Ute-Cal Land Dev. Corp. v. Kenai Oil & Gas, Inc. (In re Ute-Cal Land Dev. Corp.)
UNPUBLISHED
Debtor filed an adversary action asserting that defendant had failed to make royalty payments required under the parties' lease, and seeking to terminate the parties' contract. Debtor and the purchaser of oil from defendant agreed that purchaser would thereafter pay royalties directly to debtor, leaving only the lease termination to be determined by the court. However, the court exercised its discretion to abstain from hearing the lease dispute, concluding that the state had a comprehensive regulatory system in place to deal with oil and gas production and drilling activity that was uniquely situated to fashion an appropriate remedy. Therefore, the court considered debtor's claim to be premature, as state administrative remedies had not been exhausted.