Imposing Covenants in Oil and Gas Leases—Covenant of Further Exploration Tenuously Supported Under Texas Jurisprudence: Sun Exploration & Production Co. v. Jackson, 715 S.W.2d 199 (Tex. App.—Houston [1st Dist.] 1986, writ granted)
von Kreisler, Alexander Nicolai
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Analyzes a case from the 1st District Court of Appeals in Houston involving an oil and gas lease dispute. The lessee filed suit in order to obtain a temporary restraining order to perform a seismic survey after the lessor refused access to the property for this purpose. The lessor counterclaimed, seeking cancellation of the lease on the grounds that the lessee had failed to reasonably explore and develop the land. The court determined that an implied covenant of reasonable development includes an implied covenant of further exploration in oil and gas leases, and is not a separate covenant. This requires lessees to explore formations other than the initial discovery for new hydrocarbon production in instances in which a “reasonable” operator with an expectation of profit would so explore under similar circumstances.