Source: https://www.oilandgaslawreport.com/contracts/page/2/
Timestamp: 2019-07-17 23:24:50
Document Index: 280150738

Matched Legal Cases: ['art 3', 'art 1', 'art 2', '§ 1509', 'art 1', 'art 2']

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In the Federal Land Ordinance of 1785, Ohio was required to reserve one section of land (i.e., one square mile, usually section 16), in every Ohio township for the support of public education. Extending that federal mandate, in 1917, the Ohio Legislature passed a law that, among other provisions, provided, “It is declared to be the policy of the state to conserve … mineral resources of the [school lands held in trust] … and to this end the state reserves all gas, oil, coal, iron and other minerals that may be upon or under the said school lands… .” H.B. No. 192, passed March, 20, 1917 (107 Ohio Laws 357). Realizing the magnitude of this reservation and the fact that the Ohio Dormant Minerals Act cannot be used against government interests, my interest was tweaked and I decided to dig a little deeper.…
By Porter Wright on June 14, 2013
Mineral and land owners in Ohio who are presented with a proposed lease from a landman or oil company often launch an intense study of royalty provisions, development covenants, delay rentals, Pugh clauses, well spacing and the like. They often refer to the Internet, land owner groups, owner-oriented attorneys and other resources. Like so many things, it turns out that our forefathers pretty much had it figured out. I recently reviewed a 1901 oil and gas lease from Putman County; my thoughts and observations are below.
The lease was granted by Noah Moser to The Sun Oil Co., an Ohio corporation, on Sept. 19, 1901. The recordation of this transaction is hand written into the Putman County records by the recorder. The consideration, what is today called the “signing bonus,” was $80 for a 160-acre parcel. (In today’s dollars, that’s an “economic power” of $56,300, or $352 per acre.)
In the two-page document, Mr. Moser granted all the oil and gas in and under the described premises together with the right to enter at all times for the purpose of drilling and operating for oil, gas or water. This included the right to erect, maintain and remove all buildings, structures, pipelines and machinery necessary, provided that Mr. Moser retained the right to farm the land not actually used. Just what one would expect. But here’s where Mr. Moser shows he knew what he was doing:…
What ownership interest does the state, county, or township have in the land underlying the road?
What is the rule for abutting landowners in the event the government owns less than a fee simple absolute?
Unitization in Ohio: Compelled Participation in the New Context of the Utica Shale
In many ways, the Utica Shale play caught Ohio off guard. The state became a main focus of the oil and gas industry almost overnight. Ohio responded by updating its oil and gas laws, including major overhauls resulting from Senate bills 165 in 2010 and 315 in 2012. But in some cases, operators and regulatory agencies are still applying old law that was written with conventional drilling methods in mind. In this post, part 3 of our series on compelled participation (see Part 1 and Part 2), we look at unitization — one of these old laws being put to new use.
Unitization is the creation or designation of a contiguous area of land, called a “unit,” for the efficient development of the oil and gas resources underlying that land. Units can be formed by order of the Ohio Department of Natural Resources (ODNR), on application from an operator. Units also can be formed voluntarily by consent of interest owners, usually owners of the leasehold. Inevitably, the land sought to be unitized — really the geologic formation below the surface — is subject to a patchwork of different ownership interests. The operator attempts to negotiate lease rights with all such land or mineral rights owners, but it is often the case that the operator cannot reach an agreement with all of them. When an operator has the consent of all but a small portion of the land for a unit, Ohio law allows the operator to …
By Brett Thornton on April 24, 2013
Our colleagues at the Banking & Finance Law Report recently ran a four-part series on energy financing. They compiled those articles into a resource that’s relevant to anyone involved with lending or borrowing in the energy sector. We encourage you to download the Energy Financing eBook to enhance your understanding of lending in the oil and gas industry.…
Oil and Gas Rights — Reserved? A Litigator’s Perspective On The Mong Case
By Dave Shouvlin on April 18, 2013
A decision out of the Eleventh District Court of Appeals of Ohio, Mong v. Kovach Holdings, LLC, 2013-Ohio-882 (Ohio 11th Dist. March 11, 2013), represents a cautionary reminder that parties should carefully review the language of contracts they enter, especially the essential terms of the document, and especially contracts that convey away property rights. That is particularly true when a party parts with property rights set forth in warranty deeds. My colleague Jeff Fort blogged about this recently and asked me to add my thoughts.
