On May 24, 2013, the United States District Court for the Middle District of Pennsylvania upheld the continuation of a five year lease where the actions of a gas company were sufficient to commence a well during the primary term. The lease contained provisions which allowed the Defendant to extend the lease by producing paying quantities of oil or gas during the primary term or commencing a well during the primary term and thereafter drilling with due diligence. The lease was negotiated by an agent acting on behalf the Plaintiff, Good Will. The president and vice president of Good Will, who signed the lease, had no knowledge of the commencement language. However, the Court construed the lease against the Plaintiff because the lease had been negotiated and drafted by an agent who held himself out to be an expert. Accordingly, the Court held the Plaintiff was bound by the commencement language. In addition, the Court held because the Defendant has staked a drill site, obtained permits and easements, cleared timber and began construction of a pad site the Defendant had successfully commenced a well during the primary term.
Written by: Clara Conklin, Research Assistant
Penn State Law, Agricultural Law Center