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Court Sides with Operator in Well Location Consent Dispute

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On December 27, 2012, in Meeko v. Southwestern Energy Prod. Co., 3:CV-11-1409, 2012 WL 6721076, 2012 LEXIS 182073 (M.D. Pa. Dec. 27, 2012), the Federal District Court for the Middle District of Pennsylvania granted summary judgment to defendant Southwestern Energy Production Company in a breach of contract claim relating to a well location dispute.

In 2008, the plaintiff landowner executed an oil and gas lease with Elexco Land services, Inc., Southwestern’s predecessor, which contained a clause that granted the lessor the right to approve the location of well sites, access, roads, and pipelines, subject to the proviso that consent “shall not be unreasonably withheld.”

In 2011, the plaintiff received a letter from Southwestern with the proposed location of the well and requesting that the plaintiff give notice within five days if she proposed an alternative location. The plaintiff contended that she never consented to the well location and eventually brought claims for fraud, intentional infliction of emotional distress, and breach of contract. The claims for fraud and intentional infliction of emotional distress were subsequently dismissed. At the end of discovery Southwestern made a motion for summary judgment. The Magistrate Judge recommended that the motion be granted. The district court adopted the Magistrate Judge’s recommendation and granted Southwestern’s motion for summary judgment, finding that even accepting the plaintiff’s allegations that she had not consented to the wellsite location, the plaintiff had failed to give a timely proposal for an alternative well site within five days of notice of Southwestern’s proposed site.

This decision indicates that some courts may be sympathetic to arguments that lessors must strictly comply with consent clauses in oil and gas leases.  It also offers some support for operators who are faced with lessors who unreasonably withhold consent to the locations of well sites and other surface uses associated with oil and gas operations.

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