## Facts

- A 1937 oil-and-gas lease covered two adjoining 160-acre tracts later treated as the “Ridge tract” and the “Guinn tract.”
- Through assignments, Guinn became lessee only as to the Guinn tract, and Ridge became lessee only as to the Ridge tract, each with separate rights and obligations for its tract.
- The reversionary interests (possibilities of reverter) were also separated so that the lessor-successors for one tract had no interest in the other.
- Only the Ridge tract ever had production; the only producing wells were located on the Ridge tract.
- In December 1997, Ridge shut in the two producing wells for about ninety days.
- During/after the shut-in, Ridge obtained new leases covering only the Ridge tract from the owners of the Ridge tract’s reversionary interest, and production later resumed under those new leases.
- Guinn had no production from its tract and claimed the 1937 lease continued as to its tract under the temporary cessation of production doctrine and/or by Guinn’s alleged “operations.”
- Guinn also sought damages and equitable relief, asserting tortious interference, fraud, and a constructive trust aimed at Ridge’s newly acquired leasehold interests.

## Issues

1. Whether the temporary cessation of production doctrine applies when a single lease has been partially assigned so different lessees hold separate tracts.
2. When production “permanently ceased” under the 1937 lease on the only producing tract in light of Ridge’s shut-in and subsequent new leases.
3. Whether Guinn conducted “operations” sufficient to maintain the lease at or after permanent cessation of production.
4. Whether Ridge and its officer could be liable for tortious interference, fraud, or a constructive trust based on shutting in production and acquiring new leases.

## Decision

- The Supreme Court of Texas reversed the court of appeals and rendered judgment for Ridge and Woodward, reinstating the trial court’s summary judgment.
- The temporary cessation of production doctrine can apply even when more than one lessee holds interests under a single lease by partial assignment.
- Production under the 1937 lease permanently ceased from the Ridge tract when Ridge’s new leases with the Ridge-tract reversionary owners became effective.
- Guinn was not conducting operations sufficient to sustain the lease at the time of permanent cessation or thereafter; Guinn’s leasehold rights terminated.
- Guinn could not recover on tortious interference, fraud, or constructive-trust theories.

## Legal Principles

- Temporary cessation of production is not limited to a single-lessee leasehold; it may apply in a multi-lessee setting created by partial assignments.
- Permanent cessation of production can be fixed at the point when production is no longer attributable to the original lease, including when new leases take effect and subsequent production proceeds under the new instruments.
- To preserve a lease after cessation, alleged “operations” must be sufficiently substantial and timely; minimal or preparatory activity does not maintain the lease after permanent cessation.
- When the underlying lease has terminated, a party generally cannot establish tortious interference with that lease, and equitable remedies (including constructive trust) predicated on continuing lease rights are unavailable absent an independent basis.

## Conclusion

The court held that although temporary cessation doctrine can apply to a split lease held by multiple lessees, the 1937 lease ended when Ridge’s new leases became effective and production thereafter was under the new leases; Guinn’s asserted operations were insufficient to keep the lease alive, and its tort and constructive-trust claims failed as a matter of law.


Ridge Oil Co. v. Guinn Invs., Inc., 148 S.W.3d 143 (Tex. 2004)