pjc-oil-and-gas-2022-lib

PJC 303.13

L ESSOR -L ESSEE I SSUES

4. force majeure clauses: these clauses excuse the lessee’s nonperformance of obligations in the lease; and 5. shut-in royalty clauses: these clauses apply to gas wells “capable of pro ducing in paying quantities.” Additionally, pooling can act as a savings clause because production from anywhere on a pooled unit constitutes production from leases properly pooled in the unit. See PJC 303.2 and 303.3 on pooling. In addition to these express savings clauses, Texas courts have created other savings doctrines. For example, regarding delay rentals, courts have allowed lessees to rely on equitable doctrines to excuse their noncompliance with the terms of the delay rental clause. Humble Oil & Refining Co. , 205 S.W.2d at 361; Brannon v. Gulf States Energy Corp. , 562 S.W.2d 219, 222 (Tex. 1977). In the event of a total cessation of produc tion, Texas courts have applied the temporary cessation of production doctrine, but only if the lease does not contain an express “cessation of production” clause. See Wat son , 155 S.W.2d at 784; Krabbe , 46 S.W.3d at 315. In addition, a lessee may assert defenses to avoid lease termination. See chapter 312 of this volume on defenses. The following pattern jury charges are based on court opinions addressing whether the habendum clause or a particular savings clause has been satisfied so as to prevent lease termination. The fact issues raised by such cases commonly include whether drilling operations were commenced timely or whether they continued without cessa tion. In determining whether a lessee has complied with a savings clause, Texas courts generally require strict compliance with the language of the clause. See Rogers v. Osborn , 261 S.W.2d 311 (Tex. 1953); Hydrocarbon Management, Inc. v. Tracker Exploration, Inc. , 861 S.W.2d 427 (Tex. App.—Amarillo 1993, no writ). For that rea son, the jury charges should be modified to reflect the particular requirements of the clause at issue.

106