Mengden v. Peninsula Production Co. (534 S.W.2d 749, 1976)

DUNAGAN, Chief Justice.

This suit involves the pooling provisions of two mineral leases and the farmout agreements by which the leases were assigned. Walter H. Mengden, Sr., the as-signee, and Peninsula Production Co., et al., the successors in interest of the assignors, sought declaratory judgments to determine whether Peninsula’s reversionary interest under the farmout agreements had become effective. The trial court, without the aid of a jury and on undisputed facts, decreed that this reversion had occurred as to the only part of the leased premises from which production had been obtained. Mengden appealed from that judgment. We affirm that judgment.

The two leases (hereinafter individually referred to as the “A” or “B” lease) covered adjacent tracts of 1713.2 acres each. The lease agreements contained the usual and customary provisions, including a pooling provision. Part of the “A” lease and all of the “B” lease were assigned to Mengden in two farmout agreements by the predecessors in interest of Peninsula. The “Miltex” farmout covered 640 acres of the “A” lease and the “Baria” farmout covered the entire 1713.2 acre “B” lease.

The Miltex and Baria farmout agreements each provided that Mengden’s interest in Vi of the gas rights would terminate when he had recovered, after taxes on production accruing to the net working interests, certain enumerated costs and expenses. The Miltex farmout agreement provided that “ . . .if you complete any gas well or wells in the Escondido Sand under such lease premises then in lieu of the aforerecited recovery of costs incurred thereon you will be entitled to recover $70,-000.00 times the number of such wells on the production accruing to a 49/