Anadarko Petr. Corp. v. Thompson
In Anadarko Petr. Corp. v. Thompson, 94 S.W.3d 550 (Tex. 2002), the court discussed two of its opinions terminating leases that required only a capability of production to maintain them in effect. 94 S.W.3d at 561.
In one case, the court noted, it held a lease terminated when the lessee abandoned all operations on the lease after the wells it had drilled ceased to produce, there was no production for about fourteen years and there was evidence the lessee had expressly released the lease. Id.
In the second, when the lessee drilled a successful well but capped it, the court held there was no evidence the well could produce in paying quantities because there was no evidence of a market for the gas, facilities for its marketing or even evidence tending to show the well was near any prospective market justifying construction of a pipeline. 94 S.W.3d at 561.
In Anadarko, the court expressly noted there is a difference between production in paying quantities and the determination of a well's capability to produce in paying quantities under a shut-in royalty clause. Anadarko, 94 S.W.3d at 558.