Edra Lee Oil & Gas Co. v. Dials' Administrator

Opinion op the Court by Drury, Commissioner Reversing. The Edra Oil & Gas Company has appealed from a $600 judgment recovered against it by the administrator and heirs of J. F. Dials. On February 10, 1922, J. F. Dials executed to James Potter an oil and gas lease in which in addition to the usual terms of such instruments, there is this provision: “The second party agrees to drill a well each six months after one well is, drilled on said premises or on failure to do so to pay first party Two Hundred ($200.00) Dollars for each six months a well is not drilled until lease is developed.” The Edra Oil & Gas Company became the owner of this lease by an assignment of it from Potter. It began drilling in due season and put down five wells that cost it about $20,000. These wells were poor producers, their aggregate yield is now less than ten barrels per day. In the opinion of the lessee, that was sufficient development and it stopped drilling. The correctness of the judgment before us depends on whether or not this leasehold has been developed. Courts leave and should leave the drilling of additional wells very much to the discretion of the lessee as it is he who must pay therefor. See Hughes v. Busseyville Oil & Gas Co., 180 Ky. 545, 203 S. W. 515; Austin v. Ohio Fuel Oil Co., 218 Ky. 310, 291 S. W. 386; Paraffine Oil Co. v. Cruce, 14 A. L. R. 969; Grass v. Big Creek Development Co., 75 W. Va. 719, 84 S. E. 750, L. R. A. 1915E, 1064; Swiss Oil Corporation v. Risner, 223 Ky. 397, 3 S. W. (2d) 777; Warfield Natural Gas Co. v. Allen, 248 Ky. 646, 59 S. W. (2d) 534, 91 A. L. R. 890. The evidence regarding probable results of further drilling in view of dry holes on adjoining property is conflicting, but certainly it does not show the lessee abused its discretion by stopping when it did. Judgment reversed with directions to set it aside and dismiss the petition.