Northern Natural Gas Co. v. Approximately 9117 Acres (114 F. Supp. 3d 1144, 2015)

United States District Court for the District of Kansas 2015-07-08

Citations

Full opinion text

MEMORANDUM AND ORDER

MONTI L. BELOT, District Judge.

Before the court are the following:

1. Northern Brief Regarding PreJudgment Interest (Doc. - 949); Huff Group Response (Doe. 967); Meireis Group Joinder in Huff Response (Doc. 968); Producer-Defendants’ Response (Doc. 969); Northern Reply (Doc, 976);

2. Summary Judgment Motions Concerning Validity of Leases

—Val Group (Docs. 950, 951), Northern Response (Doc.. 970), Huff Group Response (Doc. 974), Val Reply to Northern (Doc. 989), Val Reply to Huff Group (Doc. 990);

—Pratt Well Service (PWS) Group (Doc. 952, 953), Huff Group Response (Doc. 972), PWS Reply (Doc. 987);

—Nash Oil & Gas (Docs. 954, 955), Huff Group Response (Doc. 975), Sonja Sue Staab Response (Doc. 971); Nash Reply (Doc. 988), Nash Reply to Staab (Doc. 991);

—L.D. Drilling, Inc. (Docs. 956, 957), Huff Response (Doc. 973), L.D. Drilling Reply (Doc. 992);

3. Northern’s Motion to Reallocate Fees and Expenses (Doc. 959); Huff Group Response (Doc. 978); Producer-Defendants’ Response (Doc. 981); Hudson Group Response (Doc. 986);

4. Huff Group’s and Producer-Defendants’ Motions for Attorney’s Fees and Expenses (Docs. 961, 962) and Meireis Group’s and Hudson Group’s Joinder in the motions (Docs. 964, 966); Northern’s Response (Doc. 977);

5. Northern’s Motion for Sanctions (Doc. 960); Huff Group Response (Doc. 984); Meireis and Hudson Groups’ Join-der in Huff Response (Docs. 983, 985);

6. Joint Report on Allocation to Interest Owners in Tracts Without Wells (Doc. 963);

7. Producer-Defendants’ Report on Division Between Royalty and Working Interest Owners in Tracts with Wells (Doc. 965).

I. Introduction.

Northern brought this condemnation action under the Natural Gas Act (NGA), 15 U.S.C. § 717f(h), to expand its natural gas storage field near Cunningham, Kansas. Pursuant to authority granted by the Federal Energy Regulatory Commission (FERC), Northern sought to acquire over 9,000 subsurface acres in the Viola and Simpson formations of the designated Extension Area. The court granted a preliminary injunction allowing Northern to take possession of the property as of March 30, 2012. Doc. 464. The court subsequently held that thé date of taking was March 30, 2012, the date Northern perfected a right to possession of the property. Doc. 691 at 34. A commission appointed by the court to determine just compensation for the property taken by Northern held extensive hearings and filed a report of its findings. Doc. 888. The court subsequently adopted the commission’s report. Doc. 941.

The findings adopted by the court are summarized in Exhibit 3 of the commission’s report, Doc. 888 at p. 84-85. The total compensation owed by Northern as of the date of taking was $7,310,427. Of that amount, about $5.9 million was attributable to Extension Area tracts that had producing gas wells in the Viola formation. A little over $1 million was attributable to the storage lease potential of the property taken. Additional compensation was determined to be owing for well salvage ($46,800), surface damages ($178,540), buildings ($278,190), and well isolation costs ($51,000).

The court now has before it motions addressing most of the remaining issues in the case, including: whether prejudgment interest should be awarded as part of just compensation; whether oil and gas leases on a number of well tracts terminated prior to the date of taking; whether some of the commission costs paid by Northern should be reallocated to other parties; whether defendants are entitled to attorney’s fees; whether Northern is entitled to sanctions against landowners’ counsel; how the award on non-well tracts should be allocated; and how the award on tracts with wells should be allocated among the various interest owners. ■ *'

II. Prejudgment interest.

Northern took possession of'the defendant property on March .30, 2012, but has yet to pay the owners just compensation. As the court has previously noted, when property. is -taken by a condemnor prior to payment of just compensation, the condemnor has' an obligation to pay interest -on the value of the property until just compensation is ultimately paid to -the owner. Doc. 691 at 9, (citing United States v. Dow, 357 U.S. 17, 22, 78 S.Ct. 1039, 2 L.Ed.2d 1109 (1958)). “[I]f disbursement of the award is delayed, the owner is entitled to interest thereon sufficient to ensure that he is placed in as good a position pecuniarily as he would have, occupied if the payment had coincided with the appropriation.” Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 10, 104 S.Ct. 2187, 81 L.Ed,2d 1 (1984).

Interest is thus an element of just compensation owed for the taking of the property. See Seaboard Air Line Ry. Co. v. United States, 261 U.S. 299, 306, 43 S.Ct. 354, 67 L.Ed. 664 (1923) (“The addition of interest allowed by the District Court is necessary that the owner shall not suffer loss and have ‘just compensation’ to which he is entitled.”). The Supreme Court has said that a “reasonable rate” of interest is appropriate in such circumstances. See United States v. Creek Nation, 295 U.S. 103, 111, 55 S.Ct. 681, 79 L.Ed. 1331 (1935). In Seaboard Air Line, the court found that awarding interest at a rate established by state law was- a “palpably fair and reasonable method’’ of awarding just compensation. 261 U.S. at 306, 43 S.Ct. 354. See also United States v. Rogers, 255 U.S. 163, 170, 41 S.Ct. 281, 65 L.Ed. 566 (1921) (the fact that the interest rate applied by the court “is in harmony with the-policy of the state where the lands are situated does not militate against, but makes for, the justice and propriety of its adoption.”).

After examining the various alternatives, the court concludes that the Kansas post-judgment interest rate provided for in K.S.A. § 16-204(e)(l) provides the appropriate measure of compensation. Kansas law applies this rate when an appeal from an initial condemnation award results in a greater award. K.S.A. § 26-511. Although the condemnation procedures used in this federal proceeding differ from the Kansas procedures, the Kansas judgment rate nevertheless provides a fair assessment of the compensation owed for the period from the taking of the property until ultimate payment of the condemnation award. Cf. Spears v. Williams Nat. Gas Co., 932 F.Supp. 259 (D.Kan.1996) (in condemnation proceeding under the Natural Gas Act, court applied .the judgment rate of K.S.A. § 16-204). Under the formula in K.S.A. § 16-204(e)(1), the applicable rate in this case is 4.75%, which is four percentage points above the federal reserve discount rate for the prior year.

