Release after lease expires?

Our lease expired in March.  We have over 100 acres in Robinson Township, Washington County.  We had originally signed with Dale, which was Chesapeake, flipped to Range.  There is no auto-extension provision in our lease, it was a straight five-year term with no renewal option.  Range has us pretty well buttoned up with cheap leases all around us that they did renew.  There are units close by but none of our immediate neighbors are unitized (nor were we). 

Range had approached us a few years ago about putting a well pad on our property (our lease was no-surface use).  While we were negotiating with them, they filed a stormwater permit on our property which they had no right to do since we had a no surface lease and had not given permission for any surface use at all.  Ultimately, we could not come to an agreement, and they stopped negotiating with us.  They did appear to come to an agreement with our neighbor, but although an initial stormwater permit was filed a couple of years ago, nothing else has been done.

We were listening to the "It's Your Legacy" radio show on 1170 and the attorney recommended that anyone in this position get a "Release from Lease" recorded.  There is nothing in our original lease agreement that requires the Lessee to do this automatically.  I had previously called Range and the land dept. manager said while he'd love  to renew us, they just don't have the money in the budget.  At that time I asked him if they would be filing anything to acknowledge that the lease had expired, but he said they don't do that.

I guess my question is, can I draw up some type of document and file it in the courthouse myself, or is there some sort of "official" Release form that has to be signed by the gasco before it can go on record?  And also, since they filed that permit years ago which they had no right to do, could we in any way be considered held by production?

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Permalink Reply by Frank Walker on July 18, 2015 at 3:42am

Read the final paragraph here:

Release of lease

Decent, honorable, gas companies are already doing this without need for a law.  They cannot hold you by production since there is no production.  But do not rule out that some gas companies are snakes, and will try absolutely anything, legal and honest or not.  And they will tell you anything they think you might believe, just to mess you up!!

ETA

Here is more:

The bill

Also:  I apologize to snakes, having intended no offense.  Snakes clearly are much more honorable that too many gas companies.  I am sorry.  It won't happen again.

Permalink Reply by Barry D on July 18, 2015 at 4:06am

Frank,

Glad to see that you included the apology to the snakes.

Donna,

I sugest something along these lines - send a notice to the company that the lease has expired and you would like a release of lease. Set a time frame for response, 10 business days for example, or 30 calendar days. The notice should be sent registered mail return recent required.

If they do not respond then file an affidavit of Non-Performance at the Courthouse.

I am not an attorney and not well versed in PA law, so I suggest that you avail yourself of a reputable oil and gas attorney. Do not use an attorney who is not familiar with oil and gas law in PA.

That's my opinion, the attorney will know best on how to proceed.

Permalink Reply by Donna on July 18, 2015 at 6:05am

Thank you for the info Barry.  I agree, if I can't get any action on my own I will contact an attorney, just hate to throw the money at it right away if I can get them to act.

Permalink Reply by Donna on July 18, 2015 at 6:04am

That is really great info, Frank!  Thank you.  I am assuming then that these bills were passed in 2014 and Range should comply with my request?  I really appreciate it.

Permalink Reply by Tim Tarr on July 18, 2015 at 8:02am

First I'll say get Competent Legal advice. Make sure to take a copy of your lease with you.
If they are not willing to record a "Surrender of Lease" or "Release of Lease". You need to file an "Affidavit of Nonproduction and Nonpayment of Rentals and Royalties" (ANP). Than send them a copy return receipt along with a request for the "Surrender of Lease". Keep copies of both. The ANP isn't a guarantee but puts a red flag up if they try to "flip" or Develop the Lease.
They take their time filing these Surrenders and may have a Trainee do them. Took 6 months and 4 attempts at filing before County accepted their recording. Strange how they used snail mail for this and Leases are Hand filed. At least that was my experience with East Resources now SWEPI.

Permalink Reply by Janice L. Hancharick on July 19, 2015 at 10:00am

I have been working with 4 counties along PA's northern border for several years now.  They were all on the fringe of the "hot" areas in the early days of Marcellus.  Land agents swarmed all over the country-side (a land-rush!) with agents making wild outlandish comments to OGM holders.  Anything to get them to sign!  By the time land-owner groups came into existence, many had already signed 5, 7, and/or 10 year leases.  Since little drilling was done across this broad expanse before the  O&G market crashed, many leases ended w/o anything being done.  The luckiest folks (like you under the circumstances) had leases with non-renewal clauses.

While companies flip-flopped AC all over the place trying to keep their heads above water, some were successful and others went under.  As the public began to understand the usefulness of landowner groups and continually grew in knowledge, it became obvious that devious tactics had been used upon the people way too often.

