PA Court Decision: Leases Don’t Go on Pause When Landowners Sue

Put on your hip boots, we have some deep waters to wade through with respect to an important court decision in Pennsylvania that affects landowners and drillers. Last October MDN told you about an important lawsuit that went to the Pennsylvania Supreme Court, a case called Harrison v Cabot Oil & Gas (see Important Landowner/Driller Case Heads to PA Supreme Court). In brief, Susquehanna County, PA landowners Wayne and Mary Harrison signed a lease with Cabot Oil & Gas for $100 per acre and 12.5% royalties in 2010. Learning that others in their area got better deals and feeling they were not only hoodwinked but pressured into signing, they sued Cabot halfway through the lease (before any drilling was done) to dissolve the lease. Ultimately that lawsuit was decided in favor of Cabot. But by the time the lawsuit was done and dusted, the original 5-year term had expired without Cabot drilling. The Harrisons claimed since Cabot hadn’t drilled, the lease is now over with. Cabot said the lease went on “pause” when the Harrison’s sued–you can’t very well drill with an active lawsuit. This “lease on pause” case was appealed all the way to the Supreme Court in PA, and in February the Supreme Court ruled that just because there is ongoing litigation, Cabot didn’t have the presumption that the lease was paused (see Cabot O&G Loses PA Supreme Court Case to Extend Lease). That is, Cabot lost the case. But it was referred back to the Third Circuit Court of Appeals for more work before a final final ruling. We now have that final final ruling…

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