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… Continue Reading
Category Archives: Contracts and Leases
Subscribe to Contracts and Leases RSS FeedOwnership of Minerals Under Public Roads
Posted in Contracts and Leases, Mineral Interest, Ohio, Real EstateThis is the second post in a two-part series examining ownership of minerals located under bodies of water and roads. See part I discussing the ownership of minerals under adjoining waters. Who owns the minerals underneath public roads in Ohio? This is really two questions: What ownership interest does the state, county, or township have… Continue Reading
Common Oil and Gas Lease Conundrums
Posted in Contracts and Leases, Exploration & Production, Mineral Interest, Ohio, RegulatoryUnderstanding rights and obligations associated with oil and gas leases can be challenging. Imprecise lease language, implied legal duties, formulaic statutes and evolving case law all affect oil and gas leases in different ways. We’ve written several articles on these topics during the past several months and have compiled them into an eBook to help… Continue Reading
Ownership of Minerals Under Adjoining Waters
Posted in Contracts and Leases, Exploration & Production, Mineral Interest, Ohio, Real EstateThis post is the first of two articles examining ownership of minerals located under bodies of water and roads. Who owns the minerals under bodies of water? When oil and gas were being produced in meager quantities, not many people cared. But the story is different when lease bonuses are thousands of dollars per acre… Continue Reading
Ownership Theory of Oil and Gas Influences Bankruptcy Law in Ohio
Posted in Contracts and Leases, Mineral Interest, Ohio, Real EstateOne of the most fundamental questions in oil and gas law is whether oil and gas in the ground are capable of being “owned.” The answer to this question shapes the law and influences legal analysis in a variety of ways. Different states have answered this question in different ways, and the answer is not… Continue Reading
Unitization in Ohio: Compelled Participation in the New Context of the Utica Shale
Posted in Contracts and Leases, Exploration & Production, Ohio, Real Estate, RegulatoryIn 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… Continue Reading
Financing in the Energy Sector: A Primer for Lenders
Posted in Contracts and Leases, Ohio, Real EstateOur 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… Continue Reading
Oil and Gas Rights — Reserved? A Litigator’s Perspective On The Mong Case
Posted in Contracts and Leases, Ohio, Real EstateA 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… Continue Reading
Life Estates: More Oil and Gas Law Implications
Posted in Contracts and Leases, Ohio, Real EstateWe 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… Continue Reading
ODNR Issues Second Unitization Order for Horizontal Utica Shale Wells
Posted in Contracts and Leases, Exploration & Production, Ohio, RegulatoryThe chief of the Division of Oil and Gas Resources Management (DOGRM) recently issued a new unitization order pursuant to R.C. §1509.28. This is only the second such order since the beginning of Ohio’s shale drilling boom. The unitization statute has become an increasingly important legal tool for oil and gas operators. We are seeing… Continue Reading
Be Careful Drafting Contracts and Deeds When the Ownership of Minerals Is at Stake
Posted in Contracts and Leases, Mineral Interest, Real EstateA recent decision by the Court of Appeals of Ohio highlights several errors by a seller of property who may have intended to reserve mineral rights. (See Mong v. Kovach Holdings LLC, 2013 Ohio 882, Court of Appeals of Ohio, Eleventh Appellate District, Lake County, March 11, 2013.) Facts In August 2009, McMenamin conveyed real… Continue Reading
A Tool of Last Resort: Mandatory Pooling in Ohio
Posted in Contracts and Leases, Exploration & Production, Ohio, Real Estate, RegulatoryThis 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… Continue Reading
When Is an Assignment of a Lease not an Assignment of Obligations?
