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Lessor Notice is Required in Certain Circumstances to Forfeit a Lease for Breach of the Implied Covenant of Reasonable Development

By Jay Carr

In Pavsek v. Wade, 18 MO 0024, Ohio's Seventh District Court of Appeals considered whether a lessor must serve notice upon its lessee demanding that the lessee drill additional wells on the leasehold prior to seeking a partial forfeiture of the lease due to the lessee's breach of the implied covenant of reasonable development. The Court held such notice is required if the lessee drilled a well on the leasehold that is currently producing in paying quantities. Further, the lessor must provide its lessee with a reasonable amount of time to develop the remaining leasehold prior to seeking forfeiture. In these cases, the Court will not excuse the lessor’s failure to serve notice upon its lessee simply because a long period has passed since the lessee drilled the still-producing well.

You can read the Pavsek decision here.

Tags: 'Utica Shale', Implied Covenants, Breach, Forfeiture, Energy, Reasonable Development, Utica

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