Jones

This is an action for declaratory relief with respect to an oil and gas lease in the Signal Hill territory in Los Angeles County.

At the time of the execution of the lease in question no oil sand was known nor suspected to exist in that area at a greater depth than between four to five thousand feet and no oil drilling companies had had the courage at the time to make the necessarily large expenditures incident to prospecting below that level.

The lease in question was executed in February, 1923, and provided among other things: “The party of the second part (appellants) shall, within five days from date hereof resume operations to complete the oil well now on Lot Eighteen (18) Block ‘H’, Signal Hill Tract, and will actually start work on said well within said time, and shall continue said operations diligently, continuously and in good faith until an oil well is brought in and is producing in paying quantities as is provided in section ‘Fourth’ hereof or until a well has been sunk to a depth of four thousand (4000) feet.”

Under the lease the appellants proceeded to drill and brought in a producing well at a depth of approximately 4,700 feet, which well has produced between 50…