Sauder v. Mid-Continent Petroleum Corp., 292 U.S. 272 (1934)

Please note: this case begins in mid-page. It therefore shares a citation with the last page of the previous case. If you are attempting to follow a link to the last page of 292 U.S. 263, click here.

Sauder v. Mid-Continent Petroleum Corp.

No. 660

Argued April 3, 1934
Decided April 30, 1934
292 U.S. 272

CERTIORARI TO THE CIRCUIT COURT OF APPEAL

FOR THE TENTH CIRCUIT

Syllabus

1. Under an oil and gas lease on a royalty basis for a stated number of years and so long thereafter as oil or gas can be produced in paying quantities, a lessee who has produced oil in paying quantities from a fraction of the land and continues such production after the expiration of the primary term remains under an implied obligation to prosecute development of the other part. P. 279.

2. The lessee, in the circumstances stated, cannot hold the undeveloped part of the land indefinitely, as against the lessor, merely because it may contain oil, and without drilling or any present intention to drill at any time in the future. P. 279.

3. Where the lessee in an oil and gas lease covering a forty-acre tract and an adjacent half section produced oil on the forty acres, but for many years abstained from drilling on the half-section, held that the lessor was equitably entitled to have the lease cancelled as to the half-section unless, within a reasonable time, an exploratory well were drilled upon it. P. 281.

67 F.2d 9 reversed.

Certiorari, 291 U.S. 655, to review the reversal of a decree cancelling in part an oil and gas lease in a suit begun by the lessor in a state court and prosecuted by his administratrix and heirs after removal.