With the sudden surge in the value of mineral rights in southeastern Ohio, landowners and local producers have been thrust into the position of competing for ownership of these valuable mineral rights. Unless an old oil and gas lease cover their property (and absent any other mineral title issues), landowners are free to enter into a Utica Shale lease, which carries with it a lucrative signing bonus and a better royalty. Conversely, if a local producer is able to maintain a valid oil and gas lease, the producer is in the position of being able to assign the deeper Utica rights held by the lease and receive compensation and an overriding royalty interest.
The tension is forcing more scrutiny upon the validity of old oil and gas leases. Unfortunately, there is no clear bright line test under Ohio law to determine when an oil and gas lease expires.The Daily Jeff