The court has considered but rejected the alternatives suggested- by the parties. Northern, for example, argues that prevailing money market rates (0.70% for a 36-month, CD) “would place the con-demnees, as ordinary investors, in as good a pecuniary position as had there been no delay” in payment. Doc. 949 at 10. But as Northern itself recognizes, this 'has been a period of historically low interest rates during which cash equivalents like CDs have earned little or no return. Dur'ing the same period, there were reasonably safe alternatives from which ordinary investors could generate-more substantial returns. For example, other courts have awarded interest based upon long-term corporate bond yields. See e.g., Textainer Equipment Management Limited v. United States, 115 Fed.Cl. 708, 719 (Fed.Cl. 2014) (“the court is persuaded that in this instance an objective ‘reasonably prudent investor’ would have sought yields consistent with the Moody’s Rate.”). See also Pitcairn v. United States, 212 Ct.Cl. 168, 547 F.2d 1106, 1124 (1976) (“[Ljong-term 'corporate bond yields are an indicator of broad trends and relative levels of investment yields or interest rates. They cover the' broadest segment of the interest rate spectrum.”). The court notes that in the period from April 2012 to present," long-term corporate bond yields have generally been between 3.5% and 4.5%. Under the circumstances, current CD yields and similar measures are not sufficient- to ensure that property interest owners' suffer no economic loss from the delay in payment over the past three years.

The Huff group and the producer-defendants, by contrast, urge the court to apply the 10% annual rate in K.S.A. § 16-201. Huff points out that the Kansas Supreme Court previously applied that statute to damages awarded in an inverse condemnation case. Herman v. City of Wichita, 228 Kan. 63, 612 P.2d 588 (1980). (At the time Herman was decided, it should be noted, the statute provided for 6% annual interest.). Aside from the fact that Herman-was expressly limited to inverse condemnation claims, however, the 10% flat rate in K.S.A. § 16-201 takes no account of actual market conditions. It embodies an arguably punitive -element that has no place in just compensation. And a 10% annual return is well above what a relatively safe investment would have earned over the period in question. Defendants are not entitled to a windfall return reflecting a risky investment' for which they bore no risk.

Producer-defendants likewise urge the court to apply a 10% prejudgment interest rate because the commission discounted the value of the gas reserves in the Extension Area by 10%. Doc. 969 at 3-4. But the 10% discount applied by the commission was based on evidence that willing buyers and sellers typically apply such discounts in determining the market value of oil and gas properties. That fact says nothing about the appropriate level of prejudgment- interest to compensate defendants for a delay in payment of -just compensation.

The court’s obligation is to award interest “sufficient to ensure that [the property owner] is placed in as good a position pecuniarily as he would have occupied if the payment had coincided with the appropriation.” Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 10, 104 S.Ct. 2187, 81 L.Ed.2d 1 (1984). The 4.75% annual interest rate provided for in K.S.A. § 16-204 accomplishes this. It takes into account actual market conditions for the period in question and provides a rate of return consistent with a relatively safe investment.

Northern contends -that no interest should be imposed on $2,671,700 of the condemnation award because Northern deposited that amount with the court prior to the taking. It argues defendants had the ability to withdraw that sum (although none chose to do so), and that by analogy to Kansas condemnation procedures, intér-est should only be imposed on the difference between the total $7.3 million award and this $2.6 million deposit. See K.S.A. § 26-511. .

This argument is not persuasive. Northern’s deposit was required by the court as security for the injunction allowing Northern’s up-front taking; it was not intended to be just compensation for the taking of the property. (Northern was allowed to post a bond for the lion’s share of the security.) See Doc. 464 at 25, 29. The cash deposit was required in part to allow well tract owners to avoid or mitigate the consequences of having their wells immediately taken. See Doc. 464 at 22. Additionally, the defendants who were eligible to withdraw the cash deposit faced practical barriers and were not at liberty to simply withdraw the funds. The court required that any party seeking to withdraw the funds show the “consent of any landowners, royalty owners, working interest owners and lienholders who have an interest in the tract....” Doc. 464 at 30. Property owners also faced liability if a withdrawal exceeded the ultimate determination of just compensation. These measures served to prevent pre-litigation disputes over the security deposit, but they also erected a significant hurdle in the path of any interest owner wanting to withdraw the funds. Unlike a garden variety condemnation, ownership of these tracts was splintered in such a way that withdrawal of the deposit was impracticable. The court concludes that Northern has an obligation to pay interest on the entirety of the condemnation award, including the cash deposit made prior to the taking.

Finally, the court concludes that the obligation to pay this interest continues until Northern pays just compensation to the owners of the property, and that the interest should be compounded annually to ensure that the owners are placed in as good a position as they would have enjoyed had payment coincided with the taking. Compounding is appropriate here given the significant delay between the taking and the payment of just compensation. See e.g., Hardy Storage Co., LLC v. An Easement to Construct, Operate and Maintain Gas Transmission Pipelines, 2009 WL 900157, *8 (N.D.W.Va.2009) (in action under the NGA, interest was compounded annually to fully compensate for the condemnation); Textainer Equip. Mgmt. Ltd. v. United States, 115 Fed.Cl. 708, 719 (Fed.C1.2014) (“Compound interest may be necessary ‘to accomplish complete justice’ under the Just Compensation Clause.”); 520 E. 81st St. Associates v. State of New York, 19 A.D.3d 24, 30, 799 N.Y.S.2d 1, 5 (N.Y.A.D. 1 Dept.2005) (quoting Bowles v. United States, 31 Fed.Cl. 37, 52 (Fed.Cl.1994)) (“because of the long delay since the date of taking in this case, the award of compound interest is not only proper, but its denial would effectively undercut the protections of the fifth amendment”).-

In sum, the court concludes that Northern owes interest on the value of the property taken ($7,310,427) from the date of taking on March 30, 2012, until the date just compensation is paid to the owners by Northern, át a rate of 4.75%, compounded annually.

III. Summary Judgment on Validity of Leases.

Several owners/producers with oil and gas leases in the Extension Area have filed summary judgment motions seeking a ruling-that their leases were valid on the date of taking, such that they are entitled to share in the compensation paid for the tracts taken by Northern. Although the wells on these tracts were shut-in and were not producing at the date of taking, the producers argue that the leases remained valid for various reasons, including the effect of force majeure provisions. The Huff Group of landowners (and certain other landowners), on the other hand, contend that several leases terminated due to a lack of production and/or because .the producers failed to pay shut-in royalties.

