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Denial of Surface Access Deemed Force Majeure by Ohio Court

The Seventh District Court of Appeals, based in Youngstown, held that denial of surface access to the lessee of the underlying mineral estate constituted force majeure under the lease’s broadly worded clause.  Force majeure, literally "superior force," generally means an event or effect that can be neither anticipated nor controlled.  When in this circumstance, denial of access resulted in non-production during the primary term, the court deemed the surface owner’s denial of access to be a force majeure which tolled the lease’s primary term.

In Haverhill Glen, LLC vs. Eric Petroleum Corp., decided December 2, 2016, the Seventh District Court upheld the Harrison County, Ohio, trial court’s grant of summary judgment to mineral lessee Eric Petroleum in lessor Haverhill Glen’s suit for a declaration that the lease expired due to non-production.

The lease covered 3,583 acres.  Eric determined that the best potential development site was in the 363 surface acres owned by New Rocky Valley Farms.  New Rocky repeatedly denied access to Eric; its representatives even threatened Eric’s representatives.  Eric had previously attempted to gain surface access for potential development on a 2,400-acre tract within the lease known as Faith Ranch and Farms, also to no avail.  Two months before the end of the primary term, Eric invoked the force majeure provision in its lease with Haverhill, based on repeated denial of access by surface owners.  After the primary term ended, Haverhill filed suit seeking a declaration that the lease had expired. 

The appellate court acknowledged with approval the trial court’s statement that

Drilling and placing an oil and gas well into production is an expensive endeavor.  The Defendant bargained and paid for the right to do so on the acreage which provided them with the best opportunity to succeed in their venture.  They further negotiated and paid for the inclusion of a force majeure clause in their Lease.  They have the right to rely upon the language contained therein to protect their investment.

Ohio law interpreting force majeure clauses is sparse.  The particular language of the clause may differ from lease to lease, and will control in each circumstance.  However, this case stands for the proposition that any unanticipated and uncontrollable event that results in the lessee’s inability to comply with obligations under the lease qualifies as a force majeure.          

© Steptoe & Johnson PLLC. All Rights Reserved.National Law Review, Volume VII, Number 24
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About this Author

Kevin West, Energy Attorney, Steptoe Johnson Law Firm
Member

For over 25 years, Kevin West's practice has been focused on the energy industry, both as an outside and in-house attorney.  His practice includes complex litigation, asset and stock transactions, lease transactions, and land and legal due diligence for acquisitions.  He has managed the governmental affairs process and drafted legislation regarding natural gas operations.  He has also defended clients charged with violations of federal criminal laws.  Mr. West is the Managing Member of the Columbus, Ohio office.

(614) 458-9889
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