THE IMPLIED COVENANTS OF
AN OIL AND GAS LEASE
HAYNENE COMBEST
THE IMPLIED COVENANTS OF
AN OIL AND GAS LEASE
1.
WHAT IS AN IMPLIED COVENANT?
Some may agree with professor Merrill that an implied
covenant is a fiction.
He states that it is and that it is
used like other fictions by the law in order to achieve a
desirable result. 1
Some may agree with Professor Walker
that we must look behind the mere language of our decisions,
considering the grounds relied upon, to justify the implication of these covenants and that the implications are
viewed as of fact and not of law. 2
An implied covenant in an oil and gas lease is one
which may reasonably be inferred from and consonant with
the whole agreement.
Implication, when used in that sense,
is synonymous with intention.
An expressed covenant upon
a given subj~~t, deliberately entered into without fraud
or mutual mistake, excludes the possibility of an implied
covenant of a different or contradictory nature. 3
The character of the estate held by the operator has
nothing to do with the raising of these implied covenants
for they are implied in all jurisdictions regardless of
the divergent views entertained as to the operative effect
of an oil and gas lease and the legal relation thereby
established between the lessor and lessee, and even though
the operator may hold under a grant of a fee simple title
2
to the land.
The emphasis is entirely upon the fact that
a royalty is reserved, and the theory of the courts seems
to be that the creation of a royalty, the payment of which
is to be governed by the amount of production, is enough,
standing alone, to justify the implication of any reasonable obligation looking to its protection.
tion is
pa~ed
This implica-
upon the tho:ught · tha.t the prospective royal-
ties constitute one of the primary inducements for the
execution of the lease, and, since the lease makes the
pyament of this compensation to the lessor dependent upon
the diligence and care with which operations are conducted
by the lessee, the parties must have intended that these
operations would be conducted with a reasonable regard
for the interests of the lessor and not solely from the
standpoint of the lessee. 4
It has sometimes been argued that a large and substantial bonus was paid for a lease and that the royalties
did not therefore constitute the principal or moving
consideration for such lease, and that, as a result, no
covenants could be implied.
Such arguments are misleading
because implied covenants can and will be imposed upon the
lessee regardless of the size of the bonus paid to the
lessor.
For example, in the Freenort Sulphur case, supra,
the bonus was $450,000 cash.
bonus of $100,000 was paid. 5
In another leading case, a
3
Early cases in oil and gas litigation established two
standards by which the implied obligation of the lessee
was measured.
These standards are generally referred to
as the "good faith" doctrine and as the "prudent operator"
doctrine.
Generally speaking, the "good faith" doctrine
did not give the lessor any redress so long as the lessee,
acting in good faith, exercised its discretion in the
matter of business judgment and management.
The "prudent operator" doctrine has now come to be
almost uni ver6al:l:~~-£~110wed in state and federal courts,
and is the only safe rule upon which our determination of
an implied covenant problem should based.
The prudent
operator test measures the obligations of a lessee under
the facts and circumstances in each case by the manner
in which an experienced
operator of ordinary prudence
-,
would have .oper.ated, having regard for the interests of
both lessor and lessee.
At this point it might be mentioned that there is
some variation of the prudent operator doctrine in Oklahoma which has been recently adopted and will be discussed later.
The early Oklahoma rule, which might possibly
be classified as the "abandonment" doctrine, was severely
criticized by Professor Merrill.
He suggested that that
4
court should recognize the issue of implied covenants
as such "instead of wandering through the maze of a
spurious doctrine of abandonment."
He concluded his
criticism by stating that "to call an angle worm a
locomotive does not enable it to propel a freight train. ,,6
There might be some doubt as to whether this tart cirticism
actually caused the court to review its earlier decisions.
II.
CLASSES OF IMPLIED COVENANTS
Although there is some variance between writers in
the classification of implied obligations placed upon
the lessee through the application of the "good faith"
and "prudent operator" doctrines, the obligation involves
four general classifications:
1.
The obligation to drill an exploratory well. 7
2.
The obligation to develop by drilling additional
wells.
The obligation to protect the leased premises
against drainage by wells on adjoining land.8
4.
III.
The obligation to market oil and gas discovered.
DEVELOPMENT OBLIGATIONS
If oil or gas is discovered in paying quantities in
the exploratory well and there are no express provisions
governing the drilling of additional wells, it is uniformly held that the lessee must drill as many wells as are
reasonably necessary to develop the premises and to secure
5
the oil or gas for the mutual benefit of the lessor and
the lessee.9
Wherever the lessee has drilled a paying well, it is
implied (in the absence of a contradictory express development obligation) that its operations thereafter with
respect to developing the premises by additional drilling
should be conducted with reasonable diligence.
