Belmont County landowners trying to cancel five-year-old oil and shale gas leases

ST. CLAIRSVILLE, Ohio — A group of Belmont County landowners claim Oxford Oil Company may be over-stretching a clause in their gas leases to extend the term of the leases without production, according to a lawsuit filed in Belmont County.

The situation

Fourteen Belmont County landowners have filed a lawsuit against Oxford Oil Company in Zanesville that is using a force majeure clause in a 2006 oil and gas lease to keep the leases in effect.

The leases have expired, but the landowners cannot sign another lease because Oxford Oil Company, the company that signed them in 2006, won’t let the leases expire and says the leases are held by a force majeure clause.

The company claims the clause basically lets the lease be extended because the oil and gas company was prohibited from drilling because of a coal company’s actions.

According to uslegal.com force majeure is a term that generally refers to an unavoidable force or power that affects someone’s ability to do something. It’s typically included in contracts to remove liability for natural or other events that prevent participants from fulfilling obligations. The term can also apply if government somehow interferes or stops Oxford Oil Company from production.

Plaintiffs

Jesse T. and Rane K. Beamer; Kenneth L. and Mary Jean Hennebert; Dave E. and Susan M. Hines; Kenneth E. and Linda K. Hines; Thomas J. and Tammy K. Jefferis; Charles D. Leach; Edison W. Lucas, Neal Jenewein and Dorothy Ragan; Hillis Jenewein, Donald Riser; Joseph M. Losko Sr., Joann Losko, Joseph M. Losko Jr. and Mark D. Losko are listed as plaintiffs filing the lawsuit.

All of the plaintiffs signed five-year oil and gas leases on the properties they own in Belmont County in late 2006 or early 2007.

Each landowner received a letter between one and three days before the lease was set to expire, alerting them that the oil and gas lease they had signed would continue under the condition of force majeure, because of a situation involving coal rights beneath the properties.

According to the lawsuit, the landowners state when they signed the leases, Murray Energy and its subsidiaries were owners of the coal and the coal mining rights in and under the properties covered by the leases.

Lease length. The leases were all for five years. However, no oil or gas was produced, no wells were drilled and drilling operations did not begin.

However, when the landowners received the letter stating the property would be held under force majeure, they were told the Ohio Department of Natural Resources would not issue a drilling permit. Oxford contends in the letter sent to the landowners that Murray Energy objected to drilling because they still owned the coal beneath the surface and they have to remove it before any drilling can commence.

The landowners stated that Murray Energy’s ownership of the coal rights were of public record at the time the leases were signed, therefore Oxford Oil should have known that Murray could mine for the coal at any time.

On another count in the lawsuit, Thomas J. Jefferis Jr. and Tammy K. Jefferis filed suit because their lease was behind extended as well, except for a different reason.

Oxford Oil Company is claiming force majeure and holding their lease without a bonus payment or canceling the lease.

The company is trying to use force majeure because they feel a governmental agency is stopping them.

In order for Oxford to reach a proposed well site, the company would have had to build a road off of Bailey Road to reach the well site.

Jefferis’ sought to enforce pre-existing ODNR regulations that would require Oxford to build a silt fence before constructing the road. According to the lawsuit, Oxford refused to adhere to those regulations.

Instead, Oxford Oil Company attempted to use a road owned by the city of Barnesville in place of constructing the silt fence. However, Barnesville reportedly required Oxford to pay a bond for the use and potential damage to the Barnesville road, which Oxford refused to do, according to the lawsuit.

Now, Oxford is claiming that ODNR and the city of Barnesville stopped them from moving forward with the drilling site by not allowing them to construct the road they wanted to use and by requiring a road bond.

Leases canceled

The plaintiffs are seeking compensatory damages for slander of title, attorney fees and punitive damages.

In addition, the plaintiffs are seeking a preliminary and permanent injunction against Oxford Oil to take any gas or oil from their property.

Farm and Dairy contacted Atty. Bill Taylor, who represents Oxford Oil Company, but he had no comment.

About the Author

Kristy Foster Seachrist lives in Columbiana County raising sheep and horses. She earned her degree from Youngstown State University and has worked in both print and broadcast journalism. You can follow her on Twitter at http://twitter.com/fosterk96. More Stories by Kristy Foster Seachrist

6 Comments

  1. kevin says:

    oh my god i clicked on this link after the farm kings article just to see if writing style was consistent. go to a community college for a comm 101 class

    “pensatory damages for slander of title, attorney fees and punitive damages.”

    that isnt even close to a sentence! have some pride!

    • Kevin,
      I just wanted to thank you for bringing that uploading error to my attention. I regret the error and have fixed the problem. Thank you again for reading the online edition of the Farm and Dairy! I look forward to reading comments from our readers.

  2. Jason says:

    Ms. Foster,

    I think this is very well written and informative article. In fact, having a bit of a legal background and the ability to interpret context clues myself, my first inkling was that you had some sort of electronic issue and the first part of your sentence regarding the relief sought by the Plaintiffs was cut off. It’s a shame that someone would jump to the conclusion that the error was your fault, or that you intended to write an incomplete sentence. It seems that in the electronic age, everyone is a critic.

    I also think you showed great candor in your response to the previous commenter, which bolsters your journalistic integrity.

  3. mike says:

    MS. Foster Thank you for your information that you made public

    The main issue here is the importance of the subject matter and the facts of the case regarding the legal issues related to the leases in question . In this situation did Oxford know for certain that Murray coal would stop them from completing their lease obligations . The Force Majeure clause allows for a contract to be extended when an unknown or uncertain problem or a natural act of god or other problem happens that restricts a lessee from filling the lease terms in the allowed lease time frame ,but the lessee must also do everything in it’s power to cure this force majeure problems to keep moving forward with it’s lease obligations. In addition if such force majeure stops an oil company from obtaining the proper drilling permits is this a valid reason to extend the lease . Did Oxford Oil company know the coal was already leased under the various properties in the lawsuit . The answer would certainly be yes as this would be discovered in the normal title search done before all leases are made valid and complete . Would it make good business sense to complete a lease after a title search knowing they would not be able to drill within the five year lease term they have agreed to for any unknown reason when they are paying bonus money to the landowners. Did the landowners that agreed to the leases originally with the oxford oil company ,also have access to know that the coal was already leased under their property ,and did they check to see if there could be any plans from the Murray Coal company that could restrict their minerals from being produced in the time frame of the lease that was offered that they knew they would be paid for until the five year lease period ended for them. Also when the coal seam was originally leased did any of the leases have a clause that would allow for an oil company to lease the oil and gas and then drill through the coal seam that was leased in order to allow the future landowners the right to have the minerals ,oil or gas extracted in the future unrestricted . These questions need to be answered in order to fully understand the entire lawsuit . Keep up the good information it was easy to fully understand it as written

  4. Anthony says:

    I have heard rumor that Eclipse has purchased Part or all of Oxford Oil Company. Can anyone confirm this or point me to how I can find the actual owners of Oxford Oil Company.

  5. JR says:

    The Oxford Oil Company has not been sold according to Oxford’s lawyer Bill Taylor. Mr Taylor told me face to face that it is just a rumor.

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