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