Court Decisions in Ohio in re: leases with wells 'in production' - looking for information

I will apologize ahead of time if I am not as on top of this particluar issue as I should be, and if this forum has already covered it at length. My simple searching was limitedly helpful.

Does anyone know if Ohio courts have made any rulings fore or against a landowner who has brought suit challenging an Oil & Gas Co. lease in either or both of these areas?.....

    Area 1 - What does "a well in production" really mean?  Does the well have to be commercially profitable, or will token amounts of product produced validate the lease and keep it active.  Who decides what is commercially profitable?

    Area 2 - My lease was executed by my grandfather in 1981.  At that time NO ONE (as far as I know) gave any thought to deep wells and horizontal drilling.  Has any court ruled on excluding deep well (mineral) rights from existing leases where there is NO mention of specific formations permitted to be explored/tapped/drilled or excluded from exploration/tapping/drilling, NOR, language as to depth limitations/exclusions?

Thanks in advance for any help you can provide in this area.  D.B.

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Permalink Reply by John OBrien, landowner advocate on June 3, 2013 at 11:51pm

Fowler, Is that a royalty check from a well?  Sounds like more of a delay rental payment.  When this happened to me, all I had to do was email XTO and they told me their intentions.  I suggest you try the same with Antero as a first step.

Permalink Reply by John OBrien, landowner advocate on June 4, 2013 at 12:03am

Sorry Fowler, got u mixed up with another post.  You need to find out who is the major lease holder in your area and call them.  Some digging on this site will probably get results.  Search Trumbull county posts.

Permalink Reply by Fowler, Ohio Landowner on June 4, 2013 at 1:53am

Yes it's from a royalty becuase they send production numbers with the check each quarter, the checks range from $10 - $25 every three months.

Thank you for the information.  What is XTO?

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on June 4, 2013 at 9:53am

XTO is Exxon's subsidiary.

Permalink Reply by John OBrien, landowner advocate on June 4, 2013 at 12:23pm

So, you have a little less than 1/3 of 12.5% and it amounts to $10 to $25.  This makes at best about $80 in total royalty per month.  Take that amount times 8 and you can figure that the well is producing about $640/mo at best and $240/mo at the least.  If the well is insured they are losing money every month either way.  To me, there is no way they can say it is HBP.  It just doesn't add up which means you can be fairly confident if you challenge the HBP status.  If they are not insured, they are in violation of ODNR regulations I believe.  Take 'em to court!

Permalink Reply by Americanoilnd on June 4, 2013 at 5:21pm
Production is production... It is no ones choice to decide the economics of when to P&A a well other than the operating company. they may very well be past the point of diminishing returns, but that can be viewed as an investment in future potential in developing deeper target pay zones. I am All for a landowner having an opportunity to renegotiate a lease, but unless there is a Pugh clause stating any specific drilling horizons. Your pretty well stuck with the lease...
Permalink Reply by searcherone on June 4, 2013 at 6:13pm

Thank you for expressing your view and please remember this:  I as a landowner with 33 years of shallow well leases with various small time o&g boys have heard all of the bs excuses and answers  I care to hear.   Until the boys decide to conduct business with some semblance of ethics and veracity to their words and actions I will continue to be a severe critic of those boys and their concept of what constitutes production or non production.   How long do you think I will be waiting till they turn into credible men?  And just how long should a landowner be expected to wait for that future potential?

 

Permalink Reply by John OBrien, landowner advocate on June 6, 2013 at 2:16pm

Americanoilnd, "Production is production"

Bull....!  The lease laws that refer to the type of wells these "boys" are trying to cheat the landowner with are a farce, antiquated, shoddy business.  They were written to handle small cowpath wells that could be drilled with a spudder.  No real technology needed.  No geological testing needed.  They could be done for a dime to produce a dollar.  They have no business being used to handle the type of wells that are being drilled today!  Like I said in previous posts, using these lease laws on today's wells is like using small claims court to do international corporate law.  No comparison.

