Texas Oil & Gas Corporation v. Vela

WALKER, Justice.

This case involves an oil and gas lease executed in 1933 and covering 1,500 acres of land in Zapata County. Under its terms the lessee is obligated to “pay to lessor, as royalty for gas from each well where gas only is found, while the same is being sold or used off of the premises, one-eighth of the market price at the wells of the amount so sold or used.” Gas has been produced and sold from the leased premises since 1935. In that year the owners of the working interest entered into contracts “for the life of the lease” by the terms of which the gas was sold at a price of…