Gillette v. Pepper Tank Co.
Colorado Court of Appeals
694 P.2d 369 (Colo. Ct. App. 1984)
Pepper Tank (defendant) drilled several wells on Underwood's (plaintiff) leased land between 1952 and 1972, but abandoned all but one marginally productive well; Underwood sued for breach of the implied covenants of further development and prudent operation, seeking lease cancellation. The trial court found the breaches occurred and ordered conditional cancellation: Pepper could keep the nonproducing portions of the lease by filing a development plan within 60 days, and could retain the producing portion by repairing the remaining productive well; both parties appealed.
Whether a court may fashion equitable remedies for a breach of an implied covenant in an oil and gas lease, including cancellation of the lease in whole or in part.