Oil and gas leases very frequently contain a provision about how disputes will be resolved.  Newer leases almost always contain an arbitration clause.

Just what is arbitration and how does it differ from court proceedings?  Generally speaking, both court proceedings and arbitration proceedings are adversarial processes in which a third party (or parties, in the case of a jury trial) is asked to settle a dispute.   In both court and arbitration, an award of some kind will be issued to the prevailing party.  Courts issue final judgments against parties that usually require them to take some action (i.e. pay damages).  These judgments carry the full weight of the law and must be followed by the parties. …

Before the recent interest in eastern Ohio’s utica shale, gas leases were written a little differently.  One big difference between the leases of old and the new leases has to do with how the Lessor (the landowner) and Lessee (the energy company) settle disputes.  Where old leases didn’t quite restrict the methods by which the parties could settle their disputes, new leases can include some pretty strict language that make landowners follow specific procedures for addressing their concerns.

Arbitration clauses have become common in oil and gas leases here in Ohio.  The leases that include such language usually require the landowner to have their concerns addressed by a neutral arbitrator rather than a judge or jury.…

Now that much of the new leasing has slowed down, many of our clients are being asked to sign a lease amendment.  These people are already under a lease from many years ago.  The trouble with an old lease is that they were written to accommodate shallower wells, as well as the way the oil and gas business operated thirty some years ago.  The environment has changed dramatically since then, and it shouldn’t be surprising that the language in leases has, too.   Energy companies therefore need to modify the terms of the old lease to allow them to economically drill new Utica wells.…