Ohio's Fifth District Court of Appeals issues a decision on unitization

On August 13, 2018, the Ohio Fifth District Court of Appeals issued a decision in Am. Energy-Utica, LLC v. Fuller, 2018-Ohio-3250, holding that an order unitizing the landowner’s parcel under R.C. 1509.28 after the landowner chose not to voluntarily consent to the unit “retroactively impair[ed] the obligation of the contract,” namely a provision in the landowner’s oil and gas lease stating, “UNITIZATION BY WRITTEN AGREEMENT ONLY.” In this case, Fuller executed an oil and gas lease in 1981, covering a 40-acre parcel, that contained no explicit restrictions on the formations or depths covered by the lease and included handwritten changes that crossed out the provision allowing for unitization and, instead, provided: “UNITIZATION BY WRITTEN AGREEMENT ONLY!”  After a series of assignments, American Energy-Utica, LLC acquired the deep rights under the Fuller parcel. American Energy approached Fuller to execute an amendment to allow for unitization of the Fuller parcel. The parties were unable to reach an agreement, and Fuller refused to consent to the unit. American Energy then included his parcel in a unitization application to ODNR under R.C. 1509.28.

In the case, American Energy filed a claim for injunctive relief to gain access to the Fuller property to conduct seismic testing, as well as an application with ODNR to force a portion of Fuller’s property into a drilling unit. Fuller filed a counterclaim for breach of the lease agreement provision related to unitization by written agreement only. The trial court held that the oil and gas lease covered all formations under the property and that “R.C. 1509.28 permits the unitization of the lease.” On appeal, the Fifth District reversed the trial court’s decision on unitization, relying on the Ohio Supreme Court’s decision in Burtner-Morgan-Stephens Co. v. Wilson, 63 Ohio St.3d 257 (1992). The Fifth District held that application of R.C. 1509.28 in this case constituted breach of the express provisions of the lease. 

Ohio, Oil & Gas Litigation

Cabot Oil & Gas opens branch office in Ashland County, Ohio

Cabot Oil & Gas has been testing oil wells in three Ashland County locations, according to Marcellus Drilling News. The company recently held a ribbon-cutting ceremony for a new branch office in Jeromesville and, although the corporation hasn’t formally announced findings yet, opening an office hints towards promising news. For more, read the full story


NEXUS natural gas pipeline to begin service soon

NEXUS officials have announced their pipeline across northern Ohio is 80% complete and will begin service in the third quarter of this year, according to Kallanish Energy. The pipeline, a long-term, $2.6 billion project, will transport Utica and Marcellus natural gas from the Appalachian Basin to the Midwest, the Gulf Coast and Ontario. For more, read the full story


Chesapeake Energy sells its Utica Shale assets

The nation’s third-largest gas producer Chesapeake Energy Corp. finalized a deal to sell its Utica Shale assets to Encino Acquisition Partners for approximately $2 billion, according to Crain’s Cleveland Business. Chesapeake plans to use the proceeds to pay off debt and increase crude oil production. For more, read the full story


Natural gas plants trend in Ohio, threatening coal industry

As natural gas grows in popularity as an alternative fuel source, it directly competes with coal as the preferred fuel for power plants, according to the Tribune Chronicle. Natural gas-sector officials applauded the growth, while the president of the Ohio Coal Association warned about natural gas risks. For more, read the full story


Dominion Energy files to expand capacity in Pennsylvania-Ohio pipeline

In January, Dominion Energy requested to expand its existing DETI pipeline to deliver more Pennsylvania Marcellus gas into the Ohio Utica region, generating more electricity for the Midwest market, according to the Marcellus Drilling News. The requested construction is relatively small compared to the possible results, and the PA DEP recently published a request for comments on the project in the PA Bulletin. For more, read the full story

Ohio, Pennsylvania

Ohio and Oklahoma drilling expansions boost Gulfport production

Gulfport Energy Corp. saw a 28 percent production increase of natural gas equivalent in the second quarter, led by its recent drilling expansion into Ohio and Oklahoma, according to NewsOK. Ohio’s Utica Shale was especially successful, producing almost 97 billion cubic feet of natural gas equivalent. For more, read the full story


FERC unlikely to act on pipeline review before Powelson exit

The Federal Energy Regulatory Commission (FERC) will not take any surprise action on its pipeline policy review at its Thursday open meeting, as comments are still coming in until July 26, Commissioner Cheryl LaFleur said Tuesday. FERC will instead focus on a slate of individual orders before Commissioner Robert Powelson steps down next month. For more, read the full story


Cabot Oil and Gas Corp. builds exploratory wells in north-central Ohio

Cabot Oil and Gas Corporation, which previously drilled in Pennsylvania’s Marcellus shale regions, is drilling several wells in north-central Ohio (Ashland and Richland counties) to explore oil and natural gas potential below the Utica Shale, according to Farm and Dairy.  As part of this effort, the company is negotiating amendments to existing oil and gas/gas storage leases in the area to allow for horizontal drilling. For more, read the full story


Hilcorp Energy Co. produces significant amounts of natural gas in Columbiana County

The Ohio Department of Natural Resources reported that Houston-based Hilcorp Energy Co.’s wells in Columbiana County, Ohio yielded high amounts of natural gas from January to March 2018 according to The Business Journal.  For more, read the full story

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