The Oklahoma Supreme Court has held that the measure of damages for breach of such a contract is the cost of drilling the well. Eysenbach v. Cardinal Pet. Co., 110 Okla. 12, 236 P. 10; Okmulgee P. R. Co. v. Baugh, 111 Okla. 203, 239 P. 900. The cost of drilling the well is not, in our opinion, the true measure of damages.

It is interesting to note in this opinion that the court refers to the view urged, it is said, with force, by distinguished counsel: "That it must now be accepted as a demonstration of science that putting down a well on land shown by exploration of neighboring territory to be dry is a useless expense and damage, and that parties, in contracting on the subject, must be considered to have had this fact in mind, would be a strong argument to the jury, if the case was one for them, that the plaintiff had suffered no actual damages by the defendants' default" — indicating that the court's conclusion was arrived at because of the specific stipulation in the lease that a well should be created on the land. Eysenback v. Cardinal Petroleum Co. (Okla.Sup.) 236 P. 10, is an action likewise where defendant bound himself to drill, the court holding that he could not defend a breach of such promise by showing the drilling of other wells adjacent to the property as proof of the fact that production would not be found upon the property by drilling the wells. Thornton on Oil and Gas, § 123, states the same doctrine.

The Report recommends the Court grant Defendant's Motion and award fees solely on the basis of the Licensing Agreement [ECF No. 236 pp. 8-11]. The Report further recommends the Court deny Defendant's Motion for Costs and Expenses, because the terms of the Licensing Agreement do not allow for such recovery [ECF No. 236 p. 9 n.6]. Lastly, the Report recommends that Plaintiff be given the opportunity to respond to the amount of fees in dispute [ECF No. 236 p. 10; see ECF No. 230; ECF No. 232].

His post-hearing brief asserts that the “record seems clear that” such an offer “was never conveyed.” (ECF No. 236 p. 10 n.13.) Second, even if the Government had ever made such an offer, Totoro would not have accepted it.

As to the expenditures by SWB and Coseka in drilling what was designated as the tenth well, SWB and Coseka would be entitled to their costs in the drilling of the tenth well over the original $90,000.00 turnkey price under the benefit of the bargain rule. See Interstate United Corporation v. White, 388 F.2d 5 (Tenth Cir. 1967); Osborn v. Commanche Cattle Industries, Inc., supra; Eysenbach v. Cardinal Petroleum Co., 110 Okla. 12, 236 P. 10 (1925). In the instant case, however, SWB and Coseka have materially deviated from the original agreement in drilling three wells and designating them all as the tenth well and then attempting to pro-rate the cost of each well.

The very purpose of drilling the test well was to ascertain whether oil or gas could be found. It does not lie with the plaintiffs in error, who engaged and were compensated for drilling the well, to say that their performance would not be beneficial to the lessor." This rule has been adhered to by the Oklahoma court in the following cases: Eysenbach v. Cardinal Petroleum Co., 110 Okla. 12, 236 P. 10; Okmulgee Producing Refining Co. v. Baugh, 111 Okla. 203, 239 P. 900; Newman v. Roach, 111 Okla. 269, 239 P. 640; Cosden Oil Gas Co. v. Moss, 131 Okla. 49, 267 P. 855; Lorraine Petroleum Co. v. Bartlett, 138 Okla. 8, 280 P. 286; Dixon v. Dalton, 158 Okla. 178, 12 P.2d 1108, and approved by the federal courts in Oklahoma cases. ( All-American Oil Gas Co. v. Connellee, (C.C.A.) 3 F.2d 107; Continental Oil Co. v. Fisher Oil Co., (C.C.A.) 55 F.2d 14.) It is argued that, in all the cases where the well-cost rule has been adopted, an agreement was under consideration which required the drilling of a definite number of test wells. It is further argued that these cases are distinguishable in that in every instance the plaintiff was the owner of some interest which would accrue to him immediately upon the production of oil.

The measure of damages in this case was the reasonable cost of drilling such well at the time and place and to the required depth. This court has often approved this rule: See North Healdton Oil Gas Co. v. Skelly, 59 Okla. 128, 158 P. 1180; Ardizonne v. Archer, 72 Okla. 70, 178 P. 263; Eysenbach v. Cardinal Petroleum Co., 110 Okla. 12, 236 P. 10; Cosden Oil Gas Co. v. Moss, 131 Okla. 49, 267 P. 855; Lorraine Petroleum Co. v. Bartlett, 138 Okla. 8, 280 P. 286. In view of the record that the defendant accepted the leases, filed them for record, assigned some of them to others, listed the same for sale with brokers, and traded 40 acres of same for a rig, we do not consider that there is any merit to the contention now urged by the defendant that he did not agree to drill the well.

Plaintiff retained a 1/24th interest in the minerals to be derived from drilling, in case such minerals should be found. So it will be seen that he retained a beneficial interest in the lease and the wells to be drilled thereon. It has become a settled rule in this jurisdiction that, in such cases, the measure of damages for failure to drill a well as provided by the contract is the reasonable cost of drilling the same. Ardizonne et al. v. Archer et al., 72 Okla. 70, 178 P. 263; Newman v. Roach et al., 111 Okla. 269, 239 P. 640; Cosden Oil Gas Co. v. Moss et al., 131 Okla. 49, 267 P. 855; Eysenbach v. Cardinal Petroleum Co., 110 Okla. 12, 236 P. 10; Okmulgee Producing Refining Co. v. Baugh, 111 Okla. 203, 293 P. 900. Counsel attempts to distinguish these cases from the case at bar, but we are unable to see the distinction contended for. There are some authorities to the effect that, where the party seeking damages would have no beneficial interest in the lease to be drilled on, or in the well if drilled, then the measure of damages would not be the reasonable cost of drilling the well.

He drilled only one of the wells, and the court held in that case that the measure of damages was the reasonable cost of drilling the wells as contracted. A similar measure of damages was applied in the following cases: Okmulgee Producing Refining Co. v. Baugh, 111 0kla. 203, 239 P. 900; Eysenbach v. Cardinal Petroleum Co., 110 Okla. 12, 236 P. 10; North Healdton Oil Gas Co. v. Skelley, 59 Okla. 128, 158 P. 1180; Ardizonne et al. v. Archer et al., supra. The actual cost of drilling the well appears to have been greater than the amount awarded plaintiff on his first cause of action, which cause also involved a claim for one-half of certain moneys paid in the connecting up and operating the well.

Hence, upon substitution of the location for the making of the test, the second location must be regarded as the test well provided for by the contracting parties. Upon this phase of the case, therefore, we are of the opinion that there is no room for controversy, for it is a settled rule that in an action for damages for failure to complete a test oil or gas well, where the well has been drilled to a less depth than the specified depth, and abandoned without legal excuse, the measure of damages is the cost to complete the well from the depth of abandonment to the maximum depth specified in the contract. Covington Oil Gas Co. v. Jones, supra; Eysenbach v. Cardinal Petroleum Co., 110 Okla. 12, 236 P. 10; Ardizonne v. Archer, supra; Okmulgee Producing Refining Co. v. Baugh, supra. The court therefore erred in its refusal of the requested instructions upon the measure of damages, and in the instructions given.