Permalink Reply by george m. on June 6, 2013 at 3:35pm

JOHN,

The Ohio legislature needs to pass a statue that defines the drilling permit as the operative document in defining the specific terms not defined in the lease contract.  If the original lease defines the depth as being "to the center of the earth", then those terms should be honored; however, if the original lease is mute on depth, then the permit should apply.  Note, the State of Ohio will not approve a drilling permit that defines the depth as "the center of the earth".  The same standard should be applied to the leasor/ leasee contract.   Just imagine how much needless expensive litation this would eliminate about HBP and "deep rights".  Write your congressman with this recommendation!

Permalink Reply by Fowler, Ohio Landowner on June 5, 2013 at 3:11am

Thank you, I'm going to contact a lawyer today and set an appointment to review our options.

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on June 6, 2013 at 4:50pm

SITUATION: There ARE shallow producing wells(10+), BUT drilling depth below 1,200' has been reserved for *original signing Co. to have 'first right of refusal' concerning the lower depths....

...AND the *original signing co. is also 'limited' to NOT re-assigning/transferring/selling the lease to ANY OTHER OPERATING CO. without* lessor's written consent. *This WAS done - then 'AFTER THE FACT' - got letter FROM Co. to 'please sign & return consent' - which of course WAS NOT DONE...(with that specific line HIGHLIGHTED BY THE Co. - so they KNOW what they did! HA!)....

+ ALSO sold 'pipeline' to another co. - *wouldn't THAT also be entailed in the above *original lease scenario? - for the 'pipeline' was only to get the produced gas/oil from SHALLOW wells TO a refiner/processor...it ALL falls under that ORIGIN?AL LEASE scenario - so it might be presumed...*opinions/thoughts anyone?

-----------------------------

QUESTION: Does the 'shallow well's production' put a damper on NEW LEASE for *DEEP areas - especially since they have been RESERVE BY original lease agreement? (only a matter of time?...) + the shallow wells have in production for quite some time...could that AND the 'illegitimate transfer' of the lease even VOID (as well as potentially bring on 'damages'/loss due to transfer being done...?) the 'original lease agreement'? ***COULD one possibly be 'out from under' a G/O Co.'s 'thumb' - *by their own 'mis-step'?

LOADED question...perplexing, BUT if you clamp on, dig in your heels, seek as well as do homework...one CAN make headway. Hope not too complex for anyone.

David Brooke, 'Area 1' - this too is MY debate for 'personal well concerns'.

                      'Area 2' - MY concept is that any & ALL leases should have the DEEP drilling levels SEVERED - FOR the landowner's advantage...the G/O Co.'s KNEW what was here. *It's 'their game' - of course they knew! ***Any leases signed were done so in deceit to any individual LANDOWNER. SO - 'wiping the slate clean', and giving the LANDOWNER a 'fair shake' is only the RIGHT THING TO DO. ***AND the 'in place' shallow driller' SHOULD have 'first right of refusal' to DO RIGHT - BY the landowner, himself...BUT IF they can't make up the 'landowners DUE bread & butter' from under their feet - THEN it SHOULD be 'paid for' by whomever!

Right is Right & Wrong is Wrong...straight-up simple. NO ONE should be 'held' under duress - especially the LANDOWNER. ***Let's all hear a 'NICE TRY GUYS!' to these G/O 'boys'....NEVER FORGET - it's YOUR land. (The Saudi's finally GOT THAT!)

***Read 'THE PRIZE'. 

I LIVE IN AMERICA. LAND OF THE FREE & HOME OF THE BRAVE. *As one light lights another, nor grows less - so nobleness enkindles nobleness. *AmeriCANs - ENDEAVOR! It is YOURS to 'win or loose'.

Don't know WHY it's all gotten SO complicated - seems to be pretty 'black & white' to me...honestly - it is NOT that complicated...jargon, blue suede shoes...and the full moon. Doesn't need to 'be this way' now, does it? NO, it does not.

Permalink Reply by John OBrien, landowner advocate on June 6, 2013 at 5:02pm

Again, I almost hate to admit it, but I like your post GG.  In fact, I'm almost starting to like you. LOL

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