## Facts

- Mineral owners executed an oil and gas lease on a 40-acre tract with a one-year primary term beginning October 31, 1953, and continuation “as long thereafter as oil or gas . . . is produced.”
- The original lessee assigned the lease to working-interest owners while reserving an overriding royalty; portions of the working interest and the override were later assigned to others.
- A gas well was drilled and completed around May 1, 1954, during the primary term; the well was capable of producing gas but had relatively low pressure.
- No gas from the well was ever marketed or sold, allegedly due to difficulties obtaining a purchaser and pipeline connection under the circumstances.
- The working-interest owners pursued negotiations and arrangements to secure a market and connection, encountering technical and economic obstacles.
- The mineral owners sued to quiet title and sought cancellation, alleging the lease terminated automatically at the end of the primary term because no gas was marketed, or alternatively that the lease was abandoned.
- The trial court denied cancellation and entered judgment for the working-interest owners.

## Issues

1. When a lease is silent on marketing, does the “thereafter” habendum clause require gas to be marketed within the primary term to avoid termination, or does an implied covenant allow a reasonable time after completion to market?
2. Did the failure to market gas by the end of the primary term constitute ipso facto termination or abandonment justifying cancellation in a quiet-title action?
3. In an equitable cancellation/quiet-title case, was the trial court’s judgment for the lessees clearly against the weight of the evidence?

## Decision

- The Supreme Court of Oklahoma affirmed the judgment for the lessees/working-interest owners.
- The court held that, absent an express marketing requirement, any duty to market is implied and allows the lessee a reasonable time after completion of the well to secure a market.
- The court concluded the evidence did not show abandonment or unreasonable lack of diligence, and the trial court’s decision was not clearly against the weight of the evidence.

## Legal Principles

- If an oil and gas lease does not expressly require marketing, the obligation to market arises, if at all, as an implied covenant.
- Under the implied covenant to market, the lessee is entitled to a reasonable time after completing a well to obtain a market, measured by reasonably prudent operator conduct under similar conditions.
- Failure to market gas by the end of the primary term, standing alone, does not automatically terminate the lease where the well is completed and capable of production and the lessee acts with reasonable diligence.
- Abandonment requires clear proof of intent to relinquish the leasehold or conduct permitting such an inference; continued efforts to obtain a market tend to negate abandonment.
- In equitable actions to cancel an oil and gas lease, the appellate court will not disturb the trial court’s judgment unless it is clearly against the weight of the evidence.

## Conclusion

The court refused to cancel the lease, holding that because the lease lacked an express marketing clause, the lessees had only an implied duty to market within a reasonable time after completion, and the record supported the trial court’s finding that the lessees’ nonmarketing did not amount to termination or abandonment.


McVicker v. Horn, Robinson & Nathan, 322 P.2d 410 (Okla. 1958)