The burden of proof was upon the plaintiffs to establish either a breach of an implied covenant with respect to the portions of the lease sought to be cancelled or an abandonment of such portions. Ramsey Petroleum Corporation v. Davis, Okla.Sup., 85 P.2d 427; Wilcox v. Ryndak, 174 Okla. 24, 49 P.2d 733, 735; Goodwin v. Standard Oil Co. of Louisiana, 8 Cir., 290 F. 92, 98; Orr v. Comar Oil Co., 10 Cir., 46 F.2d 59, 63. In order to comply with the implied covenants of a lease to drill offset wells and to diligently develop the lease, a lessee must do that which, under the circumstances, an operator of ordinary prudence, having regard to the interests of both lessor and lessee, would do.
Presumably he did not have evidence to establish that the defendant did not come up to the standard of a prudent operator in like circumstances. See Wilcox v. Ryndak, 174 Okl. 24, 49 P.2d 733, 736 (1935); Sunray Mid-Continent Oil Company v. McDaniel, 361 P.2d 683, 685 (Okl. 1961); Townsend v. Creekmore-Rooney Co., 358 P.2d 1103, 1104 (Okl. 1960); Jordan v. Texaco, Inc., 297 F. Supp. 1140, 1142 (W.D.Okl. 1969); Spiller v. Massey Moore, 406 P.2d 467, 471-472 (Okl. 1965). Wilcox v. Ryndak, supra; Chenoweth v. Pan-American Petroleum Corporation, 314 F.2d 63, 66 (10th Cir. 1963).
No obligation rests upon the lessee to carry the operations beyond the point where they are profitable to him, even if some benefit to the lessor would result from them. Indiana Oil, Gas Development Co. v. McCrory, 42 Okla. 136, 140 P. 610; Pelham Petroleum Co. v. North, 78 Okla. 39, 188 P. 1069; Wilcox v. Ryndak, 174 Okla. 24, 49 P.2d 733; Indian Territory Illuminating Oil Co. v. Haynes Drilling Co., supra; Ramsey Petroleum Corporation v. Davis, supra; Brewster v. Lanyon Zinc Co., supra. The burden rested on plaintiffs to prove the breach of the implied covenant to protect the leasehold from undue drainage. It was incumbent upon them to prove that had an offset well been drilled on the Roosevelt Place Addition, it probably would have produced or would produce sufficient oil to repay the expense of drilling, equipping, and operating the well, and also pay a reasonable return on the outlay.
Thus, the trial court was required to measure plaintiff's evidence by treating as admitted every fact which was supported in the slightest degree by proof and to extend to such evidence every reasonable inference to be drawn therefrom. The trial court's duty in this respect necessitated consideration and adherence to the second applicable rule, which was announced in Wilcox et al. v. Ryndak et al., 174 Okla. 24, 49 P.2d 733: "1. There is no implied obligation on the part of an oil and gas lessee to drill an offset well to a well on adjoining premises, or to drill an additional well on the leased premises after oil or gas has been discovered thereon, save and except where the drilling of such well would probably, taking all of the existing facts and circumstances into consideration, produce sufficient oil to repay the cost of drilling, equipping, and operating such well, and also to produce a reasonable profit on the entire outlay, and neither the lessee nor the lessor is the arbiter of whether an offset well should be drilled or the leased premises further developed, but both are bound by what a reasonably prudent operator would do under similar circumstances, and under no circumstances will a lessee be required to drill an offset or an additional well when the same would probably not result profitably to him."
In other words, has a lessee done those things that an ordinary prudent operator would have done under similar circumstances? In the first paragraph of the syllabus in Wilcox v. Ryndak, 1935, 174 Okla. 24, 49 P.2d 733, we held: "There is no implied obligation on the part of an oil and gas lessee to drill an offset well to a well on adjoining premises, or to drill an additional well on the leased premises after oil or gas has been discovered thereon, save and except where the drilling of such well would probably, taking all of the existing facts and circumstances into consideration, produce sufficient oil to repay the cost of drilling, equipping, and operating such well, and also to produce a reasonable profit on the entire outlay, and neither the lessee nor the lessor is the arbiter of whether an offset well should be drilled or the leased premises further developed, but both are bound by what a reasonably prudent operator would do under similar circumstances, and under no circumstances will a lessee be required to drill an offset or an additional well when the same would probably not result profitably to him."
