Norse Says NY Force Majeure Settlement Doesn’t Apply to Them

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MDN reported today that New York Attorney General Eric Schneiderman’s office struck a deal with Chesapeake Energy over the issue of extending landowner leases in New York using the “force majeure” clause in the contract (see this MDN story). Norse Energy issued a press release saying essentially that the deal does not apply to them, and their force majeure claims are still in place until overturned by a court.

Here’s the Norse press release:

Norse Energy Corp. ASA advises that Chesapeake Energy’s recently reported settlement with the NY Attorney General’s office should be viewed in the context of lease issues specific to Chesapeake. The broader question of leases being extended by force majeure due to delays in the issuance of the SGEIS by the NY Department of Environmental Conservation (DEC), remains before the Federal courts in lawsuits that are continuing to be pursued by both Chesapeake and Inflection Energy, respectively.

Norse Energy is not a party to the lawsuits involving Chesapeake and Inflection addressing force majeure. However, Norse declared force majeure over most of its leases in NY not held by production, effective December 2010, when NY Governor Patterson issued an Executive Order prohibiting permitting for high volume hydraulic fracturing until issuance of the SGEIS.

“The Company’s typical lease provides for an extension of the lease term under circumstances, which we believe have arisen, as a result of delays in the SGEIS,” commented Norse Chief Legal Officer Dennis Holbrook. “Norse looks forward to the day–hopefully soon–when the focus shifts from issues of delay to how successfully and safely we are drilling shale wells under the SGEIS,” concluded Holbrook.

Norse Energy now owns or leases approximately 130,000 net acres in New York State of which ~33,000 lies in the liquids rich shale fairways of Western New York, and the remaining ~97,000 net acres lies in the Marcellus and Utica natural gas fairways in Central New York.*

Reading between the lines, sounds like Norse is getting bombarded with phone calls from landowners wondering if they are now free to renegotiate their leases. And Norse wants to tamp that notion down post-haste. MDN does not know when the majority of the Norse leases were signed, and whether or not specific formations (like the Utica and Marcellus) were in view when the leases were signed. Such details make all the difference.

One thing’s clear: Norse is putting their landowners on notice that they prefer to look at the not-so-distant future when drilling begins and force majeure will be a moot point.

*Norse Energy (Jun 14, 2012) – Norse Energy Corp ASA: Norse Addresses Chesapeake Lease Settlement