Lease • Options

Hafer v. Anadarko E&P Co. LP, PICS Case No. 14-0118 (C.P. Lycoming Jan. 27, 2014) Gray, J. (2 pages).

In a matter arising out of the interpretation of an oil and gas lease, the court, pursuant to Pa.R.App.P. 1925 (a), requested the Superior Court to affirm its ruling.

The court had entered summary judgment for the defendants after finding that the oil and gas lease did not require a payment of $2,500 per acre on or by Aug. 13, 2011. Plaintiffs alleged that the court erred because the promise at issue, to exercise the extension option, did not alter the “integrated” lease and that the defendant, by its predecessor, had admitted the intent to include the term. They also alleged that if the parol evidence rule were to apply, the pleadings implicitly raised the fraud, accident or mistake exception to the rule.

The court held that mandating the exercise of the extension “option” would alter the lease. It would remove the option to pay to extend the term of the lease and make it mandatory to pay and extend the lease. That would impose a requirement to pay $67,775 for an extension even if the defendants did not want to extend the lease and provide a five year difference as to when the payment must be made. Such a payment significantly alters the lease, especially in light of ¶17 of the lease that provides that the lease itself contains all of the agreements and understandings between the parties.

Plaintiffs filed a complaint in assumpsit which contained no separate counts and no mention of fraud, accident or mistake. Thus, the plaintiffs did not raise or preserve those issues and they have been waived.

The court requested the Superior Court to affirm its ruling granting summary judgment for the defendant.