More Advice For Landowners Facing Old Lease Issues

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From the Pittsburgh Post-Gazette:
To help clients faced with an impending expiration, Mr. Burnett has written a questionnaire that examines what cause for litigation a landowner might have. 
• Is there a well on the property that's producing gas? 
Easy answer: If there is, that lease is activated. 
• If there's not a producing well, take a look at the lease language to see what it says about what constitutes an "active" well site. 
Drillers don't necessarily need to erect a complete rig to activate a lease. There have been horror stories across the state of landowners frustrated by drillers who park a truck or dig a ditch to lock the lease terms into place. 
"Is parking a bulldozer on the well pad site enough? Probably not," Mr. Burnett said. 
The law often requires drillers to demonstrate that they are "drilling in good faith" -- that is, if they do park a truck one day, that they return the next as part of continuing operations. 
• Has the land been pooled into a bigger holding? 
Drillers often pool several leased properties into a larger pool, and drilling anywhere on the holding activates all of the leases that comprise it. It's possible that operations occurring elsewhere in the pool have activated the lease. 
• Is there an extension clause? 
To understand lease expiration litigation, it helps to understand the stages a lease can enter. The typical five-year agreement, which includes details on any signing bonus or royalty payments, is called the primary term. If sufficient drilling activities start on the property, the lease enters its secondary term. 
Secondary terms can stretch for decades and last as long as there is a producing well on the property. 
"I have clients that have leases that are well into their secondary term because the primary term expired in 1905," said Mr. Burnett, referring to the decades-old shallow wells that have long been in Pennsylvania.
Read the rest of this article by clicking here. 

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