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August 1, 2013

New PA Pooling Law to be Tested in Court

In a lawsuit filed July 22, 2013, EQT Production Company (EQT) sued dozens of its Pennsylvania lessors residing in Allegheny County.  In addition to allegations that its lessors have improperly impeded the company from accessing their property to perform seismic testing, EQT’s Complaint asserts that the named lessors have improperly asserted that EQT is prohibited from pooling contiguous leases. The Complaint may be the first of its kind alleging the right to pool leases under recent amendments to the Oil and Gas Lease Act of 1979 (Senate Bill 259) which explicitly allows operators to pool contiguous leases using horizontal drilling unless prohibited by a lease.  (See our prior blog entry on the legislation at http://bit.ly/18TLjFP).  According to the Complaint,
“Pursuant to Pennsylvania law, where an operator has the right to develop multiple contiguous oil and gas leases, it may jointly develop multiple contiguous oil and gas leases by horizontal drilling unless the same is expressly prohibited by the terms of the lease.”
The action seeks declaratory judgment that it can access the subject properties and further that it can develop the properties using horizontal drilling.  It also seeks preliminary and permanent injunctive relief, allowing EQT to access the properties to conduct seismic testing. This case will be one to watch.  

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