equal the total acreage then held under this lease divided by ten; whereupon the Lessee shall hold all of the land free of further drilling obligations ; provided, that the Lessee may defer the commencement of drilling operations for the second or any subsequent well