In Mong v. Kovach Holdings, the plaintiff, Joseph Mong, sold approximately 70 acres of land near Warren, Ohio, he had recently acquired from Alice McMenamin to Defendant Kovach Holdings at auction. Mr. Mong apparently intended to reserve to himself the oil and gas rights associated with the property. According to Mr. Mong, the auctioneer informed the prospective purchasers of that reservation immediately preceding and subsequent to the auction. The auctioneer confirmed that he did so in a following affidavit. The purchaser of the property, Kovach Holdings, denied that that the auctioneer described any such limitations or reservations. The property sold for $245,300.
The parties shortly thereafter executed a standard purchase agreement, but which included the following handwritten language: “Gas + oil Royalty Reserved by Present owner.” Mr. Mong argued this language revealed that the oil and gas rights were not a part of the sale to Kovach Holdings. The problem, for Mr. Mong at least, was that the subsequent warranty deed by which …
Life Estates: More Oil and Gas Law Implications
By Porter Wright on March 21, 2013
We recently received a question regarding our earlier post Life Estates: Oil and Gas Law Implications, wondering: “What happens to a mineral lease which the life tenant entered into and received renewal payments each year that was never ratified by the remaindermen upon the termination of the life estate and complete possession is realized by the remaindermen?”
The Noble County, Ohio Court of Common Pleas recently addressed this issue in Dickson v. Chesapeake AEC Acquisition, LLC, Case No. 212-0051. In Dickson, a life tenant entered into an oil and gas lease with an exploration company. Just before the original term of the lease expired, the lessee’s successor sent the life tenant a check, as was required to extend the primary term of the lease. The plaintiffs (the remaindermen of the life estate) returned the check and notified the lessee that the lessor owned only a life estate in the property, that the plaintiffs owned the remainder interest in the property, and that the life tenant had no right to lease mineral rights. When the dispute could not be resolved, the remaindermen sued the lessee. The remaindermen then moved for summary judgment, asking the court to declare the lease between the life tenant and the exploration company void.…
By Porter Wright on March 13, 2013
The process of unitization is conceptually related to mandatory pooling (R.C. § 1509.27), and is part of our ongoing blog series on Ohio’s compelled participation laws. (Read part 1 and part 2.) A unitization order allows oil and gas operators to join, or unitize, recalcitrant mineral owners to create the large tracts of land — often comprising hundreds of acres — that are necessary to profitably and efficiently produce hydrocarbons from shale formations while protecting each owner’s correlative rights.…
A Tool of Last Resort: Mandatory Pooling in Ohio
By Porter Wright on March 4, 2013
This is the second in a multi-part series on the practice of compelled participation – forcing unwilling mineral rights owners to participate in oil and gas production from their property. Part I discussed the history and constitutionality of this practice in the U.S.
Every day, crowds of title researchers and landmen pack county offices in Eastern Ohio looking for the owners of unleased property. They are discovering a quilt of landowners with varying degrees of interest in leasing their land for oil and gas drilling. But even after attempting to negotiate with landowners, oil and gas companies often cannot lease enough land to comply with Ohio’s minimum spacing laws. As a result of those laws, uncooperative landowners threaten to interfere with landowners who have leased and want to have oil produced from their land.
