Permission not granted
The recent decision from Judge Washam in Wilson vs. Beck/Chesapeake (2013cv140) is an example of gas company overreaching and operating in disregard of the rights of landowners. The lease in that case required the gas company to secure the landowner’s permission before assigning the lease. After requesting and being denied permission, the gas companies proceeded to record the assignments in breach of the lease terms.
Mr. Wilson was forced to file the lawsuit to protect his interest, and the court voided the assignments.
This is not the only instance of lease assignment without permission of the landowner, as many other local leases had similar “consent clauses” in them that were disregarded by the drilling companies. Former Chesapeake CEO Aubrey McClendon was quoted in 2008 as saying: “We make more money ‘flipping’ leases than drilling…” The leases are generally heavily favorable to the drilling companies anyway. Using their economic leverage and landowners’ fear of litigation, the drilling companies often bully landowners into accepting unfair terms or unfair interpretations of lease terms, as in the consent clause.
The jury of public opinion is still out on whether the drilling boom will be a long-term benefit to local residents (and the nation), or whether only the drilling companies will be the primary beneficiaries. In the meantime, landowners should be wary and protect their rights.