I would like some discussion on this topic. My ALOV lease reads ' Should Lessee be prevented from complying with any express or implied covenant of this Lease from conducting drilling completion or reworking operations or from producing oil and gas therefrom by reason of inability to obtain or to use equipment or material, or by operation of force majeure,' then it goes on about other reasons like laws and regulations that would prevent them from drilling. My question is can they just extend my lease because they say they can't find enough equipment? Sounds like possibly an easy way to extend a lease for free. What are your thoughts?
Have you signed it yet? there is some discussion about that...
here is a link and there is some info on page 1 about it by mike knapp.
also some companies have sent out 'amendments' with that clause as it wasn't on the earlier leases.
some say it is because the pipelines are not in when they thought they would be...also because of new environmental situations.
If you haven't signed...wait til you know more about it.
A good attorney right away is where I'd start with a problem like this.
"inability to obtain or to use equipment or material" - The first thing I'd look at with this clause is whether the O & G company has drilled ANY wells since you signed the lease. If they have, I'd say that they were able to both obtain and use equipment...whether they obtained it and used it on land in YOUR lease was up to them, but they COULD have...
There were land agents that negotiated leases several years ago and assured people that they were representing oil companies who intend to build drill sites and that if they didn't then the landowners (lessors) could renegotiate at the end of the primary term (typically five years).....they shouldn't have represented the Lessees that way...made it difficult to want to work with these oil companies in signing amendments especially when prices have skyrocketed upward past the initial signing bonus and many are discovering that there is much more to these oil/gas leases than they supposed ...especially the communities that were not prepared for the influx which is resulting in 'impact fees' in some areas.
If you are being presented with an amendment to add this clause of force majeure into action...by all means seek some representation and see if you can clean up the rest of the contract since they want to for their need.
Thanks guys, I did sign lease in April with the big ALOV group in Columbiana Co. even though I live in Stark. Did not see that clause, tho I am surprised it is in there. Has not been issue yet. Crossing fingers is about all I can do, I guess.