Pa. Appellate Court Affirms Lease Termination for Lack of Production

HARRISBURG, Pa. — Pennsylvania’s intermediate appellate court has affirmed an order terminating two gas leases for lack of production despite a subsequent negotiated agreement extending the leases in return for a flat rental fee. Heasley v. KSM Energy Inc., No. 754 WDA 2011 (Pa. Super. Ct.).

The Superior Court held July 27 that once production stopped, the leases granted in 1942 could only continue on a month-to-month basis, and terminated once plaintiff Larry D. Heasley refused to accept payment.

At issue were leases for 56-acre and 55-acre parcels now owned by Heasley that were granted to defendant KSM Energy Inc. …