Defendants contend that an oil and gas lease will not be cancelled for breach of an implied covenant to drill additional wells unless it is shown that said wells, if drilled, would repay the cost of drilling, equipping and operating, and return a reasonable profit to the lessee. As supporting their contention, defendants cite Wilcox et al. v. Ryndak et al., 174 Okla. 24, 49 P.2d 733; Texas Consolidated Oils et al. v. Vann et al., 208 Okla. 673, 258 P.2d 679, and other cases to the same general effect. As pointed out, there was competent evidence sustaining the proposition that if additional wells had been drilled same would not have proved commercial wells within the test laid down in the cited cases.
ilby, 199 Okla. 430, 186 P.2d 823; Doss Oil Royalty Co. v. Texas Co., 192 Okla. 359, 137 P.2d 934; Federal Oil Co. v. Brower (Cal.), 224 P.2d 4; Fischer v. Magnolia Petroleum Co., 156 Kan. 367, 133 P.2d 195; Geary v. Adams Oil Gas Co., 31 F. Supp. 830; Hartman Ranch Co. v. Associated Oil Co., 10 Cal.2d 1032, 73 P.2d 1163; Hughes v. Busseyville Oil Gas Co., 180 Ky. 545, 203 S.W. 515; McKenna v. Nichols, 193 Okla. 526, 145 P.2d 957; Myers v. Shell Petroleum Corp., 153 Kan. 287, 110 P. 810; Poindexter v. Lion Oil Rfg. Co., 205 Ark. 976, 167 S.W.2d 492; Ramsey v. Carter Oil Co., 74 F. Supp. 481, 172 F.2d 622; Sanders v. Mid-Continent, 292 U.S. 272, 93 A.L.R. 454; Steel v. American Oil Development Co., 80 W. Va. 206, 92 S.E. 419, L.R.A. 1917E, 975; Tanner v. Olds, 166 P.2d 366, 173 P.2d 6; Texas Co. v. Ramsover, 7 S.W.2d 872; Texas Consolidated Oils v. Vann (Okla.), 258 P.2d 1953; Tide Water Associated Oil Co. v. Stott, 159 F.2d 174; Union Gas Oil Co. v. Diles, 200 Ky. 188, 254 S.W. 205; Wilcox v. Ryndak, 174 Okla. 24, 49 P.2d 733; Chap. 256, Laws 1948; Glassmire on Oil and Gas Leases and Royalties, Sec. 65; Merrill's Covenants Implied in Oil and Gas Leases, Secs. 63, 71, 110-11, 122, 124 pp. 171, 180, 255-6, et seq.; Summers on Oil Gas, Sec. 399. III.
In the present case it is without dispute that Well "D", the gas well, has at all times produced gas sold from the premises in paying quantities. In Wilcox v. Ryndak, 174 Okla. 24, 49 P.2d 733, we said: "There is no implied obligation on the part of an oil and gas lessee to drill an offset well to a well on adjoining premises, or to drill an additional well on the leased premises after oil or gas has been discovered thereon, save and except where the drilling of such well would probably, taking all of the existing facts and circumstances into consideration, produce sufficient oil to repay the cost of drilling, equipping and operating such well, and also to produce a reasonable profit on the entire outlay, and neither the lessee nor the lessor is the arbiter of whether an offset well should be drilled or the leased premises further developed, but both are bound by what a reasonably prudent operator would do under similar circumstances, and under no circumstances will a lessee be required to drill an offset or an additional well when the same would probably not result profitably to him."
Supporting this defendant urges a suit for damages for drainage can only be maintained on the same basis as a suit to cancel a lease for lack of diligence in development, and that under the decisions of this court, the plaintiff, in order to be entitled to recover, must prove that the undrilled location, if drilled, would be a profitable or commercial well, after consideration of all factors involved in development. Ramsey Oil Co. v. Davis, 184 Okla. 155, 85 P.2d 427; Wilcox et al. v. Ryndak et al., 174 Okla. 24, 49 P.2d 733; Gerson v. Anderson-Prichard et al. (1945) 149 F.2d 444. Defendant points out that plaintiffs offered no testimony that the Bilby No. 2 was a commercial well or that it would pay out, while defendant's evidence tended to show it to be an edge well, pumping since completion, and with production steadily declining since the well was completed.
The burden of proof rested upon it to prove breach of covenant, if it claimed breach of covenant. Wilcox v. Ryndak, 174 Okla. 24, 49 P.2d 733; 24 Am. Jur. 657. It offered no proof tending to establish the factors necessary to prove breach of covenant, as stated, and outlined in Ramsey Petroleum Corp. v. Davis, 184 Okla. 155, 85 P.2d 427, and Doss Oil Royalty Co. v. Texas Co., above.