851 S.E.2d 782
W. Va.2020Background
- A 1980 oil and gas lease covers a 94‑acre Tyler County tract; the lease is still producing and remains in effect. Ascent (lessee and successor to the lease) owns a 50% mineral interest; Huffman/Triple L (successors to the original lessors) own the other 50%.
- Ascent seeks to drill modern horizontal wells in the Marcellus shale, which it says require larger drilling units than the 94‑acre tract alone can support.
- The 1980 lease is silent as to pooling and unitization and contains no express right to combine the lease with other tracts; royalties are 1/8 after production and rentals were nominal.
- In 2016 Ascent sued for a declaratory judgment asking the circuit court to imply a covenant to pool/unitize and to incorporate five customary pooling/unitization clauses into the lease.
- The circuit court denied Ascent's summary‑judgment motion, holding the lease unambiguous and refusing to imply or insert new pooling provisions; the Supreme Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an implied covenant to pool/unitize exists | Ascent: pooling/unitization is reasonably necessary to exercise drilling rights and avoid waste; implies covenant from lease silence | Defendants: lease is clear and has permitted production without pooling; no right should be imposed retroactively | No implied covenant; court will not infer pooling/unitization absent express language |
| Whether silence in the lease creates ambiguity permitting implication | Ascent: silence = ambiguity; court may imply rights necessary to effect lease purpose | Defendants: silence reflects the parties' bargain in 1980; not ambiguous | Silence did not create ambiguity; lease construed as of execution and enforced as written |
| Whether court may judicially add the five specific pooling/unitization terms Ascent proposed | Ascent: modern customary terms should be incorporated to allow economic development | Defendants: adding those terms would materially alter burdens on lessors without additional consideration | Court refused to rewrite the contract or incorporate the five paragraphs |
| Whether summary judgment was appropriate based on Ascent's affidavits showing technical need for pooling | Ascent: uncontroverted expert affidavits establish necessity for pooling | Defendants: production continues without pooling; legal construction controls; factual evidence does not permit altering clear contract | Court denied summary judgment on declaratory relief; legal question decided de novo: lease unambiguous so relief denied |
Key Cases Cited
- Cox v. Amick, 195 W. Va. 608 (1995) (de novo review of declaratory judgments)
- McCullough Oil, Inc. v. Rezek, 176 W. Va. 638 (1986) (oil and gas lease is both conveyance and contract)
- Oresta v. Romano Bros., Inc., 137 W. Va. 633 (1952) (deeds and leases construed as of execution date)
- Little Coal Land Co. v. Owens-Illinois Glass Co., 135 W. Va. 277 (1951) (clear lease language governs; no practical construction when unambiguous)
- Cotiga Dev. Co. v. United Fuel Gas Co., 147 W. Va. 484 (1962) (courts must not alter clear contract language)
- St. Luke's United Methodist Church v. CNG Dev. Co., 222 W. Va. 185 (2008) (recognizing implied covenant to develop minerals in some leases)
- Wellman v. Energy Res., Inc., 210 W. Va. 200 (2001) (implied covenant to market produced hydrocarbons)
- Adkins v. Huntington Dev. & Gas Co., 113 W. Va. 490 (1932) (implied duty to protect leased premises from drainage)
- Chesapeake Appalachia, L.L.C. v. Hickman, 236 W. Va. 421 (2015) (lease construed under contract principles)
- Energy Dev. Corp. v. Moss, 214 W. Va. 577 (2003) (interpret lease as of execution date)