After years of protracted lawsuits, the Ohio Supreme Court heard oral arguments on Tuesday in a case that could release hundreds of landowners from undeveloped oil and natural gas lease agreements and cast doubt on similarly worded leases that have been used for decades in the state.
Legacy driller Beck Energy Corp. has been fighting two groups of landowners over leases signed to explore for oil and gas in southern and eastern Ohio. The parties, including Beck's partner, XTO Energy Inc., have claimed the dispute has prevented millions in bonus payments, royalties and profits.
The high court would decide if the leases signed with Beck are void because they include language to allow the company to perpetually control mineral rights without drilling. If the landowners are successful, a certified class of 700 of them could end their leases and negotiate new ones.
In September 2011, five landowners filed a lawsuit in Monroe County Common Pleas Court against Beck claiming they signed lease forms, labeled G&T (83), that allowed Beck to control their land indefinitely without drilling and paying royalties if the company paid a few hundred dollars per year in rentals for the property. Beck argued those leases followed decades of precedent under Ohio law that allowed it to drill within 10 years of the lease and remain on the land as long as the company continued operations. The following year, the lower court ruled for the landowners and declared the leases void as a violation of public policy against leases that have no end date.Click here to continue reading this article.
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