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Thursday, October 2, 2014

Beck Energy and XTO Scores Huge Victory for Drillers in Ohio Lease Case

From the law firm of Krugliak, Wilkins, Griffiths & Dougherty, which represented Beck Energy and XTO in a very important leasing case before the Seventh District Court of Appeals in Ohio, comes this release:
Krugliak, Wilkins, Griffiths & Dougherty oil and gas attorneys, Scott M. ZurakowskiWilliam G. Williams, Aletha M. Carver andGregory W. Watts successfully defended energy company, Beck Energy Corporation, in a significant case in the Seventh District Court of Appeals,  Hupp, et al. v Beck Energy Corp., 2014–Ohio–4255.  The decision impacts virtually every oil and gas producer (both local and national) who owns lease rights and/or is drilling in the Utica shale. 
The significance of Hupp et. al. v. Beck Energy Corp., 2014–Ohio–4255: 
  • The decisions of the Monroe County Common Pleas Court (Trial Court) (July 31, 2013, February 8, 2013 and June 10, 2013) overturned over 100 years of well- settled oil and gas case law in Ohio causing serious uncertainty to drillers and producers.
  • The Seventh District Court of Appeals’ Opinion reversed the prior Monroe County Common Pleas Court’s decision granting summary judgment in favor of the lessors/landowners when it determined that the Beck Energy GT 83 Lease void ab-initio as against public policy in Ohio.
  • The Seventh District Court of Appeals’ Opinion put to rest the following main areas that lessors/landowners were using to attack and void longstanding oil and gas leases: 
  • The Beck Energy GT 83 Lease is not a no-term lease.  It contains two distinct terms – a primary term and secondary term;
  • The Beck Energy GT 83 Lease contains no implied covenants and the fact that the lease contains language that requires a lessor to provide a lessee notice of any express or implied obligation, does not create any implied covenants under the lease;
  • The ability of Beck Energy to pay delay rentals, during the primary term, does not mean the lease is a perpetual lease that can last forever;
  • The phrase “capable of production” in the sole judgment of the lessee – does not mean the Lease is a perpetual lease as Beck Energy is subject to  a good faith standard; and
  • The phrase “capable of production” means the well, not the land, is capable of production. 
View the entire release here.

And here is the court's decision:




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