Amoco Production Co. v. First Baptist Church of Pyote

In this suit on a gas lease, the Court of Civil Appeals has recognized an implied covenant by the working interest owner to act in good faith in marketing the gas of its royalty owners. The opinion fails to expressly hold that there is some evidence to support the trial court’s finding of a breach of that covenant. It is implicit in the court’s reasoning that there was evidence of a breach of the covenant to market in good faith in Amoco’s marketing of the lessors’ gas at a rate substantially lower than market value, where by doing so Amoco was able to obtain for itself the collateral benefit…