Oil and Gas

The Need to Read the Entire Deed

The West Virginia Supreme Court of Appeals recently addressed a mineral conveyance issue in Tunnelton Cooperative Coal Co. v. Belmont Resources, LLC.  The case involved the interpretation of language from a 1901 mineral severance deed.  The grantors owned one-third of the coal and 100% of all other minerals underlying the tracts.  The deed specifically granted the “all the coal and other minerals” underlying the tracts.  A clause in the deed, however, stated that the parties understood that the grantors only intend to convey “one-third of all coal and other minerals” underlying the tracts and included a recitation of acreage that was exactly one-third of the total acreage.  At issue was whether the grantors intended to convey one-third or 100% of all the other minerals, thereby excepting and reserving for themselves the remaining two-thirds.

The Court concluded that the language in question did not clearly contain any exception or reservation of any mineral interest. In order to create an exception or reservation which would reduce a grant in the conveyance clause that was clear, correct and conventional, the reservation must be expressed in certain and definite language.  The Court concluded that the grantors intended to convey one-third of the coal and 100% of the other mineral interests. In divining the parties’ intent, the Court also considered the fact that there was no record of a tax assessment of any coal or other minerals in the grantors’ names after the conveyance.

To view a full copy of the case click here.

Enforcement of Restrictive Covenants and Oil and Gas Development

A recent decision of the Supreme Court of Sullivan County, New York in the case of Weiden Lake Prop. Owners Assn., Inc. v. Klansky was adverse to the oil and gas industry.  The August 18 decision dealt with the effect of restrictive covenants on an oil and gas lease taken after the covenants had been put in place.  The restrictive covenants stated that any “commercial uses” were banned from the subdivision, but did not explicitly mention oil and gas development.  The court found this language to be sufficient to practically invalidate the oil and gas lease and issue a permanent injunction against oil and gas development by the lessee.  It is unknown at this time whether the decision will be appealed. 

Source: http://law.justia.com/cases/new-york/other-courts/2011/2011-51581.html

Court Overturns Morgantown Fracking Ordinance

On August 12, 2011, the Honorable Susan Tucker of the Circuit Court of Monongalia County entered an order invalidating the City of Morgantown’s municipal ordinance banning hydraulic fracturing within the city’s municipal limits and within an area one mile outside such limits.  In granting the summary judgment motions of Plaintiffs Northeast Natural Energy, LLC and Enrout Properties, LLC, Judge Tucker recognized West Virginia’s interest in oil and gas development and production throughout the State and found that W.Va. Code § 22-6, et seq., “provides for the exclusive control of this area of the law to be within the hands of the WVDEP.”  Furthermore, Judge Tucker found that “these regulations do not provide any exception or latitude to permit the City of Morgantown to impose a complete ban on fracking or to regulate oil and gas development and production.” 

As a result, Judge Tucker concluded that Morgantown’s ordinance was preempted, and therefore, invalid.  Plaintiff Enrout Properties, LLC was represented by Albert Sebok, Dan Stickler, and Parween Mascari of Jackson Kelly PLLC.  

To review a complete copy of Jude Tucker’s Order, please click here.

Lessor Acted In Bad Faith By Drilling Water Wells

On May 6, 2011, Jackson Kelly attorneys were successful in obtaining a ruling from Judge Facemire in West Virginia’s 14^th Judicial Circuit that a landowner acted in bad faith when he drilled water wells within 200 feet of a gas well location for the purpose of preventing a lessee’s exercise of its rights under an oil and gas lease.  The oil and gas lessor, which was also the surface owner, objected to the gas well permit application and then drilled the water wells.  The court entered a preliminary injunction order extending the term of the lease to give the lessee additional time to drill a well.  The case subsequently settled.

The order illustrates that following the advice posted on the West Virginia Surface Owners Rights Organization (WVSORO) website has its risks.

To review a full copy of the order, click here.