Union Oil Co. of California v. Greka Energy Corp.

This case illustrates that in contract disputes concerning oil wells, damages can be an inadequate remedy.

Defendants Greka Energy Corporation, Saba Petroleum Company, a Delaware corporation, Saba Petroleum, Inc., Saba Energy of Texas, Saba Petroleum, a Colorado corporation, Saba Petroleum, Inc., a Texas corporation, Greka CA, Inc., Greka SMV, Inc., Greka Integrated, Inc., Greka Realty, Greka AM, Inc., and Santa Maria Refining Company (collectively Greka) appeal a judgment ordering specific performance of Greka’s contractual obligation to plaintiff Union Oil Company of California (Unocal) to plug and abandon idle oil wells on Greka’s property. We conclude the trial court properly granted specific performance; and Unocal’s action is not barred by the statute of limitations. We affirm.

FACTS

Between 1992 and 1995, Unocal sold several oil fields to other oil companies. Each contract and grant deed required the buyer to plug and abandon all idle or nonproductive oil wells within designated time schedules. “ ‘Plug’ and ‘abandon’ are terms of art which . . . describe the procedure that must be followed when a well is no longer used, to ensure that it does not pose a hazard…