{ "id": 1598926, "name": "Jim J. OWENS, Don M. Fedric, and Ronald Peters, Plaintiffs-Appellants, v. The SUPERIOR OIL COMPANY, Defendant-Appellee", "name_abbreviation": "Owens v. Superior Oil Co.", "decision_date": "1986-12-12", "docket_number": "No. 16517", "first_page": "155", "last_page": "158", "citations": [ { "type": "official", "cite": "105 N.M. 155" }, { "type": "parallel", "cite": "730 P.2d 458" } ], "court": { "name_abbreviation": "N.M.", "id": 8835, "name": "Supreme Court of New Mexico" }, "jurisdiction": { "id": 52, "name_long": "New Mexico", "name": "N.M." }, "cites_to": [ { "cite": "82 N.M. 245", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 5332754 ], "weight": 2, "year": 1970, "pin_cites": [ { "parenthetical": "recognizes cautious application of rule that oil and gas leases are to be construed most strongly against lessees" }, { "parenthetical": "recognizes cautious application of rule that oil and gas leases are to be construed most strongly against lessees" } ], "opinion_index": 0, "case_paths": [ "/nm/82/0245-01" ] }, { "cite": "82 N.M. 8", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 5328834 ], "weight": 2, "year": 1970, "pin_cites": [ { "parenthetical": "same" }, { "parenthetical": "same" } ], "opinion_index": 0, "case_paths": [ "/nm/82/0008-01" ] }, { "cite": "85 N.M. 673", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2775235 ], "weight": 2, "year": 1973, "pin_cites": [ { "parenthetical": "meaning and significance must be given to each part of a real estate lease in context of entire agreement" }, { "parenthetical": "meaning and significance must be given to each part of a real estate lease in context of entire agreement" } ], "opinion_index": 0, "case_paths": [ "/nm/85/0673-01" ] }, { "cite": "305 S.W.2d 169", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10160208, 2253983 ], "weight": 2, "year": 1957, "pin_cites": [ { "page": "174" } ], "opinion_index": 0, "case_paths": [ "/sw2d/305/0169-01", "/tex/157/0489-01" ] }, { "cite": "157 Tex. 489", "category": "reporters:state", "reporter": "Tex.", "case_ids": [ 2253983 ], "weight": 2, "year": 1957, "pin_cites": [ { "page": "497" } ], "opinion_index": 0, "case_paths": [ "/tex/157/0489-01" ] }, { "cite": "296 S.W.2d 567", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10180430 ], "opinion_index": 0, "case_paths": [ "/sw2d/296/0567-01" ] }, { "cite": "96 N.M. 22", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1577427 ], "weight": 2, "year": 1981, "opinion_index": 0, "case_paths": [ "/nm/96/0022-01" ] }, { "cite": "95 N.M. 193", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1575567 ], "weight": 2, "year": 1980, "opinion_index": 0, "case_paths": [ "/nm/95/0193-01" ] }, { "cite": "299 F.2d 238", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 237127 ], "opinion_index": 0, "case_paths": [ "/f2d/299/0238-01" ] }, { "cite": "189 F.Supp. 781", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 1430311 ], "weight": 2, "pin_cites": [ { "page": "787" } ], "opinion_index": 0, "case_paths": [ "/f-supp/189/0781-01" ] }, { "cite": "366 S.W.2d 236", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10156016 ], "weight": 2, "pin_cites": [ { "page": "239" } ], "opinion_index": 0, "case_paths": [ "/sw2d/366/0236-01" ] } ], "analysis": { "cardinality": 530, "char_count": 10417, "ocr_confidence": 0.774, "pagerank": { "raw": 8.335686108421907e-08, "percentile": 0.4805801419310547 }, "sha256": "20efac9c43030caebf4b3f4aeaf9d87c8511af3ae3cb949eef5cce46cdf6c221", "simhash": "1:ecd81c3be00f98ef", "word_count": 1693 }, "last_updated": "2023-07-14T20:20:30.820213+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "SOSA, Senior Justice, and RIORDAN, J., concur." ], "parties": [ "Jim J. OWENS, Don M. Fedric, and Ronald Peters, Plaintiffs-Appellants, v. The SUPERIOR OIL COMPANY, Defendant-Appellee." ], "opinions": [ { "text": "OPINION\nWALTERS, Justice.\nPlaintiff Owens and'others sued Superior to obtain release of an oil and gas lease held by Superior. Both parties moved for summary judgment; the trial judge denied Owens\u2019s motion and granted Superior\u2019s. Owens appeals, posing the following issue:\nDoes pooling leased land with other land, on which lessee began drilling operations within the sixty-day grace period allowed under a continuous operations clause, effectuate a valid extension of an oil and gas lease so long as production is maintained?