Ownership of Coalbed Methane Gas Linked to the Ownership of the Coal

In Kennedy v. Consol Energy Inc., 116 A.3d 626 (Pa. Super. Ct. 2015), Earl Kennedy and other interest holders (the "Kennedys") brought an action to quiet title to coalbed methane gas and for trespass and conversion against the owner and operator of the coal, Consol Energy Inc. and CNX Gas Co. ("Consol"). The first issue involved the ownership rights to coalbed methane gas.[1] The Kennedys owned the gas rights under a 790-acre tract of land, and contended that such rights also included the rights to the coalbed methane gas. Consol owned the Pittsburgh or River coal seam and had been drilling wells and extracting coalbed methane gas from underneath the tract for several years. In United States Steel Corp. v. Hoge, 468 A.2d 1380 (Pa. 1983), Pennsylvania's highest court held that if gas is present in coal it must necessarily belong to the owner of the coal. Applying Hoge, the trial court concluded that…
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Top Leases Can Survive the Rule Against Perpetuities

In BP Am. Prod. Co. v. Laddex, Ltd., 07-13-00392-CV, 458 S.W.3d 683, Tex. App. LEXIS 1521 (February 17, 2015), the Amarillo Court of Appeals upheld the validity of a top lease and remanded the case to determine whether there was a cessation of production in paying quantities which potentially terminated the underlying lease. In Laddex, the lessors executed a lease on January 13, 1971 ("Arrington Lease"), which was eventually assigned to BP. Id. at 684. The Arrington Lease provided for a primary term of five years and so long thereafter as oil or gas is produced from the land. Id. The Mahler D-2 Well was the only well drilled on the property and produced steadily until August 2005, when production slowed significantly. Id at 685. Then, in November 2006 the well inexplicably resumed producing in quantities comparable to what it had produced prior to its 2005 slowdown. Id. In 2007, the landowners entered into a "top lease"…
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Royalty Free of Post-Production Costs

The Texas Supreme Court, in Chesapeake Exploration, L.L.C. v. Hyder, No. 14-0302, 2015 Tex. LEXIS 554 (June 12, 2015), addressed the issue of allocation of post-production costs and whether, based on a certain lease royalty provision, an overriding royalty must bear its share of post-production costs. The dispute in Hyder centered on the interpretation of a lease royalty provision. Chesapeake Exploration, L.L.C. ("Chesapeake"), as lessee, acquired an interest in 948 mineral acres in the Barnett Shale previously leased by the Hyder family. Id., at *2-3. The Hyder family had previously executed a lease with the original lessee containing three royalty provisions. Id., at *3. The royalty provision in dispute provided "a perpetual, cost-free (except only its portion of the production taxes) overriding royalty of five percent (5.0%) of gross production obtained." Id., at *3-4. Additionally, the lease contained a disclaimer, which provided: "Lessors and Lessee agree that the holding in the case of Heritage Resources, Inc. v.…
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