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Recording of Surrender Documents from Oil and Gas Natural Gas Lease Act

By Paul R. Yagelski, Esq.

What Can You Do if Your Oil and Gas Lease Has Terminated, Expired or Been Cancelled, But the Oil and Gas Company Has Not Filed of Record a Document Acknowledging the End of Your Lease?

You believe that your oil and gas lease has terminated, expired or been cancelled.  Simply put, you believe that your oil and gas lease is gone; it is no longer in effect.  The oil and gas company, however, has not acknowledged this.  In particular, it has not filed anything in the recorder of deeds office in the county where your oil and gas are located to give notice to the world that it no longer has an oil and gas lease covering your property.  What can you do?

One option is to file an action, a lawsuit, seeking a declaratory judgment, or a declaration from the court that the oil and gas company no longer has an oil and gas lease covering your property.  Another option is to follow the procedures under the Recording of Surrender Documents from Oil and Natural Gas Lease Act, 58 P.S. § 901, et seq.

The Recording of Surrender Documents from the Oil and Natural Gas Lease Act, 58 P.S. § 901, et seq., requires that not more than 30 days after the termination, expiration, or cancellation of an oil and natural gas lease, the lessee must deliver to the lessor a surrender document in recordable form.

The surrender document is to include: (1) a brief description of the land upon which the lease is based, including the municipality in which the land is situated; (2) a statement that the oil or natural gas lease is terminated, expired, or cancelled pursuant to the terms of the lease; (3) the date of the termination, expiration, or cancellation; (4) a statement indicating that the lessee surrenders all of the lessee’s rights, duties, and interest under the lease; and (5) the signature of the lessee.

If the lessee fails to provide a timely surrender document, the lessor may serve a notice on the lessee stating that: (i) the lease will be terminated, expired, or cancelled according to its terms, including the date of the termination, expiration, or cancellation; (ii) the lessee has a duty to provide a surrender document under Section 3 of the Act; (iii) the lessor has failed to receive a timely surrender document from the lessee; and (iv) if the surrendered document is not received by the date of termination, expiration, or cancellation, the lessor has a right to record an affidavit of termination, expiration, or cancellation of an oil or natural gas lease in the office of the recorder of deeds for the county in which the land is situated.

The notice is also to contain: the names and addresses of the lessor, if contained in the lease; the name and address of the person giving notice and a statement as to the person’s interest in the land or the relationship to the lessor; the municipality in which the land is located and a brief description of the land; if located in a unit, the name and description of the unit, if known to lessor; if there is a well on the land, the name or number of the well if known to the lessor; the date of the execution of the oil or natural gas lease; and the date of termination, expiration or cancellation of the oil or natural gas lease and the basis of the termination, expiration, or cancellation.

If after receiving a notice of termination, expiration, or cancellation, the lessee disputes that the oil or natural gas lease will be terminated, expired, or cancelled on the date stated in the notice, the lessee must, not more than 30 days after receipt of the notice, deliver a written challenge to the lessor.  If the lessor who has served a notice of termination, expiration, or cancellation fails to receive a timely challenge from the lessee, the lessor may record an affidavit of termination, expiration, or cancellation of the oil or natural gas lease in the office of the recorder of deeds in the county in which the land is situated.  The affidavit must contain: (1) the names and addresses of the lessor and lessee; (2) the municipality in which the land is located and a brief description of the land; (3) if located in a unit, the name and description of the unit, if known to lessor; (4) if there is a well on the land, the name or number of the well if known to the lessor; (5) the date of the execution of the oil or natural gas lease; (6) the date of termination, expiration, or cancellation of the oil or natural gas lease; (7) a statement that the lessor complied with its duty to serve a notice to the lessee and that the lessee failed to provide a timely challenge to the notice; and (8) a notarized signature of the lessor.

The recorder of deeds who receives an affidavit of termination, execution or cancellation that satisfies the provisions of the act must file the affidavit.

The Act, however, is not mandatory.  In other words, in order to have a declaration filed of record in the recorder of deeds office, you do not have to follow the procedures of the Act.  You still have the option of filing an action for declaratory relief to obtain an order for recording with the recorder of deeds office stating, for purposes of notice to the world, that the oil and gas company no longer has an oil and gas lease covering your property.

Which procedure should you follow?  If you file an action for declaratory relief, you are filing a lawsuit.  This can be lengthy and expensive.  If you proceed under the Act, and the lessee does not deliver a written challenge, you have the right to file an affidavit of termination, expiration or cancellation of the oil and gas lease with the recorder of deeds office in the county in which the land is situated.  Under normal circumstances, filing an affidavit will be faster and less expensive than filing an action for declaratory relief.

If you have questions regarding your oil and gas lease, call (412) 338-1124 or contact us online.