Ohio Appellate Decision on Implied Duty to Develop Affirms Victory for Oil and Gas Producers
By: Bowles Rice LLP, Attorneys at Law, 1/22/2015
In this case, the landowners asked the Court ofCommon Pleas in Washington County, Ohio to declare two oil and gas leasesforfeited or abandoned as to formations below the Germantown Sands since therehad been no production of oil and gas below that formation. The trial court refused, finding instead infavor of the owner of the deep rights leasehold estate and holding there was noabandonment and no breach of the implied covenant to development becauseproduction in paying quantities occurred on the leased premises from shallowproducing wells drilled above the Germantown Sands. On appeal, the landowners contended the deeprights were separated from the shallow rights by a 1960 assignment of the leasewhich, they argued, created a new and distinct leasehold with its own independentobligations and duties to develop. TheFourth District Court of Appeals of Ohio rejected the argument.
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