Reynolds-Rexwinkle Oil, Inc. v. Petex, Inc.
Kansas Supreme Court
1 P.3d 909 (Kan. 2000)
Herman and Loretta Schippers issued an oil and gas lease that was later acquired by Reynolds-Rexwinkle Oil, Inc. (Reynolds) (plaintiff). The lease was to expire on February 5, 1994. In May 1993, Reynolds assigned its interests in the lease to Petex, Inc. (Petex) (defendant), save for a 1.5% royalty: “The Assignor herein hereby expressly excepts, reserves, and retains title to an undivided 1.5% of 8/8ths of all [minerals] from the described land under the provisions of the [Schippers] lease, or any extension or renewal thereof, as an overriding royalty, free and clear of any costs and expense of the development and operation thereof, excepting taxes applicable to said interest and the production therefrom.” In August 1993, before the lease expired, the Schipperses and Petex executed a new oil and gas lease with substantially the same terms as the lease that Reynolds had assigned. This top lease was to take effect, and did take effect, on February 6, 1994, or the day after the original lease expired. In November 1994, Petex drilled a producing well on the property. Reynolds demanded payment based on its claimed overriding 1.5% royalty interest. Petex claimed that Reynolds’s interest had expired with the original lease. Reynolds brought suit. The trial court granted Reynolds summary judgment. The court of appeals reversed. Reynolds appealed.
Rule of Law
Holding and Reasoning (Larson, J.)
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