Submitted September 26, 2017
from the Court of Appeals for Washington County, No. 16CA9,
Scullin & Cunning, L.L.C., and Sean R. Scullin, for
Geiger, Teeple, Robinson & McElwee, P.L.L.C., and Bruce
Smith, for appellees.
Porter, Wright, Morris & Arthur, L.L.P., Christopher J.
Baronzzi, L. Bradfield Hughes, and Ryan T. Steele, urging
affirmance for amicus curiae American Petroleum Institute.
Sater, Seymour & Pease, L.L.P., Timothy B. McGranor, and
Gregory D. Russell, urging affirmance for amici curiae Ohio
Oil and Gas Association and Southeastern Ohio Oil and Gas
1} Appellants, Linda Griffith Alford, George Alford
Jr., Bershelle Alford Giambattista, Joseph Alford, Judith
Hanlon Farnsworth, Donna R. Hanlon, and James C. Eutzler
(collectively, the "Landowners"), sued appellees,
Collins-McGregor Operating Company and Winston Oil Company
(collectively, "Collins-McGregor"), seeking the
partial termination of an oil and gas lease. The trial court
granted Collins-McGregor's motion to dismiss for failure
to state a claim and the Fourth District Court of Appeals
2} This appeal requires us to consider whether the
Landowners' claim for breach of the implied covenant to
explore further is cognizable in Ohio, and if so, the
availability of partial horizontal forfeiture as a remedy for
such a breach. We conclude that Ohio does not recognize an
implied covenant to explore further separate and apart from
the implied covenant of reasonable development. We therefore
need not reach the issue of remedy.
3} The Landowners hold interests in approximately 74
acres of land in Washington County, not far from the Ohio
River. The land is subject to an oil and gas lease entered
into on September 16, 1980, between the owners of the
property at that time and Collins-McGregor. "[T]he sole
and only purpose" of the lease is to permit "mining
and operating for oil and gas and laying pipe lines, and
building tanks, powers, stations, and structures thereon, to
produce, save and take care of said products." In return
for permission to mine the land, Collins-McGregor committed
to make royalty payments based on the amount of gas produced
from the land and to deliver a portion of the oil produced
from the land to the lessors.
4} The lease provides that it "shall remain in
force for a term of One (1) years from [the effective] date,
and as long thereafter as oil or gas, or either of them, is
produced from said land by the lessee." It is silent as
to certain aspects of drilling and production. For example,
the lease does not require production from any specific
number of wells or from any particular depth. The lease also
does not disclaim the application of any implied covenants.
5} A well was drilled in 1981 and has produced oil
and gas in paying quantities since then from a formation
called the Gordon Sand. To date there has not been any
production from the land at any depths below the Gordon Sand.
The Landowners contend, however, that exploration and
production of oil and gas have been occurring near their
property from below the Gordon Sand-specifically, from the
Marcellus and Utica formations-but Collins-McGregor has
failed to explore whether ...