By Ed Runyan
An attorney who filed several lawsuits recently in Trumbull County Common Pleas Court, seeking to get decades-old gas and oil leases declared null and void to allow for possibly more lucrative leases, says such action makes sense in cases where a production gap of three years or more occurred.
Atty. Michael Grove of Howland said he suspects many people might fit into that category in this area.
“I just don’t know how many of the land owners have the resources to hire an attorney to have the old lease declared null and void,” said Grove, who has worked as an attorney in the gas and oil business since 1980.
One reason such litigation is expensive is that it can be difficult to determine which oil and gas company has the controlling interest in a particular property, since mineral-rights leases tend to change hands many times, he said.
Determining what company currently has the leasehold requires title work, which can be expensive.
Grove added that the gas and oil leases that have the best chance of succeeding are those in which the property owner knows the production and royalty history of the property dating back quite a few years.
In the case of the lawsuit Grove filed on behalf of Daniel O. Schwartz and Pamela A. Schwartz of 4193 Everett Hull Road, Fowler Township, and Thomas S. Schwartz Jr. and Leah R. Schwartz of 4226 Everett Hull Road, the lawsuit says the mineral rights for 73 acres were leased in 1972.
The lease was good for 20 years, “so much longer thereafter as oil and gas is produced from said premises, or as long as gas is being injected, held in storage or being withdrawn ... in or from the lands hereinafter described or other land located in the same or any adjoining township.”
The suit says oil or gas has not been found in paying quantities there between January 1998 and the end of 2007.
Gas has never been injected, held in storage or thereafter withdrawn by the lease holders on the property or lands in Fowler Township or any township adjacent to the township, the suit says.
The lawsuit says the companies holding the mineral rights breached the terms of the lease by not producing gas or oil in paying quantities and not paying royalties between January 1998 and the end of 2007.
“I suspect there are a lot of leases that have gaps where they didn’t have steady production,” Grove said.
One valid defense the oil and gas company might use is that the company had to make extensive repairs of multiple leaks to well equipment, he said.
For Mahoning Valley gas and oil leases in the Clinton Sandstone formation before about 2006, production gaps were “no big deal,” but starting around 2006, knowledgeable oil and gas people started to realize the possibility that deeper formations such as the Utica and Marcellus might someday have value.
In some cases, Grove believes, companies made idle wells active again so their leases would remain valid.
But property owners who can show that they did not receive royalties for three years or more might have a valid case even if the well has returned to active status, Grove said.
The Schwartz lawsuit asks the court to declare that their leases have expired, that they are entitled to an accounting of the royalties owed to them and a finding that the lease holders have abandoned the well equipment still on the property.