OH Court: Landowners Can’t Cancel Lease for Royalty Nonpayment

can of wormsAn unfortunate decision in an Ohio court case may have far-reaching implications for Ohio landowners. In Armstrong v. Chesapeake Exploration, L.L.C., landowners Myron and Nikki Armstrong purchased 61 acres of land in Tuscarawas County, OH in 2003 with an existing oil and gas lease (dating back to 1972). After purchasing the property, the Armstrong’s land was pooled into a drilling unit and a well was drilled. We do not know how much (or even if) the well produced in the way of gas and oil. We don’t know if it was hooked up to a pipeline for production. We assume it was hooked up and is producing because the Armstrongs have sued to cancel the lease saying they haven’t received a single royalty check since the well was drilled. Tuscarawas County Court ruled that because there is no express provision in the original lease saying “you can cancel this lease if we don’t pay you the royalties we say we’ll pay you,” the court ruled in favor of Chesapeake and the company that owns the lease and is supposed to pay the royalties–Belden & Blake. The Armstongs appealed the decision to the Ohio Court of Appeals, Fifth Appellate District. That court has just ruled the same way–saying even though royalties haven’t been paid, that’s not a good and sufficient reason to cancel the lease…

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