One Belmont County landowner looks to be stuck with the terms of her $5/acre oil and gas lease with XTO Energy, Inc. (XTO) and Phillips Exploration, Inc. (Phillips), despite her claims of fraud (among other things) against the original lessor, Reserve Energy Exploration Company (Reserve).
In a decidedly producer-friendly decision, Judge Linton D. Lewis Jr., sitting on the Belmont County Court of Common Pleas in the heart of the Utica Shale zone, granted judgment as a matter of law in favor of XTO, Phillips and Reserve, while denying the plaintiff’s partial motion for summary judgment in the case of Blazek v. Reserve Energy Exploration Company, et al.
The plaintiff, Molly Blazek, had alleged four counts in an attempt to void the May 7, 2006, lease she signed with Reserve, who later assigned the lease to XTO and Phillips:
- Count I: The lease is void because it was not property notarized.
- Count II: The lease is void because the defendant’s breached the implied covenant to reasonably develop oil and gas on the plaintiff’s property.
- Count III: The lease is void based on fraud on the inducement.
- Count IV: The lease is unconscionable and against Ohio public policy.
The Court ruled for the defendants on each claim as a matter of law. It found that under Ohio law even an improperly notarized lease is valid as between the parties and their assigns. Further, there can be no implied covenant to reasonably develop during the primary term of a lease that provides for delay rentals, as the lease in question did here. The Court also found that there was no fraud, nor were the terms so unfair or respective bargaining power of the parties so unequal as to rise to unconscionability.
There is no word yet on whether Blazek will appeal. See the full case report.