Appeal from decree of Court of Common Pleas of Warren County, Feb. T., 1972, No. 48, in case of National Forge Company v. A. W. Carlson, A. W. Hughes, G. R. Christensen, E. J. Sullivan, t/a Iroquois Trust.
William F. Clinger, Jr., with him Harper & Clinger, for appellant.
H. Robert Hampson, with him Hampson & Hampson, for appellees.
Jones, C. J., Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Opinion by Mr. Justice O'Brien.
This appeal arises from a final decree in equity entered by the Court of Common Pleas of Warren County. The facts are as follows:
On February 1, 1963, the commissioners of Warren County, as trustees of the Rouse Estate, executed an oil and gas lease covering 650 acres situate in Brokenstraw Township and Youngsville Borough to M. E. Freeman and R. L. Cotton, doing business as Freeman and Cotton. Subsequently, the lease was assigned twice -- first, to Oscar W. Hogsett and then, on December 12, 1969, from Hogsett to A. W. Carlson, A. W. Hughes, G. R. Christensen and E. J. Sullivan, trading as Iroquois Trust (Iroquois), appellees herein. The lease and the two assignments were duly recorded.
The lease carried a restricted drilling clause providing, inter alia, that no wells were to be drilled on premises which "lies northerly of U. S. Traffic Route No. 6 and southerly of the Brokenstraw Creek."
On October 14, 1968, the trustees of the Rouse Estate sold to National Forge (Forge), appellant herein, 16 acres of the 650-acre tract, subject, nevertheless, to any outstanding oil and gas leases and to any rights of way or easements of record or visible on the ground. Part of this 16-acre parcel is within the restricted drilling area.
At this time, Forge owned other premises easterly and contiguous to the 650-acre tract.
The parties came into conflict in October, 1971, when Iroquois commenced drilling operations on Forge's land. Prior to that time, Iroquois had drilled twenty-five wells on other parcels, which were similarly restricted, without objection from the then-owners, the trustees of the Rouse Estate.
When Iroquois commenced drilling operations on October 4, 1971, Forge advised Iroquois that it was operating in the restricted area. However, on October 28, 1971, the parties executed a royalty agreement with Quaker State Refining Co., allocating 1/8 royalty to Forge and 7/8 working interest to Iroquois. From October 4, 1971, to December 28, 1971, Forge drilled four wells on the 16-acre tract and within the restricted area at a cost of approximately $8,700 per well. Forge ...