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Coshocton County, OH - Judge - Household production from gas well not enough to continue lease


Thursday, February 28, 2013
by Kristy Foster Seachrist
Link to the Farm and Dairy Article 

COSHOCTON, Ohio — A Coshocton County judge has ruled against a 1983 oil and gas lease that was holding property under the extension clause because it was producing enough natural gas for a household.

George and Bonnie Clark and Roy W. and Sheila A. Krasky filed the lawsuit against Zelpha Myers in 2012 over a gas well and lease on their property. The gas well, which is owned by Myers, was producing enough gas for Myers’ household, and that production was being used to keep the lease in effect.

The Clarks and the Krasky family own land in Keene Township in Coshocton County. The two separate parcels were originally one parcel and leased as such before the land was sold to either family. The Clarks own 26.18 acres and the Krasky family owns 20.79 acres.

The land was originally leased to Buckeye Oil in 1983, and a well was drilled on the property. The well was eventually sold to Myers, a neighbor, in 1998. Myers owned the well, but did not own the land on which the well was located.

No royalties
According to documents, no royalties have been paid to the Clark or Krasky families since 1999 and no production has been reported to the Ohio Department of Natural Resources since 1998.

The only well production presently ongoing provides natural gas to the Myers’ home for household use.
The Clarks and Krasky families filed the lawsuit against Myers in an attempt to get out of the lease.

Judge’s decision
The case went to trial Feb. 1, and Coshocton County Common Pleas Court Judge Robert J. Batchelor issued his order Feb. 14, concluding that this well was not considered “production” under the terms of the lease.

The original contract states the lease could continue as long as oil and or gas was being produced by the well.

Atty. Tom White, the plaintiffs’ attorney, said this was a case to see how strictly the law would be applied.

“No production, no royalty, no lease,” said White.

Production questioned
Myers claimed the production of gas from well for her home constituted production under the terms of the lease and Batchelor disagreed.

He cited a 2005 Ohio case, Morrison v. Petro Evaluation Services, Inc. (from Ohio’s 5th District Court of Appeals that includes Coshocton County) that said the production of gas for household use is not considered “production” under the terms of the lease.

“In essence, the defendant’s (Myers’) position is unjust and against public policy because the defendant (Myers) desires to indefinitely hold the plaintiffs’ (Clark and Krasky) lands in bondage to a non-producing oil and gas lease,” Batchelor wrote in his decision.

He wrote that the lease expired due to non-production.

No comments
Myers attorney, David Hipp, of New Philadelphia, Ohio was contacted for comment. He said he had not discussed the ruling with his client and was unsure if he would file an appeal.

If the case would be appealed, it would be heard in the 5th District Court of Appeals, which issued the decision in the 2005 case of Morrison v. Petro Evaluation Services, Inc.