I've recently come across a court ruling in Pennsylvania - Hite v Falcon Partners, No. 197 WDA 2011 PA Super 2 - that rules that leases that are out of the primary term (the first 2, 3, 5, etc. years usually mentioned in a lease as the time in which drilling must be commenced) can NOT be held just by paying the landowner the delay rental payments required within the language of the lease for future years beyond the primary term. I have no idea how to post links here, but here is the address of an article explaining the Hite ruling more fully:
http://www.mgkflaw.com/specAlert2011/newsFlash-20110110-Hite.html
The basic idea of this ruling is that a drilling company that holds a lease shouldn't be able to tie up property that is under lease indefinitely since the landowner had expectations of recieving royalties when signing the lease, and if drilling operations were not started within a reasonable time, then the landowners expectations have not been met. That results in cause for the lease to be terminated so that the landowner can look elsewhere for someone to lease to that intends to drill within a reasonable period of time.
I'm no attorney, but for those of you with old leases that are tying up your property and making it impossible for you to sign leases that are more in line with todays prices and lease language, this ruling MAY be very beneficial to getting out of those old leases that many of you probably had no idea existed until recently...and that many of the companies holding those leases didn't care about either until recently!
Any comments or information from anyone here that DOES have a legal background or that has property that has had leases revoked based at least in part on the Hite ruling are more than welcome! Thanks!
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How does this ruling apply to people in storage field leases? I hear there are some very unfortunate people in storage fields with Columbia Gas or Dominion that have leases that state as long as they continue to pay the land owner 5 bucks an acre for storage per year, then the lease extends beyond the primary term and then they also continue to hold the rights to Oil and gas production. Many of these leases go back to 1905. How is this really any different than a dealy rental situation? Many of leases were essentially forced under the threat of eminent domain to create or extend gas storage fields under the premise landowner loses production rights so the storage companies can protect their storage fields. But, now these fields can be drilled through and cased to protect the storage field. So where are the eminent domain judges to demand the rights of production be given back to the people?????????? A good attorney should sue on this premise, or perhaps ther's even some kind of anti-trust law to help these people.
These storage fields supposedly encompass perhaps 100,000 + acres in Marcellus and Utica rich territories.
Columbia Gas and Dominion should be ashamed of themselves. I read in a Loudonville or Wooster Ohio newspaper where Columbia Gas subleased storage field land to Chesapeake (I thought they need to protect their storage field). In the articler a representative from Columbia Gas stated that when Columbia gas decides to sublease storage land to a driller, then it is the land owner who is the primary beneficiary because they get a royalty. It made me wonder who got the sign on bonus. The wole thing sounded like a sham. Shame on them.
This is true do you have a HOA group to be leased we want to talk to you.
We are a Real Company that want to drill and not a flipper.
Please get back to me we are from Houston TX.
Kelly
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