OIL AND GAS - INTERPRETATION OF LEASE CONTAINING ROYALTY PROVISIONS

Several of the plaintiffs owned oil-producing land in Oklahoma and had leased it to one Briggs. The lease ran for a fixed term and "so long thereafter as oil or gas may be produced therefrom by the lessee." It provided for a royalty payment to the lessor of one-eighth of the oil or gas produced, and gave the lessee the right "at any time" to remove all machinery and equipment placed on the premises, including the right to draw and remove the casing. Briggs sold the equipment thereon to defendant and later sold the lease itself to one of the plaintiffs. Briggs had told the defendant that the land was no longer producing oil in "paying quantities," so defendant attempted to remove the equipment without the lessor's consent.

The plaintiffs immediately brought suit in the court of equity to enjoin defendant from removing this equipment. Held, for the plaintiffs on the grounds that (1) the phrase "at any time" must be read with other provisions in the lease; (2) the question whether oil was being produced in "paying quantities" was not to be decided by the defendant alone, but rather by a joint agreement with the lessor or by judicial determination; and (3) it would be detrimental to the legal interests of the lessor if the defendant were allowed to remove the equipment. Okmulgee Supply Corp. v. Anthis, (Okla. 1940) 114 P. (2d) 451 (second rehearing denied June 24, 1941).