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Ohio Legal Landscape+The oil and gas lease is a hybrid instrument

+The law abhors a forfeiture

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Typical Oil + Gas Lease Claims+Habendum Clause+Implied Covenants+Abandonment+Public Policy+Tort

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Habendum ClausePrimary Term Secondary Term

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Primary Term Leases

• Commencement

• Payment of Delay Rentals

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Primary Term Leases

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Primary Term Leases: Commencement

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Primary Term Leases: Payment of Delay Rentals

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Secondary Term Leases

• Continuous Operations

• Production in Paying Quantities

• Capable of Production in Paying Quantities

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Secondary Term Leases: Production in Paying Quantities

“…and as long thereafter as oil or gas or its constituents are produced in paying quantities…”

+“Paying quantities”:+Sufficient to yield a profit+Determined in the sole judgment of the lessee

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Secondary Term Leases: The Temporary Cessation Doctrine

“…and as long thereafter as oil or gas or its constituents are produced in paying quantities…”

+Mere temporary cessation will not terminate the lease+Reasonable diligence to resume production+Good faith attempts to resume production+Length of time to resume production

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Typical Oil + Gas Lease Claims+Habendum Clause+Implied Covenants+Abandonment+Public Policy+Tort

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Breach of Implied Covenants1. Implied covenant to protect from drainage2. Implied covenant to drill an exploratory well3. Implied covenant to explore further4. Implied covenant to market5. Implied covenant to conduct operations as a

reasonably prudent operator6. Implied covenant to develop

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Breach of the Implied Covenant to Develop

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Breach of the Implied Covenant to Develop

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Breach of the Implied Covenant to Develop: Disclaimer

+“It is mutually agreed that this instrument contains and expresses all of the agreements and understandings of the parties in regard to the subject matter thereof, and no implied covenant, agreement, or obligation shall be read into this agreement or imposed upon the parties or either of them.”

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Quadrant Exploration, Inc. v. Greenwood1

Stitzlein v. Willey and Columbia Gas Transmission Corp.2

14th Dist. Washington No. 82X29, 1983 Ohio App. LEXIS 14550 (August 15, 1983)25th Dist. Holmes No. CA-318, 1979 Ohio App. LEXIS 8691 (Dec. 12, 1979)

Waiver/Estoppel

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Typical Oil + Gas Lease Claims+Habendum Clause+Implied Covenants+Abandonment+Public Policy+Tort

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Abandonment+ Intent to abandon+Time period for absence of

activity+Failure to communicate with

lessors

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Typical Oil + Gas Lease Claims+Habendum Clause+Implied Covenants+Abandonment+Public Policy+Tort

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+ Hupp v. Beck Energy Corporation3

+ Bohlen v. Anadarko E&P Onshore LLC4

+ Bentley v. Beck Energy Corporation5

+ Oxford Oil Company v. West6+ Belmont Hills Country Club v. Beck Energy Corporation7

3Monroe C.P. No. 2011-345 (July 12, 2012)4Washington C.P. No. 13 OT 167 (March 27, 2014)5Belmont County C.P. No. 11-CV-513 (September 16, 2013)6Belmont County C.P. No. 11-CV-435 (September 16, 2013)7Belmont County C.P. No. 11-CV-290 (July 8, 2013)

Void Ab Initio as Against Public Policy

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Ionno v. Glen-Gery Corp.8 and the no-term lease

82 Ohio St. 3d 131, 443 N.E.2d 504 (1983)

Void Ab Initio as Against Public Policy

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Typical Oil + Gas Lease Claims+Habendum Clause+Implied Covenants+Abandonment+Public Policy+Tort

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Torts+Fraudulent Inducement

+Misrepresentation

+Unconscionability

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Thank You!

Margeaux Kimbrough, EsquireKegler Brown Hill + Rittermkimbrough@keglerbrown.comkeglerbrown.com/kimbrough614-462-5437

ohioenergy.keglerbrown.com