Val Group

The Val group argues that Val Energy’s leases remained valid on the date of taking by virtue of the leases’ force majeure clauses. Docs. 950, 951. It further argues that it would be inequitable under the circumstances to terminate the leases. In response, the Huff landowner group argues (as to the Branscom lease) that the force majeure clause did not apply, but even if it did that the lease terminated because Val failed to pay shut-in royalties to extend the lease. Northern makes a similar argument as-to the McGuire léase and further contends that even if the lease remained valid, the Val lease interest was personal property and is not compensable in this action.

Uncontroverted facts. The court finds the following facts to be uncontroverted for purposes of summary judgment.

The Val Group defendants held interests' in three relevant leases: the McGuire lease (covering Tract No. 2312620), the Branscom lease (Tract No. 3302610), and the Riffey lease (Tract No. 4252611). Val Energy operated a producing well on each of these leases — the McGuire 1-31, ■ the Branscom 1 and the Riffey VI-25, respectively. Each well was completed in and producing gas from the Viola/Simpson formations prior to June 2010.

At the'time Val drilled the McGuire 1-31 well in 2008, it was aware of litigation between Northern and various producers operating wells farther to the south. The McGuire 1-31 began producing in January 2009.

In December of 2008, Northern sued Val, L.D. Drilling, Inc., and Nash Oil & Gas, Inc. in federal court, claiming they were producing gas belonging to Northern that was migrating from Northern’s Cunningham Storage Field. Northern Nat. Gas Co. v. L.D. Drilling, Inc., et al, Case No. 08-1405 (U.S.DisLCt., D.Kan.). Northern alleged various state law tort claims, including conversion, nuisance, and civil conspiracy.

In September 2009, Lumen, the gas purchaser on the McGuire 1-31 well, suspended payments on gas purchases from Val and other producers'because of Northern’s claim that the" gas belonged to Northern.

Northern filed an action in Pratt County District Court in December 2009 claiming that purchasers of gas from Val and other producers were converting gas belonging to Northern. On April 15, 2010, the judge in the state case ruled in a summary judgment motion that Northern did not have title to the disputed gas.

On June 2, 2010, FERC granted Northern a Certificate of Public Convenience and Necessity authorizing it to expand the boundaries of the Cunningham Storage Field by over 12,000 acres. The certificate allowed Northern to acquire by condemnation the Viola and Simpson formations underlying the Extension Area, including the acreage on which the three Val wells were operating.

On June 17, 2010, Northern filed a Motion to Enjoin Production in the federal “damage case” (D,Kan. No. 08-1405) asking the court to require operators to halt production from specified Extension Area Viola wells, including the three Val wells.

On June 30, 2010, the judge in the Pratt County District Court action ordered gas purchasers to continue holding gas purchase payments in suspense pending further order of the court. He certified his summary judgment ruling as a final judgment to allow an immediate appeal to the Kansas Supreme Court.

On July 16, 2010, Northern filed the instant condemnation action (Case No. 10-1232).

Thereafter in July 2010, Val Energy shut-in its gas' wells ‘ on the McGuire, Branscom and Riffey leases. The Val leases were all producing in'paying quantities prior to being shut-in. Val would have continued to produce from these wells but for the foregoing events.

Prior to entry of the June 2,2010 FERC order, Val. Energy’s president considered the interruption of gas payments by purchasers to be. temporary. After the FERC order he believed it was inevitable that the property would be condemned.

On December 22, 2010, in the. federal damage case, Judge Brown ordered Val and other -operators to cease production from their Viola wells by February.21, 2011. (Case No. 08-1405, Doc. 420). the injunction, was based on a finding that Northern was likely to prevail on a nuisance claim-. The injunction prohibited gas production from the Viola and Simpson formations in the. Extension ;Area, but not from other formations, pending resolution of the claims in Case No. 08-1405,. .,

Each of the three Val leases included the following provisions [labeled, by the court for ease of reference as the haben-dum, shut-in royalty, and force majeure clauses]:,

{Habendum dame ] Subject to the provisions herein contained, this lease shall remain in force for a term of three (3) years from this date (called the “primary term”) and :as long thereafter as oil, liquid hydrocarbons, gas or other respective constituent products, or any of them is produced from said land or land with which said land is pooled.

[Shut-in royalty dame] Where gas from a well producing gas only is not sold or used,, lessee may pay or tender as royalty One Dollar ($1.00) per year per net mineral acre retained thereunder, and if such payment or tender is made it will be considered that gas is being ,produced within the meaning of the preceding paragraph.

[Force majeure .clause] All express or implied covenants of this lease shall be subject to all Federal and State Laws, Executive Orders, Rules or Regulations, and this lease shall not be terminated in whole or part, nor lessee held liable in damages, for failure to comply therewith, if compliance is prevented by, or if such failure is the result of, any such Law, Order, Rule or Regulation.

In December 2010, Northern acquired the fee; title to the McGuire property (Tract 2312610), including title to the hydrocarbons located thereon. The property was then subject to the McGuire lease. The three-year primary term of the lease had expired by that time but had been extended as a result of production from the McGuire i — 31 well.

The primary term of the Branscom lease ended on August 3, 2010. ■

Val has not tendered any shut-in royalty payments under any of the three leases.

Whether the McGuire and/or Branscom leases terminated prior to the date of taking.

The undisputed facts show, that the McGuire 1-31 and the Branscom 1 wells were producing in paying quantities until they were shut-in toward the end of July 2010. The facts also show that Val’s decision to shut-in its Extension Area wells resulted from litigation over the wells. The decision was due in large part to the suspension of payments by the gas purchaser, The purchasers initially suspended payment due to Northern’s claims of title to the gas. The Pratt County District judge ruled in April 2010 that Northern had no title to the gas, but on June 30, 2010, he ordered the purchasers to hold all payments in suspense pending further order of the court, In the same time frame, Northern obtained FERC authority to condemn the well tracts and it filed the condemnation action. It additionally moved for an injunction in the federal damage case to prevent further production. It is beyond reasonable dispute that these factors caused Val to shut-in its wells despité its desire to continue production. In light of these events' Val’s president understood that the suspension of payment was not a short-term measure and that the property was ultimately going to be condemned. A shut-in under these circumstances was not a “voluntary business decision” in the ordinary sense of that phrase.