\nTo answer this question, we review the facts. On April 8,1974, Donna G. Roberts, Owens\u2019s predecessor in interest, executed a ten-year primary term oil and gas lease in favor of Superior. Before the primary term expired, Superior began drilling operations at its No. 2 Mescalero Ridge Well located on the leased lands. That drilling resulted in a dry hole and, on April 25, 1984, Superior ceased operations at the No. 2 well. Since the primary term had expired, and the continuous operations clause of the lease provided for termination sixty days after the cessation of operations unless the lessee commenced \u201cadditional drilling or reworking operations,\u201d Superior began drilling operations at its No. 11 Mescalero Ridge Well on April 28, 1984. No. 11 was not located on the leased land. On May 9,1984, Superior filed its \u201cDesignation of Mescalero Ridge Com. No. 11 Unit\u201d purporting to pool forty acres of the leased land with forty acres on which the No. 11 well was located, to form an eighty-acre unit. First production from No. 11 well was obtained on June 26, 1984.\nOn June 7, 1984, Owens acquired a one-half mineral interest in the land covered by the lease. On July 11, 1984, Fedric and Peters (co-plaintiffs) acquired certain undivided interests in the minerals and leasehold estate of Owens, two days after Owens had made a demand for release. Superior refused to execute the release and, on August 1, 1984, plaintiffs filed this suit.\nNew Mexico has not previously decided the issue presented. Two other jurisdictions reached opposite results in similar cases. Compare Humble Oil & Refining Co. v. Kunkel, 366 S.W.2d 236 (Tex.Civ.App.1963) with Harper v. Hudson Gas & Oil Corp., 189 F.Supp. 781 (W.D.La.1960), aff'd, 299 F.2d 238 (5th Cir.1962). In both, drilling operations in progress following expiration of the primary term resulted in dry holes. Both leases provided that the lessees had sixty days after completion of the dry hole to commence additional operations. In Harper, within the sixty days, the Louisiana Commissioner of Conservation issued an order pooling the leased lands with other lands on which there was a preexisting well. The Harper court granted summary judgment in favor of lessee Hudson Oil. In Kunkel, within the sixty days, Humble Oil pooled its leased lands with other land on which there was a preexisting well. The trial judge granted a summary judgment in favor of termination, and the appellate court affirmed.\nAs with other leases, the primary consideration when construing an oil and gas lease is to give effect to the intention of the parties. Acquisto v. Joe R. Hahn Enterprises, Inc., 95 N.M. 193, 619 P.2d 1237 (1980). Neither party argues that the provisions in question are ambiguous; therefore, the lease must be given the legal effect resulting from a construction of the language contained within the four corners of the instrument. L.R. Property Management, Inc. v. Grebe, 96 N.M. 22, 627 P.2d 864 (1981); see also Newman Brothers Drilling Co. v. Stanolind Oil & Gas Co., 296 S.W.2d 567 (Tex.Civ.App.1956), rev\u2019d on other grounds, 157 Tex. 489, 305 S.W.2d 169 (1957).\nSuperior began drilling operations during the primary term which resulted in a dry hole. The continuous operations clause provides, in part:\n6. a) If * * * lessee should drill and abandon a dry hole or holes thereon * * this lease shall not terminate if lessee commences additional drilling or reworking operations within sixty (60) days thereafter * * * (emphasis added).\nOwens argues that only this clause remained in force after the primary term expired and Superior, therefore, could only extend the lease by engaging in additional drilling, mining, or reworking on the lands leased from Owens. Since Superior did not comply with this requirement, plaintiff argues, the lease expired by its own terms.\nSuperior urges us to adopt the federal district court\u2019s interpretation of the similar provision in Harper. The Harper court, noting that the primary purpose of a continuous operations clause \u201cis to give a lessee who has incurred the expense of drilling a well an opportunity to save his lease in the event the well is a dry hole,\u201d held that the clause kept the entire lease, including the pooling clause, in full force and effect for a sixty-day period after the cessation of operations. Harper v. Hudson Gas & Oil Corp., 189 F.Supp. at 787 (quoting Stanolind Oil and Gas Co. v. Newman Brothers Drilling Co., 157 Tex. 489, 497, 305 S.W.2d 169, 174 (1957)). We are persuaded by this reasoning, and hold that a continuous operations clause in an oil and gas lease keeps the entire lease in full force and effect if, within a period of sixty days after the cessation of drilling or production, drilling or reworking occurs on the leased land or any land with which it is pooled when pooling is permitted by the lease.\nTo hold otherwise necessitates construing the continuous operations clause as terminating all other provisions of the lease as soon as operations or production cease. To do so is contrary to the express language of that clause. Accordingly, since Superior began drilling operations during the primary term of the lease, and even though they resulted in a dry hole after the term ended, the continuous operations clause maintained the lease in full force and effect for sixty days after April 25, 1984.