Lang v. Weiss Drilling Co.
2016 Ohio 8213
| Ohio Ct. App. | 2016Background
- Joseph and Anna Lang own 29.315 acres that were subject to a 1978 oil-and-gas lease (the Lease) covering an original 32.5-acre tract; a single well (Donald Miller No. 1) was drilled in 1981.
- Weiss Drilling Company (Weiss) acquired the Lease in 1989; Antero Resources acquired certain deep rights in 2012.
- The Lease’s secondary term runs "so long as oil or gas can be produced in paying quantities."
- The Langs sued for declaratory judgment in 2013, alleging the Lease expired for lack of production in paying quantities because the Well produced little or no metered gas for extended periods and was not individually metered until November 2007.
- Trial evidence: Weiss reported zero or minimal production in multiple years (notably 2003–2007), paid speculative or improper royalties in some years, reported tax losses for several years, and admitted the pump malfunctioned in mid-2000s and that the Well was a long-term “money loser.”
- The trial court found the Lease terminated for failure to produce in paying quantities; the Seventh District affirmed on manifest-weight review.
Issues
| Issue | Plaintiff's Argument (Lang) | Defendant's Argument (Antero/Weiss) | Held |
|---|---|---|---|
| Whether a temporary cessation doctrine preserves the lease during pump-related downtime | The Lease expired because production was not in paying quantities for multiple years | Temporary cessation applies: pump malfunction in 2005–2006 and reasonable diligence in repairs prevent forfeiture | Court held temporary cessation did not save the Lease given multiple years (2003–2007 and earlier gaps) of nonpaying production; affirmed forfeiture |
| Whether the Well produced in paying quantities during the relevant period | Lease expired — production was not in paying quantities (losses, minimal production, speculative royalty payments) | The Well was profitable at times (1988–2002, post-2008); intermittent profitability shows continued viability | Court found losses and minimal production across critical years (esp. 2003–2007 and 1983–1987); post-2008 profitability irrelevant because Lease had already terminated |
| Whether use of a common meter prior to 2007 suffices to measure production for paying-quantities analysis | Langs: common metering made prior production estimates unreliable, so paying quantities not established | Antero/Weiss: common metering is accepted industry practice and allocations based on historical performance are reliable | Court rejected common-meter allocations as sufficiently reliable to establish paying quantities for the Well; individual metering required to quantify production for the habendum analysis |
| Whether the court improperly relied on evidence of Weiss’s motive (speculation in Utica shale) | Langs: motive evidence is incidental and does not control outcome; facts show nonpaying production | Antero: court improperly inferred bad faith from Weiss’s financial motive to retain the Lease | Court said motive reference was harmless; dispositive findings rest on production, profitability, metering, and royalty practices, not motive alone |
Key Cases Cited
- C.E. Morris Co. v. Foley Constr. Co., 376 N.E.2d 578 (Ohio 1978) (standard for reviewing weight of civil evidence)
- Seasons Coal Co., Inc. v. Cleveland, 461 N.E.2d 1273 (Ohio 1984) (trial court credibility findings entitled to deference)
- Blausey v. Stein, 400 N.E.2d 408 (Ohio 1980) (definition of "paying quantities" as yielding a small profit over operating expenses)
- Swallie v. Rousenberg, 942 N.E.2d 1109 (Ohio Ct. App.) (lease terminates by operation of law if secondary-term conditions not met)
- Wagner v. Smith, 456 N.E.2d 523 (Ohio Ct. App.) (courts have treated multi-year nonproduction as terminating a lease)