But whether voluntary or not, the effect of the shut-in is determined by the terms óf the leases. Under the habendum clause quoted above, each Val lease was valid for three years and thereafter for as long as oil or gas was produced in paying quantities. Because, production ceased in July 2010, the McGuire lease terminated at that time unless some other provision modified the habendum clause and effectively extended the term of the lease. See Pray v. Premier Petroleum, Inc., 233 Kan. 351, 353, 662 P.2d 255 (1983); D. Pierce, Kansas Oil and Gas Handbook § 9.22 (“If the habendum clause requires production of oil or gas to extend the lease, and there are no other lease provisions which extend the lease in the absence of production, failure to obtain and maintain the required production terminates the lease,”). Similarly, the Branscom lease terminated in- August 2010 unless it was extended by some provision of the lease.

Whether force majeure event occurred. The force majeure clause in each Val lease provided that the lease convenants were subject to “all Federal and State Laws, Executive Orders, Rules or Regulations,” and “this lease shall not be terminated, in whole or in part, ... for failure to comply therewith, if ... such failure is the result of any such Law, Order, Rule or Regulation.” Val contends the leases remained valid under this clause, despite the lack of production.or shut-in royalties, while Huff argues that none of the events cited by Val amount to force majeure events (pointing out the clause said nothing about failures resulting from “motions” or “court orders”) and, in any ease, that those events did not cause Val’s failure to pay shut-in royalties and therefore resulted in termination of the leases under the rule of Welsch v. Trivestco Energy Co., 43 Kan. App.2d 16, 221 P.3d 609 (2010).

The purpose of a force majeure clause generally is “to relieve an oil and gas lessee from the harsh termination of the lease due to circumstances beyond its control that would make performance untenable or impossible.” R. Eclavea, 38 Am. Jur.2d Gas and Oil § 83 (Westlaw May 2015). See also 2 Summers Oil and Gas § 15:32 (3d ed.) (“In the context of an oil and gas lease, the purpose of a force maj-eure clause is to excuse the lessee from non-performance of lease obligations when the nonperformance is caused by circumstances beyond the reasonable control of the lessee, or when nonperformance is caused by an event which is unforseeable at the time the parties entered the contract.”). Of course, the scope and effect of any force majeure clause depends upon its wording, but courts have construed these clauses in light of their general purpose and have limited them to circumstances beyond the lessee’s control that cannot be overcome with due diligence. Nee e.g., Edington v. Creek Oil Co., 213 Mont. 112, 690 P.2d 970 (1984) (although state commission ordered shut-in, force majeure clause did not save the lease because the shut-in was required by. saltwater, seepage within the lessee’s control).

Governmental actions,- including orders to halt oil and gas production, have been held to constitute force majeure events. See Joan Teshima, Gas and Oil Lease Force Majeure Provisions: Construction and Effect, 46 A.L.R.4th 976 (citing, inter alia, Frost Nat. Bank v. Matthews, 713 S.W.2d 365 (Tex.App.1986)) (force majeure clause prevented" termination when wells were shut-in pursuant to orders of Railroad Commission). The particular force majeure clause at issue here is a fairly common one, see Lightcap v. Mobil Oil Corp., 221 Kan. 448, 457, 562 P.2d 1 (1977), and the parties presumably intended it to have its commonly understood meaning. Although the few reported cases on this issue have dealt with administrative (as opposed to judicial) orders to halt oil and gas production,- courts have characterized this clause as one directed at governmental action generally. See e.g., Fransen v. Conoco, Inc., 64 F.3d 1481, 1488 (10th Cir.1995) (noting that the clause excused any failure that was prevented by or that resulted from “any such governmental action.”); Watts v. Atlantic Richfield Co., 115 F.3d 785, 795 (10th Cir.1997) (construing what the court termed the “governmental regulations clause”).

The Val force majeure clause specifically provided that the lease shall not be terminated if the lessee’s failure to comply was the result of any federal or state law. It is fair to say that Val’s July 2010' shut-in was the result of the state court order suspending ‘gas payments, coming as it did in the wake of FERC’s condemnation decision, the filing of the condemnation suit, and Northern’s motion for an injunction to halt production. Huff contends that because the force majeure clause referred only to executive orders, a judicial Order cannot qualify as a force majeure event. But the clause as a whole applies to failures resulting from federal and state “laws” — in addition to rules, regulations, and executive orders — and Val’s shut-in is reasonably , considered “the result of .[a state] law.” The order requiring- suspension of gas payments was duly , issued by a state .court and had the force of state law. It was an intervening act by the state that prevented Val from continuing its ongoing production and thereby extending the. lease.

The fact that executive orders but not court orders' are specifically mentioned in the force majeure clause does not evince an intent to exclude all court orders from its scope. Executive orders are common in oil and'gas production because executive agencies are typically given primary jurisdiction over oil and gas production. The specific mention of executive orders in this context reflects, this reality, but does not reasonably imply an intent to exclude all other governmental orders from its scope. In fact, doing so would be contrary to the portion of the clause covering failures from “federal and state laws,” which are governmental restraints enacted by legislatures and applied to specific cases by the courts. All of the items in this clause share a common trait: they are all forms of governmental restraint that can prevent a lessee from performing. Executive orders represent one such form; “state laws” represent another. Absent some indication of contrary intent not present here, the “state laws” that can rise to force majeure under this clause would reasonably include not only legislative enactments, but also court decrees based on state or federal law. , Cf. Restatement (Second) of Contracts. § 264, comment, b (a basic assumption of a contract may be upset if performance is made impracticable by having to comply with a government order; for purposes of this rule “[a]ny governmental action is included and the technical distinctions between ‘law,’ ‘regulation,’ ‘order’ and the like are disregarded.”)

The state court order requiring suspension of payments on Val’s gas sales constituted “state law” within the meaning of this provision. It was beyond Val’s control and resulted in Val shutting in its' Extension Area wells. Had it not been for the indefinite deprivation of payment ordered by the court, Val would have continued to produce in July of 2010. In sum, the state court order was a force majeure event covered by the clause in the Val leases.

Failure to pay shut-in royalties. Huff contends that even if this is so, Val’s failure to pay shut-in royalties when its production ceased was not excused by the force majeure clause, meaning the lease terminated under the habendum clause. Citing Welseh v. Trivestco Energy Co., 43 Kan.App.2d 16, 221 P.3d 609 (2009), rev. denied (Dec. 7, 2010).

