Hoff v. Girdler Corp
In Hoff v. Girdler Corp., 88 P.2d 100 (Colo. 1939), the lessee produced helium gas during the primary term, but ceased production when the government, its primary customer, cancelled its contract. Hoff, 88 P.2d at 101.
The court noted that after the government cancelled the contract and production ceased, there was no commercial market for helium gas and that the lack of such a market was the cause of the cessation of production. Id. at 102.
In analyzing whether the cessation of production was temporary, the court considered: (1) the lessee's efforts to create a market for helium gas, (2) the fact that the lessee maintained its pipelines, and (3) absence of drainage by other wells in the vicinity. Id.
The court held that when a producing well is developed during its primary term but the product is not marketed due to lack of a commercial outlet, that alone is not enough to conclude that the lessee abandoned the lease. Instead, the failure to market must continue for an unreasonably long period of time. Id.