A common oil and gas lease dispute in the Appalachian region involves challenges by lessors to a lessee’s extension of the primary term of oil and gas leases pursuant to an express extension provision in the leases.
Pursuant to contractual options to extend, lessees are able to lengthen the primary term of the leases, to provide an additional period of time to develop the oil and gas in the property subject to the leases. The exercise of an option to extend, however, has the practical effect of precluding the lessors from negotiating new terms to the lease or entering into new leases with different lessees. As a result, lessors have filed lawsuits to void the extensions on a variety of legal grounds, including challenging the extension language, the timing of the extension, the manner and amount of payment, and the correct party to receive the payment.
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