The question of whether the lease terminated for failure to pay shut-in royalties in.these circumstances is .governed by Kansas;daw. See. Phillips v. Washington Legal Foundation, 524 U.S. 156, 164, 118 S.Ct. 1925, 141 L.Ed.2d 174 (1998) (the existence of a property interest is determined by state law). ,.The court therefore looks to the final decisions of the Kansas Supreme Court for authority on this question. Absent such a decision— and there is none on this point — the court must make an “Erie guess” and determine in its best judgment how the Kansas Supreme Court would resolve the issue. See Cornhusker Cas. Co. v. Skaj, 786 F.3d 842 (10th Cir.2015). In doing so, the court may consider state intermediate appellate decisions, decisions of other states, federal decisions, and the general weight and trend of authority. Armijo v. Ex Cam, Inc., 843 F.2d 406, 407 (10th Cir.1988).

The Welseh decision by the Kansas Court of Appeals is the only' Kansas case discussing the interplay between a' force majeure and a shut-in royalty clause. In Welseh, the lessee shut-in a gas well after the gas purchaser ceased making- payments and declared bankruptcy. The lessee did not pay shut-in royalties. In a subsequent action by the lessor to declare the lease terminated, a district court ruled that the bankruptcy was a force majeure event that prevented termination, and that the lessor was entitled to damages but not termination for the .lessee’s failure to pay shut-in royalties. The Kansas Court of Appeals reversed, finding among other things that the bankruptcy of the purchaser was not a force majeure event. Welsch, 43 Kan.App.2d at 28, 221 P.3d 609. The court went on to say that even if it had been a force majeure event, “the failure to exercise an option to pay shut-in royalties was not due to this purportéd force maj-eure event” and therefore was not excused by the force majeure clause, such that the lease expired under the terms of the habendum clause.

Where a state intermediate appellate court has decided a question, a federal court should follow that decision absent convincing evidence that the state’s highest court would decide otherwise. Webco Indus., Inc. v. Thermatool Corp., 278 F.3d 1120, 1132 (10th Cir.2002) (“[Wjhere an intermediate appellate state court rests its considered judgment upon the rule of law which it announces, that ... is a datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.”)

A close examination of Welseh raises doubts about its application here. To begin with, Welsch’s finding that shut-in royalties were due after a force majeure event was clearly dicta because the" bankruptcy of the gas purchaser' was held not to be a force majeure event. Welseh, 43 Kan.App.2d at 29, 221 P.3d 609 (“we are not convinced the financial issues of a gas purchaser should be' considered a force maj-eure event under this lease.”). The Welseh panel rightly noted that the lack of a market due to the purchaser’s bankruptcy was a circumstance covered by the shut-in royalty clause, not the force maj-eure clause. A shut-in royalty clause is designed to allow a lessee to keep a lease in effect when a well is capable of producing but there is no market for the gas, see Levin v. Maw Oil and Gas, 290 Kan. 928, 931, 234 P.3d 805. (2010), which is precisely what the lessee faced in Welsch. By contrast, Val’s ability to produce was effectively thwarted by a governmental decree, which was a force majeure event under the Val lease.

To the extent there is any authority or commentary on this specific point, it generally says that when a force majeure evént halts production in the secondary term, the lessee is not required to pay shut-in royalties to keep the lease in effect. See Maralex Resources, Inc. v. Gilbreath, 134 N.M. 308, 318, 76 P.3d 626 (2003) (“If the cessation of production is caused by a force majeure event, then no shut-in royalties are due. [citing Sun - Operating Ltd., infra] When production stops because of an event beyond the control of the lessee, both parties bear the burden of the loss of royalties from non-production, [cite omitted] In contrast, when the lessee shuts down operations for market reasons, the shut-in royalty clause applies and the lessee must compensate the lessor for lost production.”); Sun Operating Ltd. Partnership v. Holt, 984 S.W.2d 277 (Tex.App.Amarillo 1998) (“a shut-in royalty clause does not ipso facto take precedence over every other clause which may affect the term of the lease;” by including the phrase “anything in this lease to the contrary notwithstanding” in the force majeure clause, the parties evinced an intent to allow lessee to rely upon that clause to extend the lease); Frost Nat. Bank v. Matthews, 713 S.W.2d 365, 368 (Tex.App.Texarkana 1986) (where railroad commission ordered shut-in, lease was extended by force majeure; although lessee paid shut-in royalties, such payments were not necessary to extend the lease); Williams & Meyers, Oil & Gas Law § 633 (LexisNexis Matthew Bender 2014)(“If the force maj-eure clause is applicable, then the payment of shut-in royalties is not required to keep the lease alive in the secondary term,”.); 38 Am.Jur.2d Gas and Oil § 84 (“If the cessation of oil and gas production is caused by a force majeure event, then no shut-in royalties are due under the lease.”) (citing Maralex, supra).

Unlike the force majeure clause in Welsch, the'Val lease provided that “this lease shall not be terminated in whole or in part” if compliance was prevented by law. Additionally, the habendum clause provided that it was “[s]ubject to the provisions herein contained',” including, a fortiori, the force majeure clause. Construing these provisions as part of a whole, they evince an intent to extend the lease rather than terminate it so long as production in the secondary term was prevented by a force majeure event. Cf. Central Nat. Res., Inc. v. Davis Operating Co., 288 Kan. 234, 244, 201 P.3d 680 (2009) (intent is gathered from examination of instrument as a whole). See also Beardslee v. Inflection Energy, LLC, 25 N.Y.3d 150, 159-60, 8 N.Y.S.3d 618, 31 N.E.3d 80 (N.Y.2015) (force majeure clause would excuse failure to produce in secondary term of lease). The state court order preventing payment was a force majeure event that effectively prevented Val from continuing production. Under these circumstances, the Kansas Supreme Court would likely find that termination is contrary to the terms of the lease and that payment of shut-in royalties was not required to keep the lease in effect.