Even though
the lessee may have had the right, in the absence of drainage, to delay drilling throughout the primary term by the
payment of rentals, having once drilled a paying well
that right, for all practical purposes, no longer exists
and the delay rental clause becomes inoperative and
remains . so as long as production continues. lO This obligation continues until the premises have been fully developed.
What is .to be regarded as full development will depend upon
the .productive qualities of the premises as revealed by
dri~ling
operations thereon and upon adjoining lands.
lessee owes no duty to drill
add~tional
The
wells after it
has been established that the undeveloped part of the lease
is not sufficiently productive to pay the lessee a profit
over and above drilling and operating expense. ll
Professor Merrill is of the opinion that it should not
be any worse for the lessee to · commit drainage through wells
on adjoining lands owned by the lessee than to permit
others to do so, and, in the absence of fraud on the part
of the lessee, there should be no distinction by reason of
ownership. 12
6
However, some courts have placed reliance upon the ownership factor, stating that if the lessee owns the offending
adjoining lease that a "much stronger" case is made in
favor of finding a breach of the covenant for protectiQn. l )
Frequently, two or more producing oil and gas formations are reasonably expected to be found in the same field.
Such a situation raises several important questions.
If
gas is discovered in paying quantities, is the lessee under
an implied obligation to continue exploration below the
gas formation in search of oil?
If oil or gas is discovered
in a shallow sand which can be commercially produced, is
the lessee under an implied obligation to drill and
explore deeper sands?
A number of cases have held that
there is an implied obligation to develop production from
lower strata where the available information and circumstances give reasonable ground for believing that the
lower formations do contain commercial deposit~.14· Professor Merrill is of the opinion that lessor
i~
entitled
to have a search made for oil as well as for gas, at
least to the depths at which oil may be anticipated to
exist in the vicinity and in accordance with the doctrine
that development of the land must be had in accordance
with the doctrine that development of the land must be had
in the manner most beneficial to all parties. 1 5
His
7
opinion, however, would seem to be modified by his
statement that "the lessor ought not to demand that his
lessee shall be a perpetual wildcatter."
He suggests, as
a penalty for failure to drill deeper, that the lease be
forfeited as to the undeveloped sands only;
recognizing,
however, that the resulting operation of divided mineral
interests on the same land also has difficulties, and
stating that a new application of the remedy of partial
cancellation is to decree cancellation as to formations
which have not been properly explored or exploited,
leaving the lease in effect as to formations adequately
developed. 16
The Oklahoma Supreme Court, in a
5-4
decision, refused to go along with the formation forfeiture
theory, but stated that such relief might be granted
"sparingly and confined to those cases where complete jus-
-'.
tice can be effected by no other means."
In that case,17
a conditional decree was entered granting the defendant
60 days within which to drill a well to the deeper sands
under penalty of forfeiture 61 the lease as to the portion
not previously drilled to any formation, leaving it in
effect as to all formations in the tract drilled to and
still producing from the shallow sand.
The court stated:
It is apparent, therefore, that in the instant
case, the fact that defendants have acted as prudent
operators in refusing to test the deeper sands is
not conclusive of the question of whether they have
8
breached the implied covenant for further development. It is merely a circumstance to be considered
together with the other circumstances of the case.
Other pertinent facts are thesel At the commencement of this action nearly thirteen years had elapsed
since any well was drilled on the lease; more than
23 years had passed since the execution of the lease
and no well had ever been drilled on the northeast
forty acre tract or the east half of the southwest
quarter tract; defendants do not intend to drill
presently, but desire to hold the lease until there
is more certainty of production from deeper sand.
In another case,18 plaintiff-lessor unsuccessfully
sued for damages, contending that the defendant once
having undertaken drilling operations is required to drill
to the lowest sand in order to hold the lease;
that
stopping short of such depth would work a forfeiture of
the lease and subject the lessee to liability for failure
to resume the payment of rentals or to release the same.
The well was drilled to a shallow sand, which in many
parts of that country had been a producing sand, but no
production was, found therein.
In some sections of that paart
of the country other sands had been found' at much greater
depths.
