Panhandle Eastern Pipe Line Co. v. Isaacson

The predecessor in interest of M. E. Isaacson (plaintiff) deeded a tract of land to Elmer Hall. The tract included a portion of Section 21 and a portion of Section 22. The deed reserved an undivided one-fourth mineral interest in the lands for a primary term of 15 years and as long thereafter as minerals were produced from the lands. Isaacson issued an oil and gas lease, leasing his one-fourth mineral interest. Hall’s heirs issued to Panhandle Eastern Pipe Line Company (Panhandle) (defendant) two oil and gas leases, one for a portion of Section 21 and one for Section 22, leasing the mineral interests in the land initially granted to Hall. Hall’s heirs also issued to The Texas Company (Company) (defendant) an oil and gas lease, leasing minerals in the other portion of Section 21. A test well was drilled on a segment of Section 22 that was not covered under the above grant or leases, and gas was discovered. Subsequently, the Oklahoma Corporation Commission (Commission) issued a spacing-unit order covering all of Sections 21 and 22. The order provided that the sections would be separate units for drilling and exploration purposes. Isaacson’s 15-year primary term expired. Isaacson brought suit against Panhandle and the Company to quiet title in his term mineral interest reserved under the deed to Hall. The trial court found that the test well on Section 22 extended Isaacson’s term mineral interest in both Sections 21 and 22. The defendants appealed, arguing that Isaacson’s interest on Section 21 had terminated.