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Amoco Production Company v. Braslau

Supreme Court of Texas
561 S.W.2d 805 (Tex. 1978)


Facts

Frank and Morris Braslau (defendants) issued term royalty interests to Amoco Production Company (Amoco) (plaintiff) that were to last for 15 years and as long thereafter as “oil or gas was produced from the lands described.” The operator on the land, Atlantic Richfield Company (Arco), drilled a well on the land. During drilling, Arco found indications of oil at four different depths, named Sands A, B, C, and D. Arco completed the well and began production in Sands B and D. After the 15-year primary term expired, Sand B was depleted, and production in Sand D was becoming unprofitable because of the high cost of production at that depth. As a result, Arco ceased production in Sand D. The following day, Arco began work to recomplete the well on Sands A and C. During the recompletion process, the well broke down and became unusable. Arco immediately moved to the depth of Sand C and drilled a second well that quickly began producing oil. In total, there was no production on the land for 103 days. Amoco brought suit for a declaratory judgment that its term royalty had not expired with the cessation of production. The trial court ruled in favor of Amoco. The Texas Court of Civil Appeals reversed. Amoco appealed.

Rule of Law

Issue

Holding and Reasoning (Greenhill, C.J.)

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