Drilling Dispute: Anatomy Of A Mineral Lease Case
Texas oil attorneys Charles Sartain and Brooke Sizer wrote today about an interesting Louisiana case concerning the challenge of a 108-year old lease of mineral rights. The plaintiffs are the lessor in the case and the defendant, Exxon Mobil, is the lessee.
In 1907, leases on over 3,000 acres of land in northwestern Caddo Parish, LA were executed by the plaintiff’s predecessor to the defendant’s predecessors, who sold the mineral rights to Standard Oil (now Exxon Mobil) in 1920.
The lease terms spell out that the leases were granted “for a term of ten years from date hereof and as much longer thereafter as gas or oil is found or produced in paying quantities […]”.
And that’s where the fun begins, because the lessor believed the lessee was failing to drill deeper than 6,000 feet, even though there are hundreds of shallow and productive oil wells on the property. The lessor asked for cancellation and release of the portion of the leases below 6,000 feet.
Long story short: Exxon wins. To find out why — and to learn why 99 year lease term limits in this case did not apply, check out the entire JDSupra post by Sartain and Sizer (and enjoy the wonderful baseball metaphors put on display in the telling of the tale).
Additional background: a link to the appellate court case spelling out the facts.