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Roloff v. Continental Resources, Inc.

United States District Court, District of North Dakota, Northwestern Division

January 8, 2015

Verdean Roloff, Plaintiff and Counter-Defendant,
v.
Continental Resources, Inc. and Reid Energy Investments, LLC Defendants and Counter-Claimants.

ORDER GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

DANIEL L. HOVLAND, DISTRICT JUDGE UNITED STATES DISTRICT COURT

Before the Court is a Motion for Summary Judgment filed by Defendants Continental Resources, Inc. (“Continental”) and Reid Energy Investments, LLC (“Reid Energy”) on September 12, 2014. See Docket No. 21. The Plaintiff, Verdean Roloff, filed a response opposing the motion on October 17, 2014. See Docket No. 31. The Defendants filed a reply brief on November 3, 2014. See Docket No. 34. For the reasons set forth below, the motion is granted.

I. BACKGROUND

The Plaintiff owns an interest in the oil and gas in and under the following lands located in Williams County, North Dakota:

Township 159 North, Range 95 West
Section 23: SE/4NE/4, NE/4SE/4
Section 24: NW/4NE/4, W/2, S/2SE/4
Section 25: NW/4

See Docket No. 32, ¶ 2. On November 14, 2003, Roloff leased his mineral rights in this property to Joliette Oil (USA), Inc. The lease grants to the lessee the “exclusive right for the purpose of mining, exploring by geophysical and other methods, and operating for and producing therefrom oil and all gas.” Docket No. 32–1. The lease has been assigned numerous times, although it is currently owned by Continental and Reid Energy. See Docket No. 32, ¶ 4. Continental is responsible for conducting the oil and gas exploration and performing all production operations on the property, while Reid Energy is the non-operating working interest owner of the lease.

The lease contains a Pugh clause[1] which states:

Notwithstanding the provisions of this lease to the contrary, this lease shall terminate at the end of the primary term as to all of the leased lands except those within a producing or spacing unit prescribed by law or administrative authority on which is located a well producing or capable of producing oil and/or gas or on which lessee is engaged in drilling or reworking operations. However, this lease shall not terminate as to any of the leased lands so long as drilling or reworking operations are being continuously prosecuted, that is, if not more than one (1) year shall elapse between the completion or abandonment of one well and the beginning of operations for the drilling of another well.

Docket No. 32–1.

The lease also contains a habendum clause,[2] which provides:

1. It is agreed that this lease shall remain in force for a term of Five (5) years from this date and as long thereafter as oil or gas of whatsoever nature or kind is produced from said leased premises or on acreage pooled therewith, or drilling operations are continued as hereinafter provided. If, at the expiration of the primary term of this lease, oil or gas is not being produced on the leased premises or on acreage pooled therewith but Lessee is then engaged in drilling or re-working operations thereon, then this lease shall continue in force so long as operations are being continuously prosecuted on the leased premises or on acreage pooled therewith; and operations shall be considered to be continuously prosecuted if not more than ninety (90) days shall elapse between the completion or abandonment of one well and the beginning of operations for the drilling of a subsequent well. If after discovery of oil or gas on said land or on acreage pooled therewith, the production thereof should cease from any cause after the primary term, this lease shall not terminate if Lessee commences additional drilling or re-working operations within ninety (90) days from date of cessation of production or ...

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