Pennington v. Continental Resources, 961 N.W.2d 264

Plaintiffs executed three‑year oil and gas leases (with a one‑year lessee option) on McKenzie County land; leases assigned to Continental in 2014.
Leases contained a "regulation and delay" clause (express force majeure) allowing the lessee to add periods of regulatory prevention/delay to the lease term.
Continental applied in 2012 for a drilling permit for a 2,560‑acre spacing unit but could not obtain required federal approvals; recorded an affidavit of regulation and delay in October 2015 asserting extension of the primary term.
The state Industrial Commission approved a reduced 1,920‑acre spacing unit in November 2015; pooling occurred January 2016; Continental began drilling and production occurred in 2017.
Plaintiffs sued (2017), claiming the leases expired October 25, 2015. The district court initially granted Continental summary judgment; the North Dakota Supreme Court in 2019 affirmed in part, reversed in part, and remanded solely to decide whether Continental acted diligently and in good faith in pursuing permits.
On remand after a bench trial the district court found Continental acted diligently and in good faith, concluded the delay extended the leases (to December 24, 2017), and held Plaintiffs’ new arguments were precluded by the law of the case and the mandate rule; the Supreme Court affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the leases expired at the end of the primary term despite permitting delays	Pennington: primary term expired Oct 25, 2015; regulation/delay clause does not extend primary term or require production after primary term	Continental: clause is a force majeure that applies to primary and secondary terms and extends the term for regulatory delays	The court upheld that the clause can extend the primary term; on remand found Continental acted diligently and in good faith, so the delay extended the leases and they did not expire
Whether Plaintiffs may raise new arguments on remand (e.g., crediting delays before Continental had lease interest; production requirement)	Pennington: these arguments were not properly raised earlier and concern lease term validity	Continental: law of the case and the mandate rule bar relitigation of issues outside the limited remand	Held: Plaintiffs’ new arguments are precluded by the law of the case and the mandate rule; district court properly adhered to the prior mandate

Pennington v. Continental Res., 2019 ND 228, 932 N.W.2d 897 (prior opinion: held the regulation-and-delay clause is an express force majeure and remanded on diligence/good‑faith issue)
Glass v. Glass, 2018 ND 14, 906 N.W.2d 81 (discusses res judicata and law of the case foundations)
Jundt v. Jurassic Res. Dev., N. Am., L.L.C., 2004 ND 65, 677 N.W.2d 209 (res judicata and preclusion principles)
Montana‑Dakota Utils. Co. v. Behm, 2020 ND 234, 951 N.W.2d 208 (explains the mandate rule and district court obligations on remand)
Dale Expl., LLC v. Hiepler, 2020 ND 140, 945 N.W.2d 306 (application of law of the case to prohibit relitigation on remand)
Ceynar v. Barth, 2017 ND 286, 904 N.W.2d 469 (interlocutory nature of summary judgment orders vs. final judgment)