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Pennsylvania Court Upholds Sublease of Production Rights

By Ilya Batikov

The Pennsylvania Superior Court recently held that a sublease of production rights under 250 acres in Greene County did not alter the habendum clause of a 50 year old oil and gas lease or sever rights provided under the original lease. The original lease was for the term of ten (10) years or so long as, among other actions, oil or gas was produced or gas was stored. In 2011, Equitrans L.P. subleased the oil and gas production rights under the lease to EQT Production Company.The landowners argued that the sublease severed the production rights from the storage rights and since no oil or gas was produced, any production rights under the lease terminated. The Court disagreed, holding that express provisions of the sublease evidenced the intent of the parties to not sever the production rights and under the original lease either production or storage could hold the lease. As such, production rights were not terminated.

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Tags: PA, Oil and Gas, "Oil and Gas Lease", Energy

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