Citations
- 114 F. Supp. 953
Full opinion text
CHANDLER, District Judge.
The issue in this action is whether the contract price of four cents (4 ) per thousand cubic feet (MCF) agreed upon between Cabot Carbon Company, plaintiff, hereinafter referred to' as Cabot, and Phillips Petroleum Company, defendant, hereinafter referred to as Phillips, as the price to be paid by Phillips to Cabot for natural gas at the wellhead prevails over higher prices later established by the Oklahoma Corporation Commission in orders promulgated subsequent to the date of the contract and as a means of regulating, as prescribed by the Oklahoma Statutes 1951, Title 52, Sections 231, 233, 239, and 243, economic as well as physical waste of natural gas.
Cabot owned oil and gas leases on certain lands and the gas rights on other lands in the Guymon-Hugoton gas field in Texas County, Oklahoma. On March 10, 1944, it entered into1 a written contract with Phillips whereby, for a substantial cash consideration or bonus, it agreed to assign the leases to Phillips and fi> grant to Phillips leases covering the lands in which Cabot owned the gas rights. Cabot specifically reserved in each instance, however, a part of the leasehold estate.
Paragraph 4 of the contract provided that Cabot reserved from the leasehold estates assigned and granted to Phillips (in addition to the one-eighth royalty provided in the leases granted to Phillips) “am, undivided interest in the natural gas underlying said lands or in any natural gas which may be produced therefrom winch shall be free of development and operating costs and equal to one-fourth of seven-eighths of all the gas produced” and that “Phillips shall become the owner of the gas when produced and "will account to Cabot for said one-fourth of seven-eighths of the gas produced at a value