The court held that "in the absence of any testi-
mony to the effect that there was a reasonable expectation
of finding oil or gas in paying quantities in these lower
sands, it cannot be said that defendant acted arbitrarily
or otherwise than any reasonably prudent operator would
have acted under the circumstances in discontinuing further
drilling operations."
Formation cancellation was granted in the case of
Carter Oil Co. v. Mitchell et al.,19
primarily because
9
Carter had offered to do so at the trial.
Judge Phillips
ably distinguished this case from Sauder v. Mid-Continent
Petroleum Corp.20 on the facts.
In the Sauder case a
conditional decree was entered giving the lessee a reasonable time to drill a deep well on the portion of the
lease not previously drilled.
The lessee, however, was
permitted to retain the portion on which the shallow wells
had been drilled without requirement for deeper drilling.
If wells on adjoining lands are producing oil or
gas from lower formations which indicate drainage from
the leased premises, the lessee is bound to protect
against such drainage by drilling offset wells. 2l
My conclusion with respect to implied obligations for
deeper drilling is that we should carefully determine the
facts and cricumstances in each instance and endeavor to
measure our obligations in accordance with the "purdent
operator" yardstick, tempered by the reasonable time
element, as stressed in cases in Texas and Oklahoma 22
wherein the Circuit Court of Appeals fro the Tenth Circuit
stated:
(4) From these cases we take it that while
the prudent operator" theory is yet distinctly relevant to the question of due diligence, it is not
the exclusive test; that although likelihood of
profitable production may be a factor in determining
what a prudent operator would do in the particular
circumstances, it is not conclusive of the prudence
of his conduct. Even a prudent operator must
10
excuse his unreasonable delay. What constitutes
an unreasonable delay "depends in each case upon
the circumstances rather than upon the precise time
which has expires." Skelly Oil Co. v. Boles, supra;
Doss Oil Co. v. Texas Co., supra. Thus, one year may
be unreasonable in some circumstances, and ten years
reasonable in others. Predominant in all these
cases is a conscientious effort to .arrive at a just
and equitable adjustment of the conflict of the
parties to the lease, having in mind the rights and
duties imposed by their contract, express or implied.
In the ultimate analysis, the question lies with the
Ohancellor, guided only by the cardinal principles
that govern the mutual duty of fair play.
IV.
ObliEation To Market Production
The implied covenant to market production arises
upon discovery and continues during the period the property is capable of producing commercially.
Such a duty
is obvious in order that the lessor may receive the consideration for the lease, 1. e., th.e royalties , within a
reasonable time after production has been found.
The
failure of the lessee to market may result in the creatiori of rights of action on the part of the lessor upon
three theories.
First:
The lease may be for a definite term of
years and thereafter as long as oil or gas is produced.
If production within the term is a condition precedent
to the extension of the definite term of years, and
even though oil or gas has been discovered, the lessor
may cancel the lease on the ground that it has expired
at the end of the definite term. 23
Relief may be afforded
11
the lessee where the land produces gas only and the royalties for gas are a flat yearly rental for each gas well
from which gas is marketed.
Thus, the term may be ex-
tended by the payment of such rental if a market for the
gas is not available. 24
Secondl
Failure of the lessee to market oil or gas
after discovery may be considered as evidence of an
intention on the part of the lessee to abandon the lease,
and the lessor may, having proved the other requisites,
terminate the lease as for abandonment. 25
Third:
If the lessor proceeds upon the theory that
the implied covenant to market has been breached, the
first question arising is, or course, what amounts to a
perform~~ce
or breach of such a covenant?
The test most
generally accepted is whether or not the lessee has used
due care and ' diligence in attempting to market the production, and whether that care and · diligence are such as
would be exercised by a reasonably prudent operator under
all the circumstances with due regard to the interests of
both the lessor and the lessee. 26
A question has sometimes been raised as to whether
the lessee is obligated to prepare the production for
market if it is
un~erchantable
in its natural form.
Professor Merrill states that inasmuch as the lessee is
obligated to market the production, it would seem necessarily to follow that it is the lessee's obligation : to
12
prepare it for market.
Generally speaking, if the
expense of treating or preparing the oil for market
does not involve what would be considered a costly
capital outlay, the obligation of treating or preparing
oil for market is that of the lessee.
The same rule
would apply as to gas, but in connection with the gas
cases the further question is presented as to whether
the lessee is required to erect a plant to treat natural
gas for the removal of liquids and impurities.
So far,
the decisions have not enforced any duty to construct
a plant. 27
The courts have also declined to require the
lessee to build a pipeline 28 or refinery. 29
If, however,
the lessee does erect a plant for the extraction of gasoline, the question then arises as to what portion of the
costs of extraction may be charged against the royalty
. owner.
