pjc-oil-and-gas-2022-lib

L ESSOR -L ESSEE I SSUES

PJC 303.17

PJC 303.17 Question and Instruction on Failure to Prosecute Operations without Cessation

QUESTION ______

Did Larry Lessee fail to prosecute drilling or reworking operations without cessation of more than [ indicate number of days specified in lease ] consecutive days? “Drilling or reworking operations” means actual work or operations in which an ordinarily competent operator, under the same or similar circum stances, would engage in a good-faith effort with due diligence to cause a well or wells to produce oil or gas in paying quantities. Answer “Yes” or “No.” Answer: _______________ When to use. PJC 303.17 should be used when there is a dispute regarding whether the lessee prosecuted its operations diligently and in a good-faith attempt to establish commercial production as required by the express terms of a lease savings clause. This language generally appears in an “operations” savings clause. However the question and its instructions should conform to the language of the lease regarding the applicable time period, the event from which the time period is measured, any lim itation on the applicability of the clause (e.g., whether the operation must be before the discovery of oil or gas or whether production ceased after the discovery of oil or gas), and any specific definitions of the operations required. See, e.g., Stanolind Oil & Gas Co. v. Newman Bros. Drilling Co. , 305 S.W.2d 169 (Tex. 1957). Source of question and instruction. PJC 303.17 is derived from Ridge Oil Co. v. Guinn Investments, Inc. , 148 S.W.3d 143, 158–60 (Tex. 2004); Rogers v. Osborn , 261 S.W.2d 311, 313–14 (Tex. 1953); Valence Operating Co. v. Anadarko Petroleum Corp. , 303 S.W.3d 435, 441 (Tex. App.—Texarkana 2010, no pet.); Bargsley v. Pryor Petroleum Corp. , 196 S.W.3d 823, 826–28 (Tex. App.—Eastland 2006, pet. denied); Utley v. Marathon Oil Co. , 31 S.W.3d 274, 278–79 (Tex. App.—Waco 2000, no writ); and Cox v. Stowers , 786 S.W.2d 102, 105 (Tex. App.—Amarillo 1990, no writ). COMMENT

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