Remedies for Breach of Express Drilling Agreements

Question 1

Measure of Damages for a breach of an express drilling agreement

Answer 1

the measure of damages will be the royalties that would have been owed had the well been drilled, as that was the natural loss that arose from the failure to drill. Other alternatives can be used

Question 2

Joyce v. Wyant

Answer 2

Louisiana
The lease in question required an initial well to be drilled within sixty days after the formation date of the lease. with three additional wells drilled subsequently. The lessee failed to do so.

The court found that it was an unless lease and therefore the the lease was subject to automatic termination, not damages

Question 3

Fisher v. Tomlinson

Answer 3

Kansas
The plaintiff assigned a portion of the interest to the defendant for an agreement to drill by a set date. The defendant failed to do so.

The court stated that the measure of damages for a breach of contract to drill is the damage that arose naturally from the breach itself. $8,500 wasn’t the cost of drilling a well and was more relevant to the cost of other damages such as information lost and lost royalties.

Question 4

Corbello v. Iowa Production

Answer 4

Louisiana
Defendant left the land damaged and claimed it only had to pay fair market value.

The court ruled that damages for a breach of contract rather than a tort case have no limitation tying damages to market value, rather they simply have to be based on the reasonable amount to restore the property.