There· appear to be. two rules with respect to
chargeable costs for such extraction.
The better reasoned
rule permits the lessee to charge to the lessor his proportionate part of the costs of ' operation; including'. -: .
shrinkage and extraction, the normal costs of manufacture
(labor and materials) and overhead charge, and a fair
return on the investment.3 0
The minority rule permits
the charging only of the bare cost of processing without
any provision for deduction of overhead charges, depre-
ciation, or return on investment.3 1
One case inferentially held that there was a duty
on the lessee to construct a plant for processing carbon dioxide gas into dry ice in that a cancellation of
the lease on which a paying gas well had been completed
was denied "on the condition that
the~
(the lessees)
proceed with reasonable diligence to market the gas
from the well, and if there be no purchaser available
that they proceed to the erection and operation of a
plant to process it."32
Going back to the main subject of implied obligation
to market, such oblication will not arise if the oil cannot be produced or the gas marketed or utilized except
at a loss to the lessee.
The lessee will' be allowed a
reasonable time after discovery within which to make
such preliminary tests and investigations as may be
necessary to establish the profitable nature of the
discovery before it will be required to make any expenditures incident to the commencement of production,
marketing, or utilization. 33
The lessee must make dili-
gent effort to market the production within a reasonable
time under all the circumstances.
The courts, in consi-
dering whether that effort has been reasonable not only
consider the time elapsed, but will consider what good
15
faith efforts have been made to sell;
facili ties are available;
the matter of price.
wt~ther
marketing
the distance "from market; and
The standard of compliance is the
reasonable diligence which would be exercised by the
ordinarily prudent operator under similar circumstances.3 4
V.
CONSEQUENCES UPON BREACH OF IMPLIED COVENANTS
The consequences of a breach of an implied covenant
are properly measured by the remedies afforded to the
lessor.
These remedies, of course, are based upon rights
and there appears to be greater disagreement between the
authorities as to the remedies than in any other phase
of the law of implied covenants.
In examining the authori-
ties, some cases can be found where damages have been
allowed for the breach of each of the implied covenants
mentioned "earlier in this paper.
With the exception of
some few cases involving the breach of the implied
covenant to protect against drainage, damages are so
speculative and remote as to be incapable of proof.
In
damage cases, the ascertainment thereof is based upon
hypothetical production, whether it be that which could
have been secured by reasonably diligent development, or
whether it be the amount of oil lost by drainage.
In
either case, the hypothetical production amounts to little
more than an intelligent guess, and frequently is no
more than conjecture or speculation.35
One author, in
16
reviewing some 30 cases in which the lessor succeeded in
recovering damages in the trial court for breach of an
implied covenant, found that in only 11 of the 30 cases
was recovery sustained upon appeal, and that in those in
which the lessor was held to have any chance of recovery,
nearly half were reversed because the proof was not
clear and conclusive enough to warrant the recovery;
stating, "certainly the remedy, even where granted, does
not seem to be a very efficient one."3 6
Concluding his
remarks he states:
Finally, it is to be noted that the engineers
and geologists disclose increasing confidence in
their ability to determine the oil content beneath
particular tracts. As this ability becomes better
established, it may furnish the basis for an
estimate of damages which will not be a gossamer
of guesswork. When that time comes, the objections
to this form of remedy largely will be done away
with.3?
,
The law :of oil and gas is distinctive by reason of
the fact that rules of general application in other
fields undergo a change when anointed with oil.
Thus,
the policy of the law against forfeitures and especially
the reluctance of courts to aid in enforcing a forfeiture
are overcome by the fact that damages do not furnish an
adequate remedy.
A forfeiture of lease in the law of
oil and gas was generally conceived to effectuate justice
by relieving the lessor of the burden imposed upon his
land by a fruitless or insufficiently developed and pro-
17
tected lease.3 8
A strict forfeiture of the entire lease
did not, however, give recognition to the rights and
interests of the lessee, and thus the conditional or
alternative decree was devised and would appear to be
most fair to both parties.
