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Stanolind Oil & Gas Co. v. Barnhill

Texas Court of Civil Appeals
107 S.W.2d 746 (Tex. Civ. App. 1937)


Facts

On February 4, 1930, J. R. Barnhill (plaintiff) signed an oil and gas lease, leasing oil and gas rights on his property to the Stanolind Oil & Gas Company (Stanolind) (defendant). The lease provided that the lease would continue for five years, “and as long thereafter as oil or gas, or either of them, is produced in paying quantities from the land by the lessee.” Stanolind commenced drilling in December 1930. Stanolind found gas and completed drilling in March 1931. However, despite Stanolind’s efforts, there was no market for the type of gas Stanolind found until October 1935. Stanolind thus could not sell any of the gas it found until that time. On October 9, 1935, Stanolind entered into a contract to sell gas from the Barnhill well to the Phillips Petroleum Company (Phillips). Before the contract could be performed, however, Barnhill informed Stanolind and Phillips that Stanolind’s lease had terminated on February 4, 1935, due to failure to produce oil or gas in paying quantities. Stanolind brought suit against Barnhill, seeking a judgment that the lease was still valid when it contracted with Phillips. The trial court found in favor of Barnhill. Stanolind appealed.

Rule of Law

Issue

Holding and Reasoning (Stokes, J.)

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