It is clear that Val would have continued to produce gas in and after July 2010 had it not been prevented from doing so by governmental decree. Considering the particular terms of the Val leases, the court is convinced that the Kansas Supreme Court would not apply Welsch’s dicta in these circumstances, but would instead find that a force majeure event temporarily excused the absence of production and prevented termination of the Val leases up to the- date of taking. This view is consistent with authority from other gas-producing jurisdictions, with the opinions of leading commentators, and with the language of the Val leases. See Peak ex rel. Peak v. Central Tank Coatings, Inc., 606 Fed.Appx. 891, 893-94 (10th Cir.2015) (when no controlling state decision exists, it is appropriate to look to appellate decisions in other states with similar legal principles).As noted by Williams & Meyers, Oil and Gas Law § 683 (LexisNexis Matthew Bender 2014) [footnotes omitted]:

Arguably the force majeure clause is inconsistent with clauses of limitation which operate automatically. However, a number of cases expressly or implicitly hold that a clause of limitation may be modified by a force majeure clause. We believe that the latter position is correct. In effect, the limitation provisions of the lease provide for automatic termination of the lease under certain circumstances, e.g., upon failure of production during the secondary term. The force majeure clause may properly be read as defining the event upon which the lease will terminate, e.g., “upon failure of production during the secondary term unless such failure was due to force majeure.” .Thus, the force majeure clause will modify not only the habendum clause, but [also] a shut-in gas royalty clause should the force majeure event cause a cessation of production of natural gas in the secondary term.

The terms of Val’s lease excused Val’s cessation of production after the state court ordered suspension of payment for gas sales. With the lease’s production excused by this ongoing force majeure event, Val was not required to. pay shut-in royalties to hold the lease.

Lastly, Northern contends that even if the McGuire lease was valid on the date of taking, Val’s interest in the lease is not compensable. Northern points out that under Kansas .law, an oil and gas lease .is classified as personal property, while oil and gas in the ground are considered part of the realty and thus belong to the landowner. Northern argues that as the fee simple owner of all oil and gas remaining in the ground on this tract, it is entitled to compensation for all of the remaining gas, with Val having no standing or ownership claim to that property. Doc. 970 at 11-12.

Regardless of the fact that Kansas characterizes Val’s ownership as personal property, Northern took that property under its condemnation authority and must pay just compensation for it. Northern cites no authority for its argument that condemnation of a tract covered by an oil and gas lease entitles the lessee to no compensation, and the court finds its argument unpersuasive. Northern .may own the minerals underlying the tract, but it owned them subject to a valid oil and gas lease that granted Val a right to produce the minerals and to share in the proceeds from their .sale. Val is now entitled to receive just compensation reflecting the value of the property taken from it. Cf. 26 Am.Jur.2d Eminent Domain § 318 (“In the absence of an agreement, the measure of damages for a leasehold interest taken under eminent domain is generally the fair market value of the leasehold or unexpired term of the lease____”). That value takes into account the lease rights assigned to Val by the former owner of the property, notwithstanding Northern’s title tó ' the minerals under the property.

For the foregoing reasons, Val’s motion for partial' summary judgment (Doc. ■ 950) as to the validity of its oil and gas leases as to tracts 2312610, 3302610, and 4252611 is granted. The court finds that Val’s oil and gas leases as to these tracts were valid in the Viola and Simpson formations as of the date of taking. The court further finds that Val is entitled to a share of the just compensation owing for the taking of- these tracts.

Pratt Well Service Group (Doc. 952)

Pratt Well Service (PWS) group moves for summary judgment confirming the validity of the Schwertfeger lease (covering Tract 1232611). as of the date, of taking. It argues that the lease remained valid under the habendum clause, which provided that the lease would continue in effect after the primary term as long as oil or gas “is or can be produced.” In response, the Huff group argues that the lease’s shut-in royálty clause effectively limited that provision and made payment of shut-in royalties a condition for perpetuation of the lease. The Huff group contends the lease terminated because PWS failed to pay shut-in royalties. ■ ■

Uncontroverted facts. PWS was the operator of the Schwertfeger lease. From March 2009 to June 2010, the Schwertfeger 1-23 well on this lease produced both oil and gas in paying quantities.

In June 2010, PWS’s gas purchaser stated that it would no longer pay for gas produced from the Schwertfeger lease. It did so because of developments in litigation concerning the Extension Area, including Northern’s claims that it owned the gas being produced and FERC’s authorization for Northern to condemn the Viola formation in the Extension Area. As' a result, PWS decided to halt production from the Schwertfeger lease pending resolution of the litigation.

Had it not been for the condemnation and the litigation'surrounding the Extension Area, PWS would have continued to produce oil and gas in paying quantities from the ‘Schwértfeger lease. PWS’s president, Kenneth Gates', planned to return the Schwertfeger 1-23 to production if th'e judicial uncertainty was removed.

The primary term of the Schwertfeger lease expired on July 13,2009.

The Schwertfeger lease included the. following provisions:

[Habendum clause] This lease shall remain in force for a term of three (3) years (called “primary term”) and as long thereafter as oil [or] gas ... is or can be produced.

[Shut-in royalty clause] [part of a gas royalty clause stating that the lessee shall pay the lessor a one-eighth royalty on proceeds from the sale of gas] If such gas is not sold by the lessee, lessee may pay or tender annually at or before the end of each yearly period during which such gas is not sold, as a shut-in royalty, ... an amount equal to one dollar per net mineral acre, and while said shut in royalty is so paid or tendered, it will be considered under all provisions of this lease that gas is being produced in paying quantities. The first yearly period during which such gas is not sold shall begin on the date the first well is completed for production of gas.

[Cessation of production clause] If after the expiration of the primary term, production of oil or gas should cease from any cause, this lease shall not terminate if lessee commences additional drilling or reworking operations within one hundred-twenty (120) days thereafter, or if at the expiration of the primary term, oil or gas is not being produced on said land, but lessee is then engaged in drilling or reworking operations thereon, then in either event, this lease shall remain in force so long as operations are prosecuted either on the same well or any other well thereafter commenced, with no cessation of more than one hundred twenty (120) consecutive days, and if they result in production of oil or gas, this lease shall remain in effect so long thereafter as there is production of oil or gas under any provisions of this lease.

Whether the Schwertfeger lease terminated prior to the date of taking.

This court previously construed an identical habendum clause that extended a lease for as long as oil or gas “is or can be produced,” finding this language “can only reasonably be interpreted to require actual production or the capability to pro-duce____” Hunthauser Holdings, LLC v. Loesch, 2003 WL 21981969, *5 (D.Kan., May 1, 2003), reconsideration denied, 2003 WL 21981961 (D.Kan., June 10, 2003). The court relied in part on Anadarko Petroleum Corp. v. Thompson, 94 S.W.3d 550 (Tex.2002), which similarly found that this type of clause will extend a lease beyond the primary term if a well is capable of production in paying quantities, even if the well is not actually producing.

