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Haynesville Lease Cancellation Appeal Favors QEP Resources

by Kenneth E. DuBose on July 20, 2011

QEP Resources successfully defended the first “failure to develop” case in the Haynesville Shale. The issue here is the landowner filed suit just a year into the Haynesville Shale boom. When wells costs $10 million or more, it’s hard to believe you will always get a well within a year. Being patient is very difficult at times, but it seems like there was no foul here. Know that it might take several years to get a well on your property. Especially if you are held by production and the operators has spent significant amounts of money to lease minerals around you.  The operator will be pressed to drill wells on the newly leased property before getting to your minerals.

“The action was the first ‘failure to develop’ case arising out of the recently discovered Haynesville Shale natural gas play in northwest Louisiana.”"Specifically, the mineral lessors filed suit less than a year after discovery of the play seeking cancellation of a longstanding mineral lease on the ground that QEP had failed to explore and develop the property as a reasonably prudent operator by failing to commence a Haynesville Shale well. The trial court granted lease cancellation, finding essentially that the Haynesville Shale was so special and prolific that QEP should have begun drilling by the date of trial.”

“However, the Second Circuit reversed the lease cancellation, holding that the evidence fell “far short” of establishing that QEP had breached its duty as a reasonably prudent operator.”

Read the full news release at PRNewswire.com

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