Helping Clients With Their Energy and Environmental Needs


No Implied Duty to Develop Marcellus

By Greg Russell

So holds the Pennsylvania Superior Court in Caldwell v. Kriebel Resources Co., No. 1305-WDA-2012 (June 21, 2013).  Plaintiffs sued because the operator's drilling activities involved only shallow formations to date, and did not involve exploring for or producing the Marcellus Shale.  Among other things, the court rejected the plaintiffs' claim that the operator had an implied duty to develop each economically exploitable strata.  Pointing to a disclaimer contained in the lease, the court stated, "[U]nder Pennsylvania law, we are not authorized to impose an implied duty on the lessee to develop the various strata in light of the language contained in their contract.  This is so, particularly in light of the fact that the Defendants are producing gas pursuant to the Agreement, a fact that Appellants acknowledge."

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Tags: Implied, Covenants, Implied Covenants, Energy

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