Beatty v. Baxter
208 Okla. 686, 1953 OK 157, 258 P.2d 626 (1953)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A temporary cessation of production will not terminate a determinable mineral interest that is granted for as long as oil or gas is produced, provided the cessation is due to reasonable causes and the lessee exercises diligence to resume production.
Facts:
- In 1925, to settle a potential will contest, Fred B. Hubbard conveyed undivided mineral estates in an 80-acre tract of land to his siblings, who are the predecessors in interest to F. H. Baxter and the other defendants.
- The mineral conveyances were for a term of 20 years and 'as long thereafter as oil or gas is produced from said premises.'
- The 20-year primary term of the mineral estates expired in 1945.
- In December 1945, the oil and gas lessee ceased pumping oil from well No. 3, the only producing well on the 80-acre tract at the time.
- No oil was physically produced from the 80-acre tract for approximately 21 months, from December 1945 until September 1947.
- During this period, the lessee did not remove the casing from well No. 3, which was evidence of an intent not to abandon the well.
- The delay in resuming production was attributed to wartime conditions, scarcity of oilfield equipment, and the need to rehabilitate the well.
- In September 1947, the lessee completed a new producing well (No. 7) on the tract, and shortly thereafter, deepened well No. 3, which also resumed production.
Procedural Posture:
- J. B. Beatty and Zella E. Beatty, as plaintiffs, filed suit in an Oklahoma trial court against F. H. Baxter and others.
- The plaintiffs sought an equitable judgment declaring that the defendants' determinable mineral estates had terminated.
- The trial court made written findings of fact and conclusions of law and rendered judgment for the defendants.
- The plaintiffs, J. B. Beatty and Zella E. Beatty, appealed the trial court's judgment to the Supreme Court of Oklahoma.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a temporary cessation of oil production for approximately 21 months, caused by the need to rehabilitate a well and delayed by equipment shortages, terminate a mineral interest that is granted for a term of years and 'as long thereafter as oil or gas is produced from said premises'?
Opinions:
Majority - Davison, J.
No. A temporary cessation of production does not automatically terminate a mineral interest that is conditioned upon production. The court distinguished mineral deeds from oil and gas leases, noting that leases are strictly construed against the lessee to encourage development, a policy that does not apply to mineral interest grantees who have no duty or ability to effect production. The court gave deference to the trial court's factual finding that the cessation was temporary, not permanent. This finding was supported by evidence that the lessee never intended to abandon the well, as shown by leaving the casing in place, and that the delay was reasonably caused by wartime equipment shortages. Therefore, the defendants' determinable mineral estates did not terminate.
Analysis:
This case establishes the 'temporary cessation of production' doctrine for determinable mineral interests in Oklahoma. It clarifies that the phrase 'as long as oil or gas is produced' does not mean literal, continuous, uninterrupted physical production. Instead, courts will apply a rule of reason, analyzing the cause and duration of the stoppage and the operator's diligence in restoring production. This decision provides security to the owners of term mineral interests, protecting their rights from being automatically extinguished by temporary operational issues that are often beyond their control.