\nOil and gas leases must be construed to give effect to all of their provisions so far as possible. Cf. Gallup Gamerco Coal Co. v. Irwin, 85 N.M. 673, 515 P.2d 1277 (1973) (meaning and significance must be given to each part of a real estate lease in context of entire agreement); Waxier v. Humble Oil & Refining Co., 82 N.M. 8, 474 P.2d 494 (1970) (same). Here, the pooling provision gave Superior the \u201cright to pool or unitize this lease.\u201d By exercising that right within sixty days of drilling the dry hole on the leased premises, Superior saved the lease for as long as production is maintained. Harper v. Hudson Gas & Oil Corp.\nOwens insists that, unlike the Harper court, we must strictly construe the lease against the lessee. There is New Mexico authority to support his position. See Greer v. Salmon, 82 N.M. 245, 479 P.2d 294 (1970) (recognizes cautious application of rule that oil and gas leases are to be construed most strongly against lessees). In Kunkel, the court\u2019s critical inquiry was not \u201cwhether Humble declared its unit while the lease was still in force; it is, instead, did Humble do that thing permitted by the lease to save it?\u201d Humble Oil & Refining Co. v. Kunkel, 366 S.W.2d at 239. The court there focused solely on the language of the continuous operations provision, and held that the mere pooling of the leased land with land on which there was an already producing well did not satisfy the specific requirements of the continuous operations clause. It held the lease terminated. Here, however, not even a strict construction of the provision in question defeats Superior\u2019s claims.\nBoth parties urge that success under the Kunkel analysis depends on interpretation of the final section of the continuous operations clause which provides:\nIf, at the expiration of the primary term, oil, liquid hydrocarbons, gas or their respective constituent products, or any of them, is not being produced on said land or land pooled therewith but lessee is then engaged in operations for drilling, mining, or reworking of any well or wells thereon, this lease shall remain in force so long as such operations or said additional operations are commenced and prosecuted * * * with no cessation of more than sixty (60) consecutive days, and, if they result in production, so long thereafter as oil, liquid hydrocarbons, gas or their respective constituent products, or any of them, is produced from said land or land pooled therewith (emphasis added).\nOwens insists that the crucial language is \u201csaid land or land pooled therewith,\u201d and argues that the second appearance of the phrase \u201cor land pooled therewith\u201d relates back to the first time it appears in the section, thereby requiring that any land covered by this provision be pooled before the expiration of the primary term.\nWe construe the paragraph to the contrary, believing that the clause ending with the first \u201cor land pooled therewith\u201d simply introduces the particular situation that must exist to cause this section to become operative. The rest of the paragraph then instructs the lessee what may be done to save the lease. The final \u201cor land pooled therewith,\u201d read in conjunction with the phrase \u201csuch operations or said additional operations ... commenced and prosecuted,\u201d establishes that one option for the lessee is to begin additional operations resulting in production on \u201csaid land or land pooled therewith\u201d during that subsequent sixty-day period. Therefore, even though under Kunkel, pooling alone is insufficient to save a lease under the continuous operations clause after the expiration of the primary term, \u201cadditional operations ... commenced and prosecuted\u201d on either the leased land or land with which it has been pooled during the sixty-day grace period covered by the clause, continues the lease in force. Superior, unlike Humble Oil, did \u201cthat thing\u201d which saved the lease \u2014 it engaged in further drilling (that resulted in production) on land that had been \u201cpooled therewith [the leased land]\u201d prior to production, and before the sixty days had run.\nSummary judgment in favor of Superior is AFFIRMED.\nSOSA, Senior Justice, and RIORDAN, J., concur.", "type": "majority", "author": "WALTERS, Justice." } ], "attorneys": [ "A.J. Losee, Losee & Carson, Artesia, K. Douglas Perrin, Shamas & Perrin, Roswell, for plaintiffs-appellants.", "Harold L. Hensley, Jr., Hinkle, Cox, Eaton, Coffield & Hensley, Roswell, for defendant-appellee." ], "corrections": "", "head_matter": "730 P.2d 458\nJim J. OWENS, Don M. Fedric, and Ronald Peters, Plaintiffs-Appellants, v. The SUPERIOR OIL COMPANY, Defendant-Appellee.\nNo. 16517.\nSupreme Court of New Mexico.\nDec. 12, 1986.\nA.J. Losee, Losee & Carson, Artesia, K. Douglas Perrin, Shamas & Perrin, Roswell, for plaintiffs-appellants.\nHarold L. Hensley, Jr., Hinkle, Cox, Eaton, Coffield & Hensley, Roswell, for defendant-appellee." }, "file_name": "0155-01", "first_page_order": 195, "last_page_order": 198 }