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FELMONT OIL CORPORATION v. MARTIN M. CAVANAUGH AND MARY LOUISE CAVANAUGH (03/05/82)

filed: March 5, 1982.

FELMONT OIL CORPORATION, APPELLANT,
v.
MARTIN M. CAVANAUGH AND MARY LOUISE CAVANAUGH



No. 822 April Term, 1978, Appeal from the Order of the Court of Common Pleas, Civil Division-Equity, Indiana County, at No. 29 EQ. 1977.

COUNSEL

Beverly A. Gazza, Indiana, for appellant.

George A. Conti, Jr., Greensburg, for appellees.

Cercone, President Judge, and Watkins and Hoffman, JJ.

Author: Cercone

[ 300 Pa. Super. Page 521]

Appellant, Felmont Oil Corporation (Felmont Oil) filed a complaint in equity to enjoin appellees, Martin and Louise Cavanaugh (Cavanaughs) from preventing Felmont Oil's construction of a pipeline across certain property owned by the Cavanaughs in Indiana County. Felmont Oil claims the right to locate the pipeline on the Cavanaughs' property pursuant to a certain oil and gas lease executed in favor of Felmont Oil by Tirza Steffy, the Cavanaughs' predecessor in title. The lower court en banc, after hearings, decree nisi and exceptions filed, entered a final decree denying Felmont Oil's claim. After careful review of the facts and legal issues, we reverse the lower court's final decree.

The facts of this case are as follows. In 1965 the Cavanaughs' predecessor in title, Tirza Steffy, conveyed to Felmont Oil the oil and gas rights under a lease, whose relevant parts provide:

1. RIGHTS GRANTED. The Lessor does hereby grant, demise, lease and let unto the Lessee and the Lessee does hereby take the Premises for the purpose and with the exclusive right of prospecting, exploring, mining and operating thereon for oil, gas and all other liquid and gaseous hydrocarbons; the right of ingress, egress and regress to, upon and over the Premises; the exclusive right to introduce, store and withdraw gas in and from any stratum underlying the Premises, as provided in Paragraph

[ 300 Pa. Super. Page 52210]

hereof; and in connection with such operations by the Lessee on the Premises and on neighboring lands, the right to install and maintain lines to convey water, oil, steam, electricity, air and gas, to, from over or across the Premises, the right to build roads, tanks, stations and structures on the Premises, the right to take and use free of charge sufficient water, oil and gas from the Premise for such operations, the right to remove at any time during or within a reasonable time after the termination of this lease all machinery, structures, piping and fixtures placed on the Premises, and also such other rights and privileges as are necessary or convenient for conducting such operations.

4. UNITIZATION (POOLING). Lessee may at any time unitize or pool and consolidate this lease, in whole or in part, as to any stratum or strata, with lands adjacent to or in the immediate vicinity of the Premises, so as to constitute a unit or units not exceeding in area the acreage prescribed or required in any Federal or State law, order, rule or regulation for the drilling or operation of one well . . . . Drilling, mining or reworking operations upon, or production of oil or gas from, or existence of a shut-in gas well on any part of such unit shall be treated for all purposes hereunder as such operations upon or production from or such a shut-in gas well on the Premises, whether occurring before or after the creation of the unit. Upon production from any part of such unit, Lessor shall be entitled to royalties calculated as follows: There shall be allocated to this lease, a fractional part of all production from the unit as constituted at the time of such production in the ratio that the number of acres of this lease included in the unit bears to the total number of acres then included in the unit, and Lessor shall be entitled to royalties as provided in this lease upon such fractional part of such production, and no more . . . .

Subsequent to the execution of this lease, Felmont entered into a Model Form Operating ...


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