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Thursday, January 30, 2014

Ohio Court Rules That a Driller Filing Paperwork Qualifies as "Operations" to Extend Lease

From ShaleOhio:
In Henry v. Chesapeake, Case No. 12-4090, January 14, 2014, the United States Court of Appeals for the Sixth Circuit  held that by filing a Declaration of Pooled Unit (DPU) with the Ohio Department of Natural Resources, Chesapeake Appalachia, L.L.C. (“Chesapeake”) engaged in “operations” under the terms of the lease.  

Plaintiffs leased approximately 447 acres of land in 2006 for a five-year term.  The habendum clause provided that “Any Operations” would extend the lease.  The lease defined operations as inter alia, “any acts in search for or in an endeavor to obtain, maintain or increase the production of oil and/or gas[.]”
Read the rest here.  You can read the complete case by clicking here.

So all Chesapeake had to do in this case was file some paperwork 3 days before the expiration of the lease to extend it.  Landowners take note: getting out of an old lease that isn't generating any royalties won't be as simple as one may have thought prior to this ruling.

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