On August 14, 2013, the United States District Court for the
Middle District of Pennsylvania adopted a magistrate judge’s report and
recommendation dismissing an action that sought to declare an oil and gas lease
had terminated be dismissed. Messner v.
SWEPI, LP, 2013 WL 417723 (M.D. Pa. Aug. 14, 2013). The disputed lease
contained a provision that allowed for extension where all wells on the lease
or all well in the unit(s) containing the lease were shut-in for a period of at
least twelve months. If no production or operations were occurring to otherwise
maintain the lease, the operator could pay the landowner an annual shut-in
royalty in order to maintain the leasehold.
SWEPI’s predecessor brought the leased land into two
separate drilling units in January and February of 2011. Each unit had one well
drilled on it. SWEPI shut-in both wells, and tendered royalty shut-in payments
to the landowner. The landowner refused to accept the payments.
The magistrate’s report stated that SWEPI had satisfied its
obligations to extend the lease because production had occurred, it was halted
and the wells were shut in, and the well operator tendered shut-in royalties to
the landowner. The United States District Court for the Middle District of
Pennsylvania adopted the report and recommendation and therefore dismissed the
landowner’s claims.
Written by: Garrett Lent, Research Assistant
Agricultural Law Research and Reference Center
September 2013
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