Margeaux Kimbrough presented "Ohio Oil + Gas Lease Litigation" at the Energy & Mineral Law Foundation Kentucky Conference on October 22, 2014. She discussed the Ohio legal landscape, oil and gas claims, and breach of implied covenants.

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Ohio Legal Landscape
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The oil and gas lease is a hybrid instrument
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The law abhors a forfeiture

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Typical Oil +Gas Lease Claims
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Habendum Clause
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Implied Covenants
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Abandonment
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Public Policy
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Tort

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Habendum Clause
Primary Term
Secondary Term

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Primary Term Leases
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Commencement
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Payment of Delay Rentals

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Primary Term Leases

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Primary Term Leases: Commencement

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Primary Term Leases: Payment of Delay Rentals

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Secondary Term Leases
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Continuous Operations
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Production in Paying Quantities
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Capable of Production in Paying Quantities

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Secondary Term Leases: Production in Paying Quantities
“…and as long thereafter as oil or gas or its constituents are produced in paying quantities…”
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“Paying quantities”:
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Sufficient to yield a profit
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Determined in the sole judgment of the lessee

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Secondary Term Leases: The Temporary Cessation Doctrine
“…and as long thereafter as oil or gas or its constituents are produced in paying quantities…”
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Mere temporary cessation will not terminate the lease
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Reasonable diligence to resume production
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Good faith attempts to resume production
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Length of time to resume production

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Typical Oil +Gas Lease Claims
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Habendum Clause
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Implied Covenants
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Abandonment
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Public Policy
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Tort

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Breach of Implied Covenants
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Implied covenant to protect from drainage
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Implied covenant to drill an exploratory well
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Implied covenant to explore further
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Implied covenant to market
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Implied covenant to conduct operations as a reasonably prudent operator
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Implied covenant to develop

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Breach of the Implied Covenant to Develop

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Breach of the Implied Covenant to Develop

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Breach of the Implied Covenant to Develop: Disclaimer
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“It is mutually agreed that this instrument contains and expresses all of the agreements and understandings of the parties in regard to the subject matter thereof, and no implied covenant, agreement, or obligation shall be read into this agreement or imposed upon the parties or either of them.”

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Quadrant Exploration, Inc. v. Greenwood1
Stitzleinv. Willey and Columbia Gas Transmission Corp.2
14thDist. Washington No. 82X29, 1983 Ohio App. LEXIS 14550 (August 15, 1983)
25thDist. Holmes No. CA-318, 1979 Ohio App. LEXIS 8691 (Dec. 12, 1979)
Waiver/Estoppel

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Typical Oil +Gas Lease Claims
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Habendum Clause
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Implied Covenants
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Abandonment
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Public Policy
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Tort

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Abandonment
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Intent to abandon
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Time period for absence of activity
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Failure to communicate with lessors

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Typical Oil +Gas Lease Claims
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Habendum Clause
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Implied Covenants
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Abandonment
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Public Policy
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Tort

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Huppv. Beck Energy Corporation3
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Bohlen v. Anadarko E&P Onshore LLC4
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Bentley v. Beck Energy Corporation5
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Oxford Oil Company v. West6
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Belmont Hills Country Club v. Beck Energy Corporation7
3Monroe C.P. No. 2011-345 (July 12, 2012)
4Washington C.P. No. 13 OT 167 (March 27, 2014)
5Belmont County C.P. No. 11-CV-513 (September 16, 2013)
6Belmont County C.P. No. 11-CV-435 (September 16, 2013)
7Belmont County C.P. No. 11-CV-290 (July 8, 2013)
Void Ab Initio as Against Public Policy

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Ionnov. Glen-GeryCorp.8and the no-term lease
82 Ohio St. 3d 131, 443 N.E.2d 504 (1983)
Void Ab Initio as Against Public Policy

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Typical Oil +Gas Lease Claims
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Habendum Clause
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Implied Covenants
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Abandonment
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Public Policy
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Tort

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Torts
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Fraudulent Inducement
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Misrepresentation
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Unconscionability

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Thank You!
Margeaux Kimbrough, Esquire
Kegler Brown Hill +Ritter
mkimbrough@keglerbrown.com
keglerbrown.com/kimbrough
614-462-5437
ohioenergy.keglerbrown.com