Fortunately, under the right circumstances, an operator or the consenting landowners may be able to invoke Ohio’s mandatory pooling laws, the most common form of compelled participation. Mandatory pooling laws force hold-out landowners to submit their mineral rights to oil and gas operations when their recalcitrance prevents an operator from meeting state spacing requirements. Read more about these and other industry terms in a previous post.…
This kind of controversy set the stage for the recent decision by the North Dakota Supreme Court captioned Golden v. SM Energy Co., 2013 ND 17, Feb. 1, 2013. The Golden decision presents an interesting discussion about royalty payments, division orders and assigned obligations. Does this case portend what can happen in Ohio? Only for companies that do not learn from mistakes made in other states.…
By Ned Segelken on February 1, 2013
You are interested in acquiring a gas lease on certain parcel. When you look at the real property records, however, you discover the record owner is deceased. Now what do you do? Who owns the interests? How do you evidence this ownership?
This issue might be best discussed in the context of an example. Roger Farmer sold his farm, located in Muskingum County, Ohio, in 1978 and retained the mineral interests. That is, Roger “severed” the mineral interest from the rest of the property. He died in 1995 without transferring those interests. He left a will, admitted to probate in Franklin County, Ohio, which left all his property, real and personal, to his son, John.
John died in 2002, also without transferring the interests. There is no record of any will being admitted to probate, or of the administration of his estate. To determine the current owners of the mineral interest, we have to analyze Roger’s will and John’s family situation.…
Is Gas a Mineral?
By Porter Wright on January 16, 2013
A case pending before the Supreme Court of Pennsylvania considers a question that seemingly has been settled in that state for 130 years: Is gas a mineral?
In Butler v. Charles Powers Estate, Pennsylvania’s highest court will consider whether rights to natural gas produced from the Marcellus shale should qualify as “mineral” rights under an 1881 deed. The deed at issue contained an exception reserving “one half the minerals and Petroleum Oils to said Charles Powers and his heirs and assigns forever…”
In 2009, the owners of the surface estate filed a complaint to quiet title to the property, including the minerals and petroleum oils. The heirs to Powers’ estate opposed the action and sought a declaratory judgment that the reservation rights in the deed’s exception included Marcellus shale gas. The trial court dismissed the heirs’ declaratory judgment action with prejudice, holding that the heirs failed to state a cognizable cause of action based upon two Pennsylvania Supreme Court decisions — Dunham v. Kirkpatrick, 101 Pa. 36 (1882), and Highland v. Commonwealth, 400 Pa. 261, 161 A.2d 390 (1960).…
Lawsuits Over “Fraudulent” Oil & Gas Leases Often Lack Merit
By Chris Baronzzi on December 13, 2012
The Ohio shale boom started slowly when a few small companies quietly began acquiring mineral leases for as little as $25 per acre. This soon gave way to a full blown land rush in the fall of 2010. But as lease prices skyrocketed through the Fall of 2011, disillusioned lessors who signed before the peak of the market were the ones rushing – to the courthouse to file lawsuits to cancel their leases.
In order to gain leverage and legitimize their lawsuit, lessors frequently allege that their lease is “unconscionable” or they were fraudulently induced to sign it. “Exhibit A” to these lawsuits is often a technical error in the lease signing or a “fraudulent” statement made by a landman. There are exceptions, but many of these kinds of lawsuits have no legal basis.…
US Supreme Court Decision in Nitro-Lift Technologies case this week
By Brett Thornton on December 5, 2012
One of our Partners, Bryan Faller, added an interesting post to our Employer Law Report blog today we thought you might find of interest.
In United States Supreme Court: A Challenge To The Enforceability Of A Non-Competition Agreement Must Be Presented To The Arbitrator, And Not A Court, If The Contract Contains An Arbitration Provision, Bryan covers the Nitro-Lift Technologies, L.L.C. v. Howard case and its implications for employers. Nitro-Lift Technologies, L.L.C. provides services to operators of oil and gas wells that enhance production of those natural resources. The U.S. Supreme Court held that if a contract contains an arbitration provision and there is a challenge to the validity of the contract, it is for the arbitrator and not a court to hear that challenge. The case is important for employers because the challenge was to the validity of a non-competition agreement. Given the industry and nature of the matter, we wanted to bring the post to your attention.…