OH Court Rules on ‘Paying Quantities’ Affecting Lease Termination
A recent ruling from Ohio’s Seventh District Court of Appeals has the potential to affect conventional and unconventional (shale) leases. As with most legal rulings, this one is a bit complex. We’ll do our best to summarize. In Ohio, most oil and gas leases have both a primary term and a secondary term. The primary term is that period of time a driller has to locate and drill for oil or gas–typically five years. The secondary term is that period of time (which can last for decades) under which oil and gas is produced from the well. In most lease contracts, as long as the well is producing in “paying quantities” the lease remains in effect. But when the well does not produce in paying quantities, the lease is terminated and the landowner can seek a new lease. Of course, the definition of “paying quantities” is key. In a previous case, the Ohio Supreme Court defined paying quantities. However, the recent Seventh District Court case, Paulus v. Beck Energy Corp., added to, or should we say “refined” the definition provided by the Supreme Court by providing guidance on what items may be considered when determining paying quantities and lack of production in Ohio…
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In June 2016, MDN shared with you the news that Munroe Falls (Summit County), OH had filed yet another frivolous lawsuit against Beck Energy to prevent drilling–after already losing a similar case before the Ohio Supreme Court (see 
Last June MDN shared with you the news that Munroe Falls (Summit County), OH had filed yet another frivolous lawsuit against Beck Energy to prevent drilling–after already losing a similar case before the Ohio Supreme Court (see 
Over the past four years MDN has monitored and reported on conventional driller Beck Energy and their ongoing difficulties with attempting to drill in Munroe Falls (Summit County), OH. You can see our list of stories stretching back to February 2013 
Earlier this month MDN shared with you the news that Munroe Falls (Summit County), OH had filed yet another frivolous lawsuit against Beck Energy to prevent drilling–after already losing a similar case before the Ohio Supreme Court (see 
Earlier this month MDN shared with you the news that Munroe Falls (Summit County), OH had filed yet another frivolous lawsuit against Beck Energy to prevent drilling–after already losing a similar case before the Ohio Supreme Court (see 
“Unbelievably dense” is how we would describe the “leaders” of Munroe Falls, Ohio. Going back to 2012, Monroe Falls–a “city” with a population of 5,000–has been attempting to stop legally permitted wells from being drilled on private property within city limits. Munroe Falls ordered Beck Energy to cease and desist drilling activity claiming the driller had not secured permits from the city first (Mother May I?). The object was to never let Beck drill, to deny them the permits they would need to seek, so Beck took them to court and an Ohio appeals court struck down Munroe Falls’ “home rule” zoning ordinances as illegal (see 
Cases before the high courts of both New York and Pennsylvania in the past year have ruled that local municipalities can control oil and gas drilling within their borders–so-called “home rule” statutes. In the case of NY the high court went berserk and said towns can actually ban such drilling, which of course strips away private property rights guaranteed under the U.S. Constitution. In PA it was a little better, but not much. PA’s high court gutted provisions in the state’s Act 13 law making for a crazy-quilt patchwork of local zoning regulations that PA’s drillers must now navigate through. One state’s high court, however, has gotten it right. Yesterday the Ohio Supreme Court issued its long awaited ruling in the Munroe Falls v Beck Energy case (for background, see