Community Bank of Raymore v. Chesapeake Exploration, LLC

416 S.W.3d 750 (2013)

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Community Bank of Raymore v. Chesapeake Exploration, LLC

Texas Court of Appeals
416 S.W.3d 750 (2013)

SC

Facts

Community Bank of Raymore (CBR) (plaintiff) issued an oil and gas lease to Chesapeake Exploration, L.L.C. (Chesapeake) (defendant). The lease provided that it would expire at the end of the primary term unless Chesapeake started a continuous-development program on the land. The lease also stated that “[a]t the expiration of the Primary Term or the conclusion of the continuous development program,” the lease would terminate with respect to all formations below the depth at which Chesapeake was drilling. Chesapeake drilled a producing well on the property during the primary term of the lease and developed the land in accordance with the lease’s requirement of a continuous-development program. After the conclusion of the primary term, CBR sought to have Chesapeake release any mineral rights that Chesapeake owned at depths deeper than the drilled well. Chesapeake refused and did not cease its continuous-development program. CBR brought suit against Chesapeake for a judgment declaring that Chesapeake had no rights to minerals at depths deeper than the drilled well. The trial court found in favor of Chesapeake. CBR appealed.

Rule of Law

Issue

Holding and Reasoning (Rodriguez, J.)

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