## Facts

- Landowners leased oil-and-gas rights to Blue Stem Oil Company for a three-year primary term “and as long thereafter as oil or gas is produced.”
- The lease contained no clause extending the term based on commencement or continuation of drilling operations alone.
- About one month before the primary term expired, the lessee began drilling on the premises.
- The well was not completed and no oil or gas was produced by the end of the three-year primary term.
- The lessee alleged delays beyond its control, including adverse weather, employee illness, and governmental interference affecting operations.
- After the primary term ended without production, the lessors sued to cancel the lease as expired.

## Issues

1. Whether a lease that continues after a fixed primary term only “as long thereafter as oil or gas is produced” remains in effect when drilling begins before expiration but production is not obtained by the end of the primary term.
2. Whether alleged hindrances (weather, illness, governmental interference) can prevent termination where the lease lacks an express operations-based extension.
3. Whether judgment on the pleadings canceling the lease is proper when the pleadings show no production within the primary term and no saving clause.

## Decision

- The Kansas Supreme Court affirmed the judgment canceling the lease.
- The lease terminated by its own limitation at the end of the primary term because no production existed at that time.
- Commencement of drilling within the primary term did not extend the lease absent an express clause making operations sufficient.
- The lessee’s alleged excuses were immaterial because the case involved expiration under the habendum clause, not forfeiture for breach.
- Judgment on the pleadings was proper because, even taking the lessee’s allegations as true, the lease language and lack of timely production required termination as a matter of law.

## Legal Principles

- Under a habendum clause providing a fixed primary term “and as long thereafter as oil or gas is produced,” continuation beyond the primary term depends on actual production, not merely drilling operations, unless the lease expressly provides otherwise.
- Such a lease creates an interest that ends automatically upon failure of the stated condition at the end of the primary term; courts will not imply an operations-based saving provision contrary to the expressed limitation.
- Equitable excuses for delay do not extend a lease that ends by its own terms for nonproduction within the primary term when no contractual clause authorizes extension based on operations.

## Conclusion

An oil-and-gas lease that extends beyond its primary term only while oil or gas is produced expires automatically at the end of the primary term if production has not been obtained, even if drilling began before expiration and even if the lessee alleges uncontrollable delays, where the lease contains no express operations-based extension.


Baldwin v. Blue Stem Oil Co., 106 Kan. 848, 189 P. 920 (Kan. 1920)