By Matthew L. Lambach
On January 27th, 2014, the Commonwealth Court of Pennsylvania overruled in part and sustained in part the preliminary objections of Seneca Resources Corporation (Seneca) to a complaint filed by the Pennsylvania Game Commission (Commission) [enhanced opinion available to lexis.com subscribers]. The Commission requested injunctive and declaratory relief against Seneca relative to the development of oil and gas under State Game Lands 39 in Venango County, Pennsylvania. The controversy stemmed from the interpretation of two severance deeds. A 1928 deed to the Commission excepted and reserved “all the oil and gas in or under the herein[-]described lands, with the right to operator for same by ordinary means now in use” (emphasis added). A 1932 deed excepted and reserved “all petroleum and oil and natural gas together with the right to prospect for, drill and bore for, produce and remove the same.” Seneca is the owner of the oil and gas rights that were excepted and reserved from the two deeds. Although the Commission conceded that Seneca acquired the oil and gas, it maintained that it owns the development rights to extract the oil and gas by “modern means” since horizontal drilling and hydrofracturing were not available practices at the time of the severance, and therefore, the parties could not have contemplated such practices as “ordinary means now in use.” With regard to the 1932 deed, the Court held that there were no limitations on the manner of extraction. With regard to the 1928 deed, the Court stated that the language was ambiguous with regard to whether ”modern” extraction methods were prohibited and that the litigation would proceed to determine that claim.
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