Beck Energy and XTO Scores Huge Victory for Drillers in Ohio Lease Case
Krugliak, Wilkins, Griffiths & Dougherty oil and gas attorneys, Scott M. Zurakowski, William 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:
View the entire release here.
- 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.
And here is the court's decision:
Connect with us on Facebook and Twitter!