Sunflower Electric Cooperative, Inc. v. Tomlinson Oil Co.,

7 Kan App. 2d 131 (1981)

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Nature of the Case

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Facts

Sunflower (P) contracted with Tomlinson (D) for the delivery of natural gas from D's reserves in the Stranger Creek field. D was to delivery 3 MMCF per day and to develop its reserves to delivery up to 7 MMCF per day. Both parties constructed their respective pipelines, and from the start, D breached the contract in that it only was able to deliver 88,749 MMCF vs. the 985,500 MMCF that it would have to delivery to meet the minimum requirement. In July 1976, all production was stopped at the Stranger Creek field, and P sued D. The facts revealed that heavy oil was interfering with the production of the gas and that in all reality there was a small reservoir or one of limited permeability from the field. The trial court found that there was no gas left in the field and that the estimates of reserves when the contract was signed were over-optimistic. Eventually, the court concluded that D should be relieved of any liability for damages because of impossibility of performance and even denied reliance damages to D for the $262,209.55 it had spent. P appealed.