Cook v. El Paso Natural Gas Co.
United States Court of Appeals for the Tenth Circuit
560 F.2d 978 (10th Cir. 1977)
Cook (plaintiff) assigned an oil and gas lease to Phillips (defendant), later assigned to El Paso (defendant), while reserving a five percent overriding royalty; El Paso completed a well on an adjoining property, and the U.S. Geological Survey then barred drilling on Cook's property to prevent wasting potash deposits. Cook sued for a compensatory royalty based on the defendants' breach of the implied covenant against drainage, and the defendants argued the government drilling ban excused their duty and that a royalty owner lacked standing to enforce lease covenants; the district court ruled for Cook.
Whether a royalty interest owner on a property deemed by government order unfit for drilling may recover a compensatory royalty when the owners of a gas well on an adjoining lease have drained gas from under the royalty owner's property.