Posted in Contracts and Leases, Exploration & Production, Mineral Interest, Real EstateWhen oil companies transfer oil property among themselves, they frequently do so by an assignment of lease rights. Sometimes they assign all their interest under a lease, but they often assign just a portion of the lease, or reserve some interest in the property. In the event of multiple assignments — such as when party… Continue Reading
Mandatory Pooling and Unitization in Ohio, Part I: History and Constitutionality
Posted in Contracts and Leases, Mineral Interest, Ohio, Real Estate, RegulatoryLandowners, in certain situations, can be compelled by the state to combine their mineral interest with their neighbors for the purpose of producing oil and gas. In Part I of a multi-part series, I explain the history and constitutionality of this practice. What is Compelled Participation? “Compelled participation” is the term I will use throughout… Continue Reading
Who Owns the Mineral Rights on My Property?
Posted in Contracts and Leases, Mineral Interest, Ohio, Real EstateAs oil and gas companies flock to eastern Ohio to take advantage of the Utica shale play, trying to figure out “who owns the mineral rights” continues to be a difficult and increasingly important question. As noted in a recent post, Ohio title insurance companies are excepting from title insurance policies the ownership of the… Continue Reading
Is Gas a Mineral?
Posted in Contracts and Leases, Mineral Interest, Real EstateA 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… Continue Reading
Life Estates: Oil and Gas Law Implications
Posted in Contracts and Leases, Mineral Interest, Ohio, Real Estate, Tax issuesLife estates have been recognized as an interest in land at common law since the Middle Ages. Even so, how they relate to the ownership of and payment for oil and gas can result in outcomes that may not be intuitive. According to common law and statute, there can be no gap in the perpetual… Continue Reading
Lawsuits Over “Fraudulent” Oil & Gas Leases Often Lack Merit
Posted in Contracts and Leases, Other Articles, Real Estate, Regulatory, ShaleThe 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… Continue Reading
US Supreme Court Decision in Nitro-Lift Technologies case this week
Posted in Contracts and LeasesOne 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… Continue Reading
Ohio Attorney General Issues Guidance on Road Use Maintenance Agreements (RUMA’s)
Posted in Contracts and Leases, Ohio, RegulatoryIn response to questions posed by the Richland County Prosecuting Attorney, the Ohio Attorney General recently provided guidance to public authorities about entering into Road Use Maintenance Agreements (“RUMA’s”) with oil and gas operators. This is a distillation of the 20-page Attorney General Opinion No. 2012-029, which addressed three primary questions. I. May a county… Continue Reading
Conveying Fractional Mineral Interests – The Duhig Rule
Posted in Contracts and Leases, Mineral Interest, Real EstateLast month, we posted about issues that can arise when a landowner conveys or reserves a fractional mineral or royalty interest. In addition to questions about the amount of the interest an imprecisely drafted document conveys or reserves, previously granted or retained fractional interests can create conveyancing issues as well. Consider the following scenario: Suppose… Continue Reading
Is There a Right To Appeal an Oil and Gas Drilling Permit in Ohio? [UPDATE]
Posted in Contracts and Leases, Ohio, Real Estate, RegulatorySurface owners, neighbors and others indirectly affected by the issuance of an oil and gas well drilling permit might be surprised to learn that they do not have a clear right to challenge the terms contained in that permit. But, recent cases in Ohio and West Virginia have forced courts to more clearly define who… Continue Reading
Reserving Fractional Mineral Interests – A Trap for the Unwary
Posted in Contracts and Leases, Exploration & Production, Ohio, Real EstateIn a past life, this author was a “pipeline lawyer” who represented the crude oil purchaser (the company that typically owns the pipeline where the oil is delivered). As a pipeline lawyer, I was called upon to interpret deeds, wills, assignments, and other documents whereby a grantor purported to convey or reserve some interest in… Continue Reading
Oil and Gas Surge Impacts Title Searches and Policies of Title Insurance – Part Two of a Two Part Series
Posted in Contracts and Leases, Exploration & Production, Mineral Interest, Real EstateAs I touched on in a recent post, the surge in oil and gas exploration and the accompanying concern with mineral rights and interests have created significant challenges for county recorders and title insurance companies across the state. The strong demand on county offices (often in counties still feeling effects from the recession) for time… Continue Reading