Shale Daily / NGI All News Access

Range Backed in Pennsylvania Lease Extension Case

A Pennsylvania judge has ruled against a Lycoming County landowner who had argued an oil and gas lease could not be extended because he was not aware of an extension clause.

In a 41-page ruling, U.S. District Court Judge Robert Mariani of the Middle District of Pennsylvania, said Good Will Hunting Club Inc. failed to meet the burden of proof that the five-year lease it signed with Great Lakes Energy Partners LLC in June 2006 had expired (Good Will Hunting Club Inc. v. Range Resources Appalachia LLC, No. 4:11-CV-1152). Great Lakes became Range Resources Appalachia LLC in 2007.

The club was bound by an authorized consultant's decision to sign the lease, said Mariani.

"Understandably, Good Will was frustrated by the lack of clarity in the advice it received [during the process]," Mariani said in his May 24 ruling. "[But] the court finds that the lease was a commencement lease, and [the] defendant took sufficient action to commence a well within the original five-year term of the lease. Thereafter, [the defendant] drilled the well with due diligence, such that it extended the lease by its actions."

According to court documents, Range staked a drill site for the Goodwill 5H well in June 2010 and over the next two years it acquired the necessary permits from the Pennsylvania Department of Environmental Protection (DEP) and from Lewis Township. Filings indicated that it also made payments to Good Will for various agreements and it prepared the site for drilling.

"The court...finds that Range took several actions before the lease expired in June 2011 to constitute commencing a well, including staking a drill site, obtaining several permits and easements, clearing timber, constructing roads to the well site, and beginning construction of the pad site," Mariani said. "Thereafter, Range took steps to drill the well and completed the well in March 2012." He also ruled for Range on a counterclaim for declaratory relief.

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