In my particular region I encouraged those whose leases were about to expire or had already expired, to write a simple request to home office for a Surrender of Lease document using the same model as was suggested here earlier. Putting a specific timeframe on it is just plain smart. (I prefer the 10 business day approach.)  I believe all were successful.  I also told them to take responsibility themselves for getting the release to the courthouse.  I know of no companies who took this action upon themselves to record such documents, or to mail them to the owners w/o pointed prompting.  An interesting side-note came from  a few of my group members ... the company's initial response "Oh we dropped your lease after 2 years.  Sorry if we forgot to tell you."

A piece of advice you didn't ask for but one I'll share readers ...

If nothing has been done to activate your lease and it's a non-renewal, you can begin to look around for another one or join a landowner's group at least 6 months before it expires.

Conversations on GMS and webinars sponsored by lawyers and collegiate professionals have pointed all this out before, but reminders are always needed.  The devil is in more than the details sometimes.

Permalink Reply by Frank Walker on July 19, 2015 at 12:13pm

Donna always happy to be of service.  This stuff is very difficult, at least for me, to track down as to final disposition.  Legislative processes in Harrisburg are convoluted for a lay person such as myself.  So I offer you this link with that as a caveat:

Pennsylvania 2014 Act 152

That legislation having been signed into law by Governor Corbett well in excess of 60 days ago, my best understanding is that you are entirely within your legal rights and entitlements to request Range provide you your surrender of lease forthwith.  If they refuse, they are in violation of PA Act 152 of 2014.  I suspect as soon as you advise them of your awareness of Act 152, they will comply with the law.  Gas companies feast on landowners who are unaware of such things and who, therefore, represent no threat.

Good luck.

 

Permalink Reply by Donna on July 20, 2015 at 3:49am

Janice and Frank - thank you so much.  This info is so helpful.

Permalink Reply by James Young on July 20, 2015 at 3:55am

I guess I'm a bit confused as to why anyone should spend money and time worrying about an official recording of a lease release?  If the recorded lease has expired, and a new one is not in affect or has been signed by the landowner,  what's the big deal with spending time and money to "record" that ?  They can't record a re-lease if one was never signed. 

Also in PA there doesn't seem to have to be anything ever produced to be "Held by Production" ... if they put a pad on the property and drill a pilot hole, without even hitting marketable gas or maybe any gas at all, no pipeline within miles to move it, even if it was producing any gas ... it's "HBP"....

Permalink Reply by Donna on July 20, 2015 at 4:27am

James - as far as we are concerned, the lease on file at the courthouse, even though technically expired, still clutters up our title.  Also, in the event another gasco would have an interest, they have to dig beyond the initial lease to find out its term, whether it has expired or been extended - providing they look beyond the fact that a lease is recorded against the property at all.  We simply don't care to have an expired document showing up on our title.  If we can eliminate this issue then it's all good :)

Permalink Reply by Frank Walker on July 20, 2015 at 4:35am

Recording places the world on notice as to the status of your land.  In most instances, when a lease originally is "recorded", only a memorandum of lease is recorded in reality.  This make it impossible for others to view the details and terms of your lease.  They only know your land is leased.  It takes a recorded release of lease to place others on notice that your land is once again available for development.

Since in much of Pennsylvania all this stuff is on the internet, e.g. on Landex, there are people all over the country watching such things.  Without a recorded release of lease, such folks likely will just move along to the next leasing opportunity, one where status of the land can readily be determined.

Permalink Reply by Mtneer on July 20, 2015 at 4:47am
The contents of one's lease will determine if the lease has expired at the end of the primary term. As in this case there is no secondary term, thus one must carefully read what the process is in order for the release to be expired. Unfortunately many signed gas company friendly leases which may entail an extra step or two for one's lease to expire. For example, the landowner may be required to send a letter to the driller notifying the company that the lease is going to expire within a set amount of days. Failure to do so could enable the company the right to extend and so forth since the terms of the lease were not met.
Second, as far as being held by production (i.e., hbp), again, it depends on the language in one's lease regardless if it is in PA, OH or WV. Generally speaking, the boiler plate gas company leases will have language that benefits them to hbp a landowner. For example, surveying the land, storing equipment, etc. could meet the requirements of hbp. Many landowners have specified in their lease that a well must be drilled and it must be in production, profitable, yada yada. This benefits the landowner but the gas companies are trying to circumvent these terms. Supposedly cases are going through the courts on this very issue.
Always use a knowledgable attorney when reviewing a lease. Just my 2¢ and we know what that is worth.

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