SUMMITVILLE, Ohio — Summitcrest Inc. has filed a lawsuit against Eric Petroleum Corp., Chesapeake Exploration LLC and Ohio Buckeye Energy LLC in Columbiana County Court of Common Pleas.
The lawsuit was filed by the law firm of Squire, Sanders and Dempsey in Washington, D.C. A court date has not been set yet.
Background
In April 2004, Sam Johnson, owner of Summitcrest Farm, leased the land he and his family owned to Burlington Inc. for oil and gas drilling.
Johnson said one well was drilled and the permit for a second well was issued by the state but it was not drilled.
An addendum to the lease, according to Johnson, states once Eric Petroleum drilled one well, drilling was supposed to commence immediately on another well. This didn’t happen and the lease rent was not paid for a few years. This made Johnson think the lease was not in force.
Selling leases
He said the farm was notified in December 2010 the lease had been sold. A lease check was sent from Chesapeake Exploration in April, but he didn’t cash it.
Eric Petroleum Corp. sold the lease in 2004 to Ohio Buckeye Energy LLC (a subsidiary of Chesapeake Exploration.) Chesapeake Exploration is a subsidiary of Chesapeake Energy.
Phone call
This summer, Johnson got a call from Chesapeake Exploration LLC, requesting permission to take a survey of the land in preparation for drilling.
“All that is stopping Chesapeake from coming onto my farm is my three F1 Brahman-Angus bulls,” said Johnson, as he explained he requested Chesapeake officials sign a waiver of liability before coming onto the property for the survey.
He thought they were calling about land leased to them in Carroll County, but discovered they were coming to survey part of the farm in Columbiana County, under the Eric Petroleum lease, which he thought had been nullified.
Johnson said, as far as he knows, there are at least 65,000 acres of land leased to Eric Petroleum and those landowners could be in similar situations.
Negotiate
Johnson said the goal of the lawsuit is to get his property back and to be able to negotiate with Chesapeake Exploration.
“I want the judge to enforce the Ohio law and return the property back to the owner. Then hopefully, other properties will be returned to them after the precedent is set,” Johnson said.
Meanwhile, Johnson said he will also appear before the Oil and Gas Commission Oct. 28 to make an appeal.
(Reporter Kristy Foster welcomes feedback by phone at 800-837-3419 or by e-mail at kfoster@farmanddairy.com. You can also follow her on Twitter at http://twitter.com/fosterk96.)
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In a similar situation with Eric and Chesapeake. Several law firms are trying to find the right strategy to take on the low ball leases and the unethical tactics that the land men used 3 to 5 years ago. They told me the client list will be around 500 to start without any advertising. I have a feeling when we advertise in the farm and dairy that the number will be 1500 land owners. At the oil and gas conference with Bill Johnson on 10-20, no one was concerned with facking and 90% of the people wanted to know what they could do with the low ball leases that the inside traders sold us 4 years ago. Here is an interesting article about how Chesapeake made 43 billion for zero dollars. http://seekingalpha.com/article/297753-chesapeake-energy-creates-34-billion-of-value-at-a-net-cost-of-zero?source=email_rt_mc&ifp=0
When you sign a lease on your land you need to read it very carefully and only have it at 4 to 5 years then the lease is up. The co. must heave to produce another lease at the end of the 4 to 5 years that must be resigned by both parties if the parties agree.Also make sure it is stated in the lease that the co. will replace what they mess up so to speak,by planting grass ect.