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Sun Exploration and Production Co. v. Jackson
Supreme Court of Texas
783 S.W.2d 202 (Tex. 1989)
Ocie Jackson (defendant) leased oil and gas rights to Sun Exploration and Production Company (Sun) (plaintiff). The lease covered 10,000 acres of land. Sun drilled three wells on the land and discovered oil in a portion of the land known as the Oyster Bayou Field. Jackson asserted that Sun had developed only the Oyster Bayou Field and failed to develop the rest of the land. Sun brought suit for a declaratory judgment that the lease was still valid, and for an injunction enjoining Jackson from preventing Sun access to the leasehold. Jackson countersued for breach of the implied covenant to further develop and explore, and sought cancellation of the lease. The trial court’s jury instructions asked the jury to determine whether Sun had reasonably developed the leasehold, as well as whether Sun had reasonably explored the leasehold. The jury found that Sun had not failed to develop the leasehold, but that Sun had failed to reasonably explore the entire leasehold. The trial court cancelled the lease on one portion of the leasehold conditionally and on one portion of the leasehold unconditionally. The court of appeals reversed the conditional cancellation, but affirmed the unconditional cancellation. Both parties filed motions for rehearing, which were overruled. The Supreme Court of Texas reviewed the courts of appeals’ decision.
Rule of Law
Holding and Reasoning (Ray, J.)
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