Stewart v. Amerada Hess Corp.

604 P.2d 854, 65 O. & G.R. 530 (1979)

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Stewart v. Amerada Hess Corp.

Supreme Court of Oklahoma
604 P.2d 854, 65 O. & G.R. 530 (1979)

SC

Facts

The predecessor in interest to Edward Stewart (plaintiff) issued an oil and gas lease to Amerada Hess Corporation (Amerada) (defendant). The lease provided that it would remain in effect after the primary term for so long thereafter as oil and gas were produced from the leasehold in paying quantities. Stewart brought suit to terminate the lease on the ground that oil and gas were no longer being produced in paying quantities. In calculating paying quantities, Stewart did not include production-equipment depreciation in Amerada’s operating costs. The trial court agreed with this calculation methodology but held that Amerada had superior lease rights. Stewart appealed. The court of appeals reversed, holding as a matter of law that Amerada’s lease had expired due to nonproduction. Amerada appealed.

Rule of Law

Issue

Holding and Reasoning (Opala, J.)

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