Thursday, October 10, 2013

Ohio Federal Court Rules In Favor Of Tolling Of Natural Gas Leases

The U.S. District Court for the Southern District of Ohio has held that oil and natural gas leases challenged by the landowners/lessors will be tolled, or delayed, during the pendency of any lawsuit and appeal.  The Court found that the oil and natural gas company/lessee should not be penalized for an unsuccessful lawsuit challenging a valid lease.  In Wiley v. Triad Hunter, LLC, Case No., 2:12-CV-00605, a group of lessors challenged the validity of the oil and natural gas leases they entered with Anschutz Exploration Corporation, which were subsequently assigned to Triad Hunter, LLC.  Lewis Glasser Casey & Rollins PLLC represented Triad Hunter in this matter.

The Wiley lawsuit followed other similar lawsuits in which the lessors argued that the natural gas company/lessee’s Preferential Right to Renew in Paragraph 14 of the Anschutz leases required the lessee to match any bona fide third-party offers or terminate the leases.  The court first agreed with other Ohio state and federal courts by holding that the preferential right to renew does not allow the lessor to terminate the lease. The court then solidified Ohio law requiring the tolling of a lease during any lawsuit challenging the lease’s validity. The court’s decision allows oil and natural gas companies to keep the full remaining term of their oil and natural gas lease after a lawsuit is resolved.

Click to read more about this decision.