EDWARD ARDEN BLAIR, JAMES THOMAS BLAIR, ROBERT PIERSON BLAIR, JAMES LOWDEN BROWN and FRANCES ELIZABETH CRAWFORD STROUD, Plaintiffs/Appellees,
NATURAL GAS ANADARKO COMPANY; HW ALLEN CO., LLC; STEPHEN J. JATRAS and RICHARD WRIGHT, CO-TRUSTEES OF STEPHEN J. JATRAS PROPERTY TRUST DATED 8/17/1988; COVE PETROLEUM CORPORATION; L.H.H., INC.; ARI-MEX LAND COMPANY; PATRICIA W. WHEELER; ZENERGY, INC., F/K/A Zinke & Trumbo, LTD.; and NEIL A. KILBANE, Defendants/Appellants, and THE UNKNOWN HEIRS AND DEVISEES OF STEPHEN J. JATRAS, Deceased; AGATE PETROLEUM, INC.; and LEXINGTON ENERGY COMPANY, Defendants.
Mandate Issued: 11/14/2017
FROM THE DISTRICT COURT OF BEAVER COUNTY, OKLAHOMA HONORABLE
RYAN D. REDDICK, TRIAL JUDGE
L. Smith, MAHAFFEY & GORE, P.C., Oklahoma City, Oklahoma,
for Plaintiffs/Appellees Edward Arden Blair, James Thomas
Blair, Robert Pierson Blair, and James Lowden Brown.
Michael E. Smith, HALL, ESTILL, HARDWICK GABLE, GOLDEN &
NELSON, P.C., Oklahoma City, Oklahoma, for
Defendants/Appellants Natural Gas Anadarko Company; HW Allen
Co., LLC; Cove Petroleum Corporation; L.H.H., Inc.; Ari-Mex
Land Company; Ameritrust Corporation, an Oklahoma Trust
Company, Trustee of the Stephen J. Jatras Oil & Gas
(F/K/A Stephen J. Jatras Property Trust Dated 8/17/1988); and
U. White, Jr., Tulsa, Oklahoma, and Jon E. Brightmire,
DOERNER, SAUNDERS, DANIEL & ANDERSON, L.L.P., Tulsa,
Oklahoma, for Defendants/Appellants Zenergy, Inc., f/k/a
Zinke & Trumbo, LTD. and Neil Kilbane.
L. GOODMAN, CHIEF JUDGE.
Natural Gas Anadarko Company, et al., (Defendants) appeal the
trial court's May 12, 2014, order granting summary
judgment to Plaintiffs Edward Arden Blair, James Thomas
Blair, Robert Pierson Blair, James Lowden Brown, and Frances
Elizabeth Crawford Stroud.  Plaintiffs sought
cancellation of an oil and gas lease held by Defendants and
an order quieting title to the well located within the lease.
Defendants claimed the lease did not expire and denied
Plaintiffs were entitled to summary judgment. The trial
court, following an evidentiary hearing, held that by
operation of the lease terms, the leasehold had expired. The
trial court denied relief to Defendants and granted judgment
to Plaintiffs. The appeal was assigned to the accelerated
docket pursuant to Oklahoma Supreme Court Rule 1.36(a)(1), 12
O.S.2011, Supp. 2013, Ch. 15, App. 1 and In Re Amendments
to Oklahoma Supreme Court Rules, 2013 OK 67.
Based on our review of the facts and applicable law, we
reverse and remand with directions.
The parties dispute whether a Beaver County oil and gas lease
terminated because, for three 90-day periods, it was
The lease was executed on June 12, 1981, filed of record June
18, 1981, and covers the E/2 of Section 33-1N-21ECM in Beaver
County. The subject well, Blair No. 1-33, is located in this
section. The primary term of the lease was three years from
June 20, 1981. Plaintiffs own an undivided one-half interest
in the lease. Defendants are assignees of the lease and
operate the well.
The lease is represented  to contain the following language:
If, after the expiration of the primary term of this lease,
... production on the leased premises shall cease from any
cause... this lease shall not terminate provided lessee
resumes or commences operations for the drilling or reworking
of a well within ninety (90) days from the date... cessation,
and this lease shall remain in force and effect during the
prosecution of such operations, and if production results
therefrom, then as long as such production continues or the
well or wells are capable of producing.
It is uncontested that the well was completed and producing
during the initial three-year term of the lease, and
Plaintiffs admit that "from July 1, 2012 through
December 31, 2012, there was no period when the Blair No.
1-33 Well ceased to physically produce oil for 90 consecutive
days." (Emphasis in original).  Plaintiffs contend,
however, that following three chosen 90-day spans of time,
the well did not cumulatively produce in paying quantities.
Therefore, Plaintiffs argue the 90-day cessation of
production provision, set out above, operated to terminate
Plaintiffs did not allege, nor did the trial court address,
any violations of any explicit or implied duties of
Defendants to market the oil produced from Blair 1-33, nor
that any other provision of the lease was violated.
Seeking summary judgment, Plaintiffs presented evidentiary
material showing the cumulative lifting costs and income from
the sale of oil from the well. Plaintiffs argue that during
specific 90-day periods, the total lifting costs at the end
of those 90 days exceeded the value of the oil sold, causing
the cessation of production clause to operate and terminate
the lease. Defendants filed a response and argued the
evidentiary material reflects that there were several times
during those periods in which the well did produce in paying
quantities, which "interrupted the cessation of
production" and therefore there was never any
consecutive 90-day span in which production ceased
completely. They then requested summary judgment in their
A hearing on both summary judgment motions was held on March
25, 2014. All parties presented arguments and evidentiary
material in support of their respective positions. The trial
court entered an order, filed May 12, 2014, containing the
following findings of fact.
4. During the ninety (90) day period from July 18, 2012
through October 15, 2012... lifting expenses for the [well]
exceeded the value of the oil produced during such time
5. During the ninety (90) day period from August 1, 2012
through October 29, 2012... lifting expenses for the [well]
exceeded the value of the oil ...