Thus it has been held that erection of a derrick on the land, digging slushpits, placing three or four hundred feet of drill stem on the ground, and the patching of a road leading to the leased land, constituted "a commencing of operations for drilling" and, hence, the lease could not be cancelled for failure to commence drilling operations within a specified time. Crye v. Giles, 200 So. 155 (La.App. 1941). And where a lease provided that should production cease from any cause, the lease should not be terminated if the lessee commenced drilling or reworking operations within sixty days thereafter, it was held that repairing the derrick, pulling the tubing from the well and repairing roads and bridges leading to the well was a commencement of reworking operations.
In Johnson v. Houston Oil Co., 229 La. 446, 86 So.2d 97 (1956), the court found that hiring a drilling contractor, getting a drilling permit and moving drilling equipment onsite constituted “drilling or reworking operations” sufficient to extend the lease. In Crye v. Giles, 200 So. 155 (La.App. 2d Cir.1941), this court held that erecting a derrick, digging a slush pit and laying drill stem on the ground were activities sufficient to maintain a lease which would expire unless “operations for drilling are commenced” by a certain date. In Cason v. Chesapeake Operating, Inc., 47,084 (La.App.2d Cir.4/11/12), 92 So.3d 436, writ denied, 2012–1290 (La.9/28/12), 98 So.3d 840, the parties entered into a lease with a term of five years, ending on May 31, 2010.
Further, no Louisiana case has ever maintained a lease on such minimal conduct. The Casons distinguish Crye v. Giles, 200 So. 155 (La.App. 2 Cir.1941), Johnson v. Houston Oil Co., 229 La. 446, 86 So.2d 97 (1956), Hilliard v. Franzheim, 180 So.2d 746 (La.App. 3 Cir.1965), and Allen v. Continental Oil Co., 255 So.2d 842 (La.App. 2 Cir.1971), writ ref'd,260 La. 701, 257 So.2d 156 (1972), all of which found sufficient operations to maintain a lease. The Casons conclude that on de novo review, this court should reverse the finding that Empress made a prima facie showing.
Further, no Louisiana case has ever maintained a lease on such minimal conduct. The Casons distinguish Crye v. Giles, 200 So. 155 (La. App. 2 Cir. 1941), Johnson v. Houston Oil Co., 229 La. 446, 86 So. 2d 97 (1956), Hilliard v. Franzheim, 180 So. 2d 746 (La. App. 3 Cir. 1965), and Allen v. Continental Oil Co., 255 So. 2d 842 (La. App. 2 Cir. 1971), writ ref'd, 260 La. 701, 257 So. 2d 156 (1972), all of which found sufficient operations to maintain a lease. The Casons conclude that on de novo review, this court should reverse the finding that Empress made a prima facie showing.
Cases which have construed the language regarding commencement of drilling operations (as distinguished from "engaged in drilling operations") have consistently held that acts in preparation for drilling were sufficient to satisfy the requirement that drilling operations commence. See Crye v. Giles, 200 So. 155 (La.App. 2d Cir. 1941) and Texas Co. v. Leach, 219 La. 613, 53 So.2d 786 (1951). FAILURE TO MAINTAIN PRODUCTION OR TO PAY PRODUCTION ROYALTY
"If the lessee has performed such preliminary acts within the time limited, and has thereafter actually proceeded with the drilling to completion of a well, the intent with which he did the preliminary acts are [sic] unquestionable, and the court may rule as a matter of law that the well was commenced within the time specified by the lease." In our opinion the following cases reflect Louisiana decisions are in accord with the general rule as heretofore stated: Hilliard v. Franzheim, (La.App. 3rd Cir. 1965), 180 So.2d 746; Wehran et al v. Helis, (La.App. 4th Cir. 1963), 152 So.2d 220; Crye v. Giles (La.App. 2d Cir. 1941), 200 So. 155. See also "What Constitutes Commencement of Operations Under an Oil, Gas and Mineral Lease", 16 Tul.L.Rev. 573, at 584 (1942).
Section 349 (p. 459), cf. Section 300.1 (p. 251); Brown, The Law of Oil and Gas Leases (1958) Section 7.04 (p. 127). The Louisiana decisions apply this general rule: Johnson v. Houston Oil Co., 229 La. 446, 86 So.2d 97 (clause: "reworking operations * * * being conducted."); Texas Co. v. Leach, 219 La. 613, 53 So.2d 786 ("commences drilling or reworking operations"); Crye v. Giles, La. App. 2 Cir., 200 So. 155 ("[i]f operations for drilling are [not] commenced"); cf., Hudspeth v. Producers Oil Co., 134 La. 1013, 64 So. 891 ("commence operations"). See also: Wehran v. Helis, La. App. 4 Cir., 152 So.2d 220 (which concerns a lease definition of when operations shall be deemed to have commenced); Sterling v. McKendrick, La. App. 4 Cir., 134 So.2d 655; Iberian Oil Corporation v. Texas Crude Oil Co., W.D., La., 212 F. Supp. 941 (1963), affirmed, 5 Cir., 328 F.2d 832 (1964).