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Seventh District Court of Appeals' Opinion Overturns Court Decision Impacting All Oil & Gas Producers Leasing and/or Drilling in the Utica Shale

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.

Krugliak, Wilkins, Griffiths & Dougherty oil and gas attorneys, Scott M. Zurakowski, William G. Williams, Aletha M. Carver and Gregory W. Watts successfully defended energy company, Beck Energy Corporation, in a significant case in the Seventh District Court of Appeals,  Hupp, et al. v Beck Energy Corp., 2014–Ohio–4255.  The decision impacts virtually every oil and gas producer (both local and national) who owns lease rights and/or is drilling in the Utica shale.

The significance of Hupp et. al. v. Beck Energy Corp., 2014–Ohio–4255:

  • The decisions of the Monroe County Common Pleas Court (Trial Court) (July 31, 2013, February 8, 2013 and June 10, 2013) overturned over 100 years of well- settled oil and gas case law in Ohio causing serious uncertainty to drillers and producers.
  • The Seventh District Court of Appeals’ Opinion reversed the prior Monroe County Common Pleas Court’s decision granting summary judgment in favor of the lessors/landowners when it determined that the Beck Energy GT 83 Lease void ab-initio as against public policy in Ohio.
  • The Seventh District Court of Appeals’ Opinion put to rest the following main areas that lessors/landowners were using to attack and void longstanding oil and gas leases: 
    • The Beck Energy GT 83 Lease is not a no-term lease.  It contains two distinct terms – a primary term and secondary term;
    • The Beck Energy GT 83 Lease contains no implied covenants and the fact that the lease contains language that requires a lessor to provide a lessee notice of any express or implied obligation, does not create any implied covenants under the lease;
    • The ability of Beck Energy to pay delay rentals, during the primary term, does not mean the lease is a perpetual lease that can last forever;
    • The phrase “capable of production” in the sole judgment of the lessee – does not mean the Lease is a perpetual lease as Beck Energy is subject to  a good faith standard; and
    • The phrase “capable of production” means the well, not the land, is capable of production. 

Founded in 1958, Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A. provides representation across various practice areas of the law:  Oil, Gas & Mineral Law, Corporate and Business Law, Real Estate and Construction, Labor and Employment, Employee Benefits, Workers’ Compensation, Commercial Lending and Finance, Taxation, Health Care, Environmental Law, OSHA, Trusts and Estates, and Litigation in all areas.  The Firm has over 50 attorneys with offices throughout Northeast Ohio, serving Canton, Akron, Alliance, New Philadelphia, and Sugarcreek.  For more information visit www.kwgd.com.

For a complete copy of the court decision, click on the link below.

 
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