Because the Schwertfeger 1-23 was capable .of producing oil and gas in paying quantities when it was shut-in, and there-i after until the date of taking, the Schwert-feger lease remained valid on the date of taking unless some other provision effectively limited the habendum clause or otherwise caused the lease to terminate.

The Huff group argues that the shut-in royalty clause did so. It first notes that Anadarko, supra, distinguished a siniilar New Mexico case (Greer v. Salmon, 82 N.M. 245, 479 P.2d 294 (1970)) on the grounds that the Greer lease had a shut-in royalty clause. Anadarko, 94 S.W.3d at 556-57. Huff also suggests the Kansas Supreme Court would not follow Anadarko, pointing out that in Levin v. Maw Oil & Gas, LLC, 290 Kan. 928, 948, 234 P.3d 805 (2010), the court declined to adopt Anadarko’s understanding of when a well is “capable of,production.” Huff argues that the shut-in royalty clause, in the Schwertfeger lease modified the habendum clause and established a condition that had to be satisfied to perpetuate the lease. To read it otherwise, Huff says, would.be to allow the habendum clause to trump the shut-in royalty clause and render the latter meaningless, because it would never be needed to save the lease. Doc. 972 at 10.

As PWS ' points out, however, the Schwertfeger 1-23 was capable of producing oil as well as gas in paying quantities, and the capability to produce either one extended the lease under the habendum clause. The shut-in royalty clause applied only insofar as there was a failure to produce gas. Even assuming it was intended as a limitation on the habendum clause, then, the shut-in royalty clause did not terminate the lease, because the- Schwert-feger 1-23 was still capable of producing oil. There is no inconsistency- with the shut-in royalty clause in this instance, because that clause did not- apply to production of oil. Moreover, the cessation of production clause can likewise be harmonized with the habendum clause, as Anadar-ko pointed out. Any apparent inconsistency between extending the lease when oil or gas “can be produced” [the habendum clause] and termination of the lease if actual production is not timely restored after a halt in production [the cessation clause], is resolved if the cessation clause is understood to apply only when a producing well holding the lease ceases to be capable of producing oil or gas in paying quantities. Anadarko, 94 S.W.3d at 556.

Provisions in an oil and gas lease, like other contracts, must be construed together and harmonized if possible. See Stady v. Texas Co., 150 Kan. 420, Syl. ¶ 1, 94 P.2d 322 (1939). The construction outlined above reasonably harmonizes the habendum, shut>in royalty,'and cessation of production clauses of the Sehwert-feger lease. The court concludes that the lease was capable of producing oil in paying quantities from its June 2010 shut-in through the date of taking, and that the lease remained valid for that reason under the habendum clause. Neither the shut-in royalty clause nor the’ cessation clause caused the lease to terminate in these circumstances. The PWS group is therefore entitled to a share of the just compensation payable for. the tract (no. 1232611) covered by the Schwértfeger lease.'

Nash Oil & Gas leases (Doc. 954)

Nash Oil & Gas held the following five leases in the Extension Area:' Holland, Trinkle, JC1, CRC, and Staab. Nash argues that the leases remained valid until the date of taking for several reasons. First,- it argues that gas was “produced” within the meaning of the leases’ haben-dum clauses by leaving the gas in the ground pending condemnation, as found by Mich. Wis. Pipeline Co. v. Mich. Nat’l Bank, 118 Mich.App. 74, 324 N.W.2d 541, 544 (1982). With respect to the Holland lease, whose habendum clause said the lease was extended so long as gas is “or can be produced,” Nash further argues that the lease remained valid because the Holland well was capable of producing at all times. Second, Nash argues that both the state court order of June 30, 2010 and the federal court injunction entered by Judge Brown in December 2010 were force majeure events that prevented the leases from expiring. Finally, Nash argues that finding the leases invalid would constitute an uncompensated taking of its property in violation of the Fifth Amendment.

The Huff group contends the three leases on tracts owned by its members (the Holland, Trinkle and JC1 leases) terminated. As it did previously, Huff argues there was no force majeure event preventing the operator from continuing to produce or from paying shut-in royalties. Sónja Sue Staab, the owner of the tracts covered by the CRC- and Staab leases, similarly argues there was no force maj-eure event preventing Nash from continuing to produce in 2010 (pointing out that L.D. Drilling continued to produce until Judge Brown’s injunction took effect in February of 2011), and that, even after the injunction took effect nothing prevented Nash from exploring zones other than the Viola and Simpson.

Uncontroverted facts.

Nash held an interest in the following mineral leases: the Holland lease (tract 3262611), on which it operated the Holland 1-26 and Holland 2-26 wells; the Trinkle lease (tract 2362611) on which it operated the Trinkle-1 well; the JC1 lease (tract 4272611), on which it operated the JC1 well; the CRC lease (tract 2012711); on which it operated the CRCT and CRC2 wells; and the Staab lease (tract 5352611), on which it operated the Staab 1- well.

All of the foregoing Nash wells were shut-in in July 2010, except for the CRC wells, which were not shut-in until November 2010. All of the wells were capable of producing gas in' paying quantities when they were shut-in. All of the wells were shut-in as a result of developments in litigation, including FERC’s June 2, 2010 certificate authorizing Northern to condemn the property, Northern's motion for an injunction to halt production, Northern’s claim of title to the gas, and the Pratt County District Court order of June 30, 2010 requiring purchasers to suspend all payments for gas from the wells.

The intent of Nash Oil & Gas’s president was to resume production from Nash’s wells' if the federal court denied Northern’s request for an injunction and the state court restored ONEOK’s ability to pay for natural gas.

Nash tendered shut-in royalties to the lessors on each of the foregoing leases on July 12, 2013, and on November 4, 2014. The lessor on the CRC and Staab leases rejected the tendered shut-in royalties. Holland lease.

The Holland lease contained the following provisions:

[Habendum clause] This lease shall remain in force for a term of Three (3) years and as long thereafter oil [or] gas ... is or can be produced.

[Shut-in royalty clause] [part of a royalty clause requiring lessee to pay one-eighth of the value of gas used or sold] [W]here gas only is found and where such gas is not sold or used, lessee shall pay or tender annually at the end of each yearly period during which such gas is not sold or used, as royalty, an amount equal to the delay rental provided in paragraph 5 hereof, and'while said royalty is so paid or tendered this lease shall be held as a producing lease under [the habendum clause]....

