Burgan v. South Penn Oil Co.

Citations

• 243 Pa. 128
• 89 A. 823
• 1914 Pa. LEXIS 588

Syllabus

<p>Beal property — Oil and gas leases — Bight to drill more wells than the lease requires — Construction—Intention.</p> <p>1. The rule that covenants in oil leases which are to be performed by the lessee and which relate to the right to drill or explore for oil are to be construed most favorably to the lessor is founded upon the presumption that an oil lease is made for the purpose of immediate development unless the contrary appears in the contract. The purpose of the rule is only to spur the lessee to perform his covenant to drill and discover oil; it cannot be invoked to aid the lessor in dispossessing a lessee who has faithfully performed all his covenants, discovered oil in paying quantities and paid the royalties contemplated by the lease.</p> <p>2. The lease of a right .to mine for oil and gas is for the purpose of exploration until oil and gas are found, but upon the discovery of oil and gas in paying quantities, the lessee has a vested interest in the oil and gas granted by the lease as long as it can be produced in paying quantities.</p> <p>3. The owner of several tracts of oil and gas land leased the exclusive right to mine for and produce petroleum and natural gas therefrom for the term of one year and so long thereafter as oil or gas could be produced. Each lessee agreed “To commence the drilling of one well......within thirty days from the date above and prosecute the drilling of same with due diligence to completion and commence the drilling of a second well within sixty days from the completion of the first well, prosecute the drilling of the second well with due diligence to completion, or forfeit all of said land except eight acres around the first well drilled and to commence drilling the third well within sixty days from completion of second well, or forfeit all of said lease, except seventeen acres around the first two wells drilled. A failure of the second party to comply with any of the requirements herein contained to render said lease null a