Court Considers Energy Firm's 'Good Faith' in Defining Habendum Clause

PITTSBURGH, Pa. - The Pennsylvania Supreme Court has held that the commonwealth's courts should consider a drilling company's good faith judgment in determining whether a well has produced "in paying quantities" sufficient to continue an operating lease after the primary term. T.W. Phillips Gas and Oil Co., et al. v. Jedlicka, No. 19 WAP 2009 (Pa. Sup. Ct., West. Dist.).

The high court's western district justices affirmed lower court rulings in favor of continuing an 80-year-old minerals lease despite evidence that drilling was not profitable in at least one of those years.

Ann Jedlicka challenged the continuation of a lease …