This аction was initiated by plaintiffs in error, plaintiffs below, against defendants in error, defendants below, to cancel an oil and gas lease on the NJ4 of the NE14, and the SE14 of the NE14, Section 5, Townshiр 13 North, Range 6 East, I. M., Lincoln County, Oklahoma, and to recover royalty payments under the lease alleged to have been lost to lessors by reason of drainage permitted by the lеssees. Trial was to the court, and the defendants’ motion for judgment at the conclusion of plaintiffs’ evidence was sustained. Plaintiffs’ motion for a new trial was denied and they have apрealed. We shall continue to refer to the parties by their trial court appellation.
Plaintiffs’ petition filed in August, 19SS, alleged their ownership of the mineral estate in the described рroperty and defendants’ ownership of leases to that property executed by plaintiffs in March, 1950, for a primary term of two years. It was also alleged that defendants had drilled two wells on the premises; one on the SEJ4 of the SE14 of the NE14, and the other on the NW'j4 of the NWJ4 of the NE14. As grounds for cancellation, plaintiffs alleged that these two wells “were not drilled, complеted and operated” in a proper manner; that they “have not been operated and managed” in a proper manner and have “produced very little, if any, gas sincе” August 1, 1954; that off-sets to both wells have produced in commercial quantities; that defendants have failed to protect the leasehold by drilling off-set wells to commercial producеrs on adjacent property; that defendants have failed to fully develop the leases as a reasonably prudent operator would have done; that plaintiffs have made a written demand for further development with which defendants have failed to comply. Plaintiffs’ petition concluded with an allegation that they had been damaged by loss of their royalty by drainage from the property to off-set wells on other property. Defendants controverted all these allegations and alleged that they had operated as a rеasonably prudent operator; that they have sufficiently developed the premises; and that they had complied with all the provisions of the leases.
One of the assignments on аppeal is that the court erred in denying plaintiffs’ demand for a jury trial. Whether or not a jury trial was necessary depends primarily upon the nature of the issues made by the pleadings. Howard v. Stanolind Oil & Gas Co.,
On the merits of the action, it appears from the evidence that produсtion in this area is from the Prue sand at around 3000 feet. ■ The well spacing unit is ten acres. The greatest production of oil from this sand is from wells west of plaintiffs’ property. Wells east from plaintiffs’ land have produced mostly gas or have been dry holes. The expert opinion testimony established that the Prue sand varied in thickness from almost nothing in the NE corner of plaintiffs’ proрerty to a depth of approximately 90 feet in the NW14 of this section, west from plaintiffs’ property, and that the west and southwest corner of plaintiffs’ property have a sand depth of 40 feet or more. All but three of the possible locations west and south of plaintiffs’ land have been drilled and production obtained. The southeastern-most location on plaintiffs’ property was drilled first. The second well was drilled in 1952 in the northwestern-most location. Each well has produced gas and some oil. One of the plaintiffs testified that when he inquired of an offiсial of one of the defendants concerning additional development, the official told him “they had spent too much money and just wasn’t interested in spending any more down there.” Plaintiffs’ еxpert witness testified that there were two or three locations on plaintiffs’ land at which oil might be found. These locations were off-sets to producing wells on the adjacent prеmises. He also testified that there had been some drainage to these adjacent wells from plaintiffs’ property. The expert was unwilling, however, to state an opinion as to thе possibility of producing any commercial wells on plaintiffs’ land. Plaintiffs also introduced evidence to establish the extent of production of oil and gas from the premises on their wеst, as well as the amount of oil and gas produced from the two wells on their own property. More important, however, the following was unequivocally established. The two wells on plаintiffs’ property were completed as commercial producers, and gas and some oil were sold from the leases until November, 1954: No oil or gas was sold from the leases from November 23, 1954, until seven months after this action was filed, when runs from each well for approximately two weeks in March, 1956, were sold and plaintiffs paid royalties for that production. The leases here involved contain the usual clause providing that the lease shall extend beyond the primary term of two years for “as long thereafter as oil or gas, or either of them, is produced.” The leases also have provisions requiring the lessees to pay the lessors monthly their part of the proceeds from the sale of gas, and to deliver to the сredit of the lessors their part of the oil produced. The leases contain no shut-in royalty payment provisions.
In view of the undisputed, unequivocal evidence hereinabove noted concerning the unexplained cessation of marketing of oil or gas from these leases, we do not find it necessary to discuss the facts in relation to the implied covenаnt of further development or the effect of' any drainage to adjacent leases.
A lessee has only a limited estate following the expiration of the primary term of an oil and gas lease containing a “thereafter” clause. Gypsy Oil Co. v. Marsh,
Necessarily incident to and implied from the contractual responsibility to produce oil and gas in paying quantities, the lessee has the additional duty to market the oil and gas produced from the lease. Strange v. Hicks,
In this action the trial court rendered judgment for the defendants upon the defendants’ motion at the conclusion of the plaintiffs’ evidence. In this it erred. Under these circumstances we have held that the proper disposition is to reverse the judgment and grant the plaintiffs a new trial so that all the evidence might be introduced. Modern Woodmen of America, Camp No. 6967 v. Tulsa Modern Woodmen Bldg. Ass’n, Okl.,
The judgmеnt is reversed and remanded with directions to grant plaintiffs a new trial.
The Court acknowledges the aid of the Supreme Court Commission in the preparation of this opinion. After a. tentative opinion was written by the Commission the cause was assigned to a Justice of this Court for examination and report to the Court. Thereafter, upon report and consideration in conference, the foregoing opinion was adopted by the Court.