Samano v. Sun Oil Co.

On March 29, 1934, Sun Oil Company and Tanya Oil Company (collectively, Sun) (defendant) entered an oil-and-gas lease with George Samano (plaintiff). The lease contained a habendum clause (i.e., a clause defining the lessee’s rights and interests) that provided that the lease would remain in force for a primary term of 10 years “and as long thereafter” as oil, gas, or other minerals were produced from the land, “or as long thereafter” as Sun conducted drilling or reworking operations with no cessation of more than 60 consecutive days until successful production resulted. The primary lease term ended on March 29, 1944, but production of minerals extended the lease into a secondary lease term until production stopped on May 4, 1977. After production stopped, Sun did nothing to restore production for 73 consecutive days. Samano brought an action against Sun seeking a declaratory judgment that the lease had terminated because Sun had ceased production and had not conducted any drilling or reworking operations for more than 60 consecutive days. The trial court granted summary judgment for Samano. However, the appellate court reversed, holding that the 60-consecutive-day drilling-or-reworking requirement applied only during the primary lease term and not during the secondary lease term. Samano appealed to the Texas Supreme Court.