[Force majeure clause] All provisions hereof, express or implied, shall be subject to all federal' and state laws and the orders, rules, or regulations (and interpretations thereof) of all governmental agencies administering' the same, and this lease shall not- be in any way terminated wholly or partially nor shall lessee be liable in damages for-failure to comply with any • of the express -or implied provisions hereof if such failure accords with any such laws, orders, rules or regulations (or interpretations thereof)....

Trinkle Lease.

The Trinkle lease contained the following provisions:

[Habendum clause] This lease shall remain in force for a term of Three (3) years from this daté (called “primary term”) and as long thereafter as ... oil [or] gas ... is produced from said land.....

[Shut-in royalty clause] [part of royalty clause requiring payment of one-reighth royalty for gas sold or used] Where gas from.a'well producing gas only is not sold or used, lessee may pay, or tender as royalty One Dollar ($1.00) per year per net mineral acre retained hereunder, and if such payment or tender is made it will.be considered that gas is being produced within the meaning of the [haben-dum clause].

[Force majeure] All express or implied covenants of this lease shall be subject to all Federal and State Law, Executive Orders, Rules or Regulation, and this lease shall not be terminate [sic] in whole or in part, nor leassee [sic] held liable in damages, for failure to comply > therewith, if compliance is prevented by, or if such failure is the result of, any Law, Order, Rule or Regulation.

JCl Lease, CRC Lease and Staab Lease.

The JCl, CRC,-and Staab leases each contained provisions essentially identical to the above provisions of the Trinkle lease.

Whether Nash’s leases terminated prior to the date of taking.

The court first rejects out of hand two of Nash’s arguments. Nash argues the court should apply the reasoning of Mich. Wis. Pipeline Co. v. Mich. Nat. Bank, 118 Mich. App. 74, 324 N.W.2d 541 (1982) and find that gas was still being “produced” despite the fact that the wells were shut-in. The plain meaning of “produced” cannot support such a finding. Leaving gas in the ground is the opposite of producing it. Nash also argues that declaring its leases to be terminated would be an unconstitutional taking of its property. But if Nash’s leasehold interests expired or terminated by reason of the terms of the parties’ lease agreements — terms that were agreed to by Nash — then Nash could claim no property rights with respect to the leases.

Nevertheless, for the same reasons expressed with respect to the Val leases, the court concludes that the Nash leases remained valid up to the date of taking by virtue of a force majeure event. The state court order of June 30, 2010, which suspended all payments for sales of gas from Nash’s wells, was an application of state law that resulted in Nash’s inability to continue producing gas. That order, and the circumstances under which it was entered, effectively strangled Nash’s ability to produce. It is true, as the Huff group argues, that the order was not an absolute bar to continued production — as illustrated by Nash’s continued production of the CRC wells until November of 2010. (By contrast, Judge Brown’s injunction requiring the wells to be shut-in by February 21, 2011, was an absolute bar.). But nothing in the Nash force majeure clauses or in the law of force majeure generally requires absolute impossibility. Cf Restatement (Second) of Contracts § 261, comment d (“Although the rule stated in this Section is sometimes phrased in terms of ‘impossibility,’ it has long been recognized that it may operate to discharge a party’s duty even though the event has not made performance absolutely impossible. This Section, therefore, uses ‘impracticable,’ the term employed by Uniform Commercial Code § 2-615(a), to describe the required extent of the impediment to performance. Performance may be impracticable because extreme and unreasonable difficulty, expense, injury, or loss to one of the parties will be involved.”).

The court order prohibiting payment for gas sales effectively rendered Nash’s production impracticable, which was sufficient to invoke the force majeure clauses. Those clauses applied to any failure that “accords with” state law (the Trinkle lease) or that “is the result of’ such state law (the other Nash leases). Cf. Restatement (Second) of Contracts § 264, comment a (“It is ‘a basic assumption on which the contract was made’ that the law will not directly intervene to make performance impracticable when it is due.”). Under the-force majeure clauses, Nash’s-'failure to produce beginning ■ in July 2010 was excused because that failure resulted from a state court order foreclosing payment.

The court further finds, again for the reasons previously expressed, that Nash was not required to pay shut-in royalties to hold the leases. Under the force maj-eure clause, Nash’s failure to produce was excused because it resulted from a legal obstacle interposed by state law. The ha-bendum clause requiring production to extend the lease was expressly made subject to the other clauses in' the’ lease, including the force majeure clause. The production requirement of the habendum clause 'was excused and, by agreement of the parties, was not to be a basis for termination of the lease in whole or in part. Requiring Nash to pay shut-in royalties to keep the lease alive in these circumstances would hold the failure to produce against Nash and would essentially nullify the intent and benefit of the force majeure clause. See supra Frost Nat. Bank, 713 S.W.2d at 368 (lease was extended by force majeure where railroad commission ordered shut-in; payment of shut-in royalties was not required to.extend the lease); Williams & Meyers, Oil & Gas Law § 633 (“If the force majeure clause is applicable, then the payment of shut-in royalties is not required to keep the lease alive in the secondary term.”).

The fact that. Nash remained free to explore other zones (besides the Viola and Simpson) does not alter this conclusion. All of the force majeure clauses at issue state that if a force majeure event occurs, the lease shall not be terminated “in whole or in part” or shall not be terminated “wholly or partially.” None of the parties have provided any authority dealing with a factual situation where a force majeure event affects only a part of a lease, e.g., a specific zone or zones, as is the situation in this case. The-court has failed to find any such authority. However, the fact that all of the force majeure clauses in all of the leases in this case specifically state that a force majeure event will prevent the termination of a part of a lease can only mean that the part of the lease affected by a force majeure event will not terminate regardless of the circumstances pertaining to the other parts of the lease. Huffs argument that a lessee is nevertheless obligated in such circumstances to explore other zones to perpetuate the lease simply disregards this language. Huff focuses on other zones but essentially ignores the fact that the part of the lease covering the Viola and Simpson formations' necessarily remains in force due to a force majeure event. Such an interpretation wholly disregards the “in part” language of the force majeure clauses. And all the court need determine here is whether the leases remained in effect as to the Viola and Simpson formations, since those are the formations to which the state court order, and later the federal court injunction, apply and which are the subject of this condemnation action. The court need not deal with the question of the other zones covered by the leases remain in effect as a result of the force majeure event or whether the lessees must take further actions to perpetuate the leases as to those other -zones. That issue is for another day and another court to decide.

The Nash lease, like the other disputed leases, wa's not to be terminated in whole or in part if the operator’s failure to -produce was the result of a force majeure event, which it clearly was.- The produ