It avoids the uncertainty and conjecture
involved in the attempt to ascertain the damage
inflicted upon the lessor by a breach of one of
the implied covenants. It does away with the
injustice of refusing relief to the lessor where
it is perfectly clear that serious loss is resulting from a failure to explore, develop,
operate or protect the prem1ses, merely because
it is impossible accurately to determine the extent
of such loss. On the other hand, the hardship to
the lessee arising out of the complete destruction
of a valuable property interest without opportunity of salvage, as a penalty for having misjudged
the extent of his obligation under the particular
circumstances of the case -- a hardship which is
inseparable from the remedy of strict forfeiture -is obviated by the alternative decree. The lessee
may be given opportunity to fulfill the obligations
imposed by the judgment upon such conditions as to
time, diligence, extent of development, sands to
be expToited, etc., as the circumstances of the case
may make fair and equitable. If he feels that the
conditions imposed are too onerous, he is not
required to assume the burden. If he chooses not to
incur the expense and take the risk involved in
complying with the decree, the alternative may be
so drawn -- and, it is submitted, in most cases
should be so drawn -- as to permit him to retain the
portions of the lease which he has properly developed,
operated and protected and such producing wells, with
a reasonable protection area, as he may have drilled
upon other portions, forfeiting only those areas as
to which he refuses to perform the obligations
judicially implied in the lease.39
In closing, I might emphasize again that our action
will be determinative in a lawsuit on an implied covenant
18
as to whether we will be permitted to retain our lease in
whole or in part.
Therefore, it is extremely important
that in our daily operations we operate as an experienced
operator of ordinary prudence, having regard not only for
our interests, but for those of the lessor and other
interest owners as well;
that we should not be guilty of
any unreasonable delays in our actions;
and that we
should always be guided by the principles of fair play.
Footnotes
1.
Merrill, Covenants Implied in Oil and Gas Leases, p. 27.
2.
Oil and Gas Law from Texas Law Review, p. 452, also see
Hemingway, Oil and Gas Law, West, Hornbook Series,
1971, § 8.1-8.13.
3.
Brimmer v. Union Oil Co. of California (C.C.A. 19),
81 F.2d 437; Brewster v. Lanyon Zinc Co. (C.C.A. 6),
140 Fed. 801; Shell Petroclum Corp. v. Shore (C.C.A.
10), 72 F.2d 193; Freeport Sulphur Co. v. American
Sulphur Royalty Co. (S. ct. Tex.), 117 Tex. 439,
6 S.W.2d 1039, 60 A.L.R. 890.
4.
A. W. Walker, Jr., Oil and Gas Law from Texas Law
Review, Page 452, also Hemingway, supra, § 8.1.
5.
Waggoner Estate v. Sigler Oil Co. (S. ct. Texas),
118 Tex. 509, 19 S.W.2d 27; Clifton v. Loontz, 160
Texas 82, 325 S.W.2d 684; Felmont Oil Corp. v.
Pan American Petroleum Corp., Tex. Cir. App., 334
s. W. 2d 449.
6.
Merrill, Covenants Implied in Oil arid Gas Leases, p. 327.
7.
Delay rental provisions have made this obligation practically obsolete. It has been held, in the absence of
a delay rental provision~ that the lessee may not hold
the lease for an unreasonable length of time without
drilling '~n exploratory well.
(See 2 Summers Oil and
Gas, Page 310, Paragraph 396; Merrill, Covenants Implied in Oil and Gas Leases, Chapter II.) .
8.
With the exception of matter of damages, this obligation
and the obligation to drill additional wells are similar and will be hereinafter discussed under the heading
of "Development Obligations."
9.
Merrill, Covenants Implied in Oil and Gas Leases, pages
148-153, Paragraph 57; Clifton v. Koontz, supra, note 5;
Fontenot v. Austral Oil Exploration Co~, 168 F.2d
36, affd., C.A. 5th, 266 F.2d 959.
10.
Oil and Gas Law from Texas Law Review, pp. 459, 461,
468, 470; Berry v. Wondra et aI, (Kans), 246 P.2d 282.
11.
Oil and Gas Law from Texas Law Review, p. 472;
v. Koontz, supra, note 5.
Clifton
12.
Merrill, Covenants !mplied in Oil and Gas Leases, p. 260.
13.
Humphrys Oil Co. v. Tatum (C.C.A. 5), 26 F.2d 882;
Hartman Ranch Co. v. Associated Oil Co. (Calif),
73 P.2d 1163; Swope v. Holmes (La.), 124 S. 131;
Central Kentucky Nat. Gas Co. v. Williams (Ky.), 60
S.W.2d 580; Geary v. Adams Oil & Gas Co. (E.D.,
Ill.), 31 F. SUpPa 830; Gregg v. Harper-Turner Oil
Co. (C.C.A. 10), 199 F.2d 1. In the Gregg case it
was held that the lessee's responsibility became
greater as to non-unitized land after the productive
portion of the lease was included in a unit agreement
in which the lessee owned the entire acreage.
