Reynolds-Rexwinkle Oil, Inc. v. Petex, Inc.

Reynolds-Rexwinkle Oil, Inc. (Reynolds) (plaintiff) assigned an oil-and-gas lease to Petex, Inc. (Petex) (defendant) while reserving a 1.5% overriding royalty that expressly applied to any 'extension or renewal' of the lease. Before the original lease expired, the landowners and Petex signed a new lease on substantially the same terms, set to take effect the day after the old lease's expiration. Petex later drilled a producing well, and when Reynolds demanded its royalty, Petex argued Reynolds's interest had expired along with the original lease. The trial court granted Reynolds summary judgment, but the court of appeals reversed, and Reynolds appealed.