When Leases Expire: Navigating Holdover, Extension, And Renewal Clauses In West Virginia

In this article, you will discover:

• How operations clauses impact land use after lease expiration in West Virginia
• Whether oil or gas leases can be extended without a landowner’s consent in West Virginia
• Terms to include in an oil or gas lease extension clause in West Virginia

What Should West Virginia Landowners Do When Their Oil Or Gas Lease Expires?

There are a few different ways a lease can expire. Suppose an oil and gas company takes a lease with a primary term of five years, and there’s no development you’re aware of. You should request a release from the company, which they will hopefully provide. That release can then be recorded in the courthouse and serve as notice to anyone that the lease is terminated.

The other way a lease expires is due to non-production or non-development. That means no more oil and gas is being produced, insufficient amounts of oil and gas are being produced or there’s a gap in the company’s operations aimed toward the property.

In those cases, it could be more challenging to get the gas company to agree to the release, but you can ask. If it’s not forthcoming, then it’s probably time to consult with a lawyer about whether the lease has actually been terminated. If so, you can file a declaratory judgment action to prove that the lease has terminated.

How Do Operations Clauses Impact Land Use After Lease Expiration In West Virginia?

Typically, there is a provision in the lease that states that even if production ceases for some time, the lease continues, provided there is only a break of a specified duration or less. Within that specified break period, the company must resume operations to produce additional oil and gas. The difficulty is that the company will take a very expansive view of the activities that would revive the lease.

The only activities that would revive the lease are those directed at that specific property, as opposed to an overall drilling program. The key is that once your lease expires or production stops, you need to hold the company accountable and request a release.

If the company is not interested in releasing you from the lease, ask for a specific list of activities they have done that are holding you to the lease, and consider consulting a lawyer. In these cases, they’re often trying to take advantage of you by holding the lease so they don’t have to pay an additional bonus or enhance the available royalty clause.

Attorney Edmund Wagoner is a skilled lawyer based in Morgantown and Bridgeport, West Virginia, who has helped countless clients just like you navigate the complexities of oil and gas law. With years of experience, he is prepared to assist you with negotiating lease extensions, renewals and terminations so your oil and gas lease rights are protected.

Still have questions? Ready to get started? Contact Hansberry & Wagoner, PLLC, Attorneys at Law, today to schedule an initial consultation.

Can An Oil Or Gas Lease Be Extended Without The Landowner’s Consent In West Virginia?

A lease can be extended indefinitely, as long as production continues or the lease terms are met. To extend the primary term, a company must pay a specified sum, provided that the original lease includes a provision for such an extension.

If you request no-extension leases or if you’re going to agree to an extension, the consideration should increase from what you originally were paid. That protects you in the event the market value increases.

What Terms Should Be Included In An Oil And Gas Lease Extension Clause In West Virginia?

You need an increase in the upfront consideration. Typically, this should be 150% or 200% of the initial payment. Otherwise, if the primary term ends and market conditions are favorable for the company relative to the original payment terms, they will likely extend it.

If the company reaches the end of the primary term and market conditions are not favorable to them, they will attempt to renegotiate with you for a lower payment. Factoring in a price increase will significantly benefit you in the event that market conditions improve and the market supports a higher bonus.

Can You Renegotiate The Lease Upon Renewal?

If the renewal is automatic, you cannot renegotiate your lease. Once the lessee pays you the money, the terms are the same. That’s why it’s essential to either have a lease without an automatic renewal clause or, at the very least, ensure you receive additional money upfront for the renewal.

Why Should You Consult Legal Counsel Before Allowing An Extension To An Oil And Gas Lease In West Virginia?

Suppose the oil and gas company requests an amendment or modification of a lease, which in some respects can be considered an extension. They’re going to claim the reason for that is to obtain the right to pool or something along those lines. It almost always includes language that ratifies the prior lease and can trigger additional time for them.

If you’re asked to sign anything that is not an original lease, make sure the company has the right to that extension and that you don’t have additional bargaining power you’re unaware of. The lease may have expired, and they can’t obtain an extension.

Still Have Questions? Ready To Get Started?

For more information on lease expiration in West Virginia, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling ! (304) 470-2056 (Morgantown) | (304) 470-2056 (Bridgeport) today.