14.
Jones v. Interstate Oil Corp. 115 Calif. A. 302, 1 P.
1051; Webb v. Croft, 120 Kan. 654, 244 P. 1033,
Southern Oil Co. v. Frazier, 206 Ky. 739, 268 S.W.
343; Logan v. Tholl Oil Co., 189 La. 645,180 s. 473;
Berthelote v. Loy Oil Co., 95 Mont. 434, 28 P.2d 187;
Papoose Oil Co. v. Rainey, 89 Okla. 110, 213 P. 883.
15.
Merrill, Covenants Implied in Oil and Gas Leases,
pp. 175-176.
16.
Merrill, Covenants Implied in Oil and Gas Leases, p. 366.
17.
McKenna et aI, v. Nichlos et al, (Okla. ) , 145 P2d
957.
18.
Berryman et ale v. Sinclair Prairie Oil Co. (C.C.A.
10), 164 F.2d 734, 736.
19.
100 F.2d 945 (C.C.A. 10).
20.
292 U.S. 272, 78 L. ed. 1255, 93 A.L. R. 454.
21.
Oil and Gas Law from Texas Law Review, pp. 373, 474,
and cases cited; Merrill, Covenants Implied in Oil
and Gas Leases, pp. 173-177.
22.
Trust Co. of Chicago v. Samed~~ Oil Corp. (U.S.C.A.
10) 192 F.2d 282, 285. In Clifton v. Koontz, supra,
note 5, the Texas Supreme Court has rejected the Souder
case and strongly adopted the prudent operator rule.
23.
2 Summers:. Oil and'Case pr. 349,· Hemihgway~ - supra, note
2, § 89 (A) (D).
24.
2 Summers Oil and Gas, pp. 138, 349.
25.
Beatty-Nickel Oil Co. v. Smethers (Ind. App.), 96
N.E. 19: Collins v. Mt. Pleasant a 1 & Gas Co.
(Kan.), 118 P. 54; Monarch Oil & Gas Co. v. Hunt
(Ky.), 235 S.@. 772; Pennagrade Oil & Gas Co. v.
Martin (Ky.), 277 S.W. 302; American Wholesale Corp.
v. F. & S. Oil & Gas Co. (Ky.), 45 S.W.2d 498; Carroll
Gas & Oil Co. v. Skaggs (Ky.), 21 S.W.2d 445; Lowther
Oil Co. v. Miller-Sibley Oil Co. (W. Va.), 44 s.E.433;
Freeman v. Magnolia Petroleum Co. (Tex.), 171 S.W.2d
339.
26.
2 Summers Oil and Gas, pp. 350-352.
27.
Armstrong et all v. Skelly Oil Co. et aI, (C.C.A.
5), 55 F.2d 1066.
28.
Kretni Development Co. v. COBsolidated Oil Corp.
(C.C.A. 10), 74 F.2d 497.
29.
Keenan v. Texas Production Co. et ale
84 F.2d 826.
30.
Armstrong et ale v. Skelly Oil Co. et al., supra.
31.
Coyle v. Louisianan Gas & Fuel Co. (La.) 144 S.737;
Crichton et al v. Standard Oil Co. of Lousiana (La.),
150 S. 668; Wall et al v. United Gas Public Service
Co. (La.), 152 S. 561.
32.
Libby v. DeBaca et ala
33.
Oil and Gas Law from Texas Law Review, Pages 487-488,
and cases cited.
34.
Merrill, Covenants Implied in Oil and Gas Leases,
Pages 212, Paragraph 84; 2 Summers Oil and Gas, pp.
347, 381;"383; Christianson et al v. Champlin Refining
Co. et all (Kan.), 240 P.2d 464. Althoughthese
.
cases primarily concern the question of termination of
leases, the rules with respect to the duty to market are
as stated above.
35.
Cooper et al v. Ohio Oil Co., supra.
36.
Merrill, Covenants Implied in Oil and Gas Leases, p. 358.
37.
Merill, Covenants Implied in Oil and Gas Leases, pp.
359-360.
38.
Acme O. & Min. Co. v. Williams (Calif.), 74 P. 296.
39.
T.:errill, Covenants Implied in Oil andGas Leases, pp.
368-387.
(C.C.A. 10),
(N.M.), 179 P.2d 263, 266.