Ohio Landowners Seek Lease Invalidation
In a case with significant implications for oil and gas operators in Ohio, two landowners have asked the U.S. District Court for the Southern District of Ohio to rule that their leases, signed with Mason Dixon Corporation and now held by Hess Energy Corporation, are invalid due to irregularities in signing and the failure of the gas company to drill wells during the primary term. The landowners, David Cameron and Stephen and Melissa Griffith, have moved for summary judgment in the case.
Three issues were presented to the court, including two signing irregularities. Mr. Cameron claims his signature was not notarized, and Mr. Griffith claims he signed his wife’s name on her behalf, without her being present. Further, the landowners are refusing to cash their delay rental checks. Delay rentals are paid to extend the primary term of the lease, thereby allowing the gas company to delay drilling a well. Payment of delay rentals may extend the leases for as long as ten years before a well must be drilled. The landowners have asked the court to declare this time period to be unreasonable, despite the terms of the lease.
This case illustrates the importance of having each lease validly signed and notarized by all interested parties. Any irregularity can be used by landowners to contest a lease they are no longer satisfied with, even if the landowner may not ultimately prevail. Further, oil and gas operators should make sure that landowners understand the binding nature of a lease, and the full term thereof.