SALEM, Ohio — Chesapeake Exploration has filed a lawsuit against 95 property owners in Carroll and Columbiana counties after they reportedly threatened to terminate their leases.
The lawsuit has been filed in the U.S. District Court Northern District of Ohio in Akron Jan. 25. The leases were originally signed with the Anschutz Exploration Corporation, which then sold them to Chesapeake Exploration and CHK Utica (a division of Chesapeake) in 2010.
The landowners contend they can terminate the leases with Chesapeake if they have received a better offer and Chesapeake does not match the offer. The claim comes from one paragraph in the lease agreements that they claim says they can break the lease if another deal is offered.
A copy of the lease was included in the lawsuit filed, and the language in question can be seen in the adjacent box.
According to Chesapeake, the lawsuit claims that in exchange for an upfront payment that includes a bonus as well as all delay rents that otherwise are due under the leases, Chesapeake is granted the right to the oil and gas deposits on the land for a primary term of at least three years but extending longer in other circumstances, including if Chesapeake is conducting operations on the land or has an active well on the land.
The lawsuit goes on to state that the primary term is extendable, at Chesapeake’s option and sole discretion, for one additional term of generally three to five years with the same terms and conditions for almost all of the leases at issue here.
Chesapeake filed the action, according to the lawsuit, asking the court to declare the landowners do not have a right to terminate their leases as threatened.
According to the landowners’ attorney, Robert T. Scholl, of Canton, the landowners have received a third party offer to lease the land and it has been extended to Chesapeake.
Scholl said the landowners interpret their original lease to mean Chesapeake had 30 days to match the offer received, which it didn’t, and that was the reason behind the threat to terminate the lease.
“We sent the offer to Chesapeake and said make a better offer. Chesapeake disagreed with our interpretation of paragraph 14 of the lease,” Scholl said.
Currently, there are 6,000 acres involved in the lawsuit among the 95 property owners.
The attorneys listed on the lawsuit for Chesapeake were contacted as well as the company, but chose not to comment.