West Virginia -Oil & Gas

摘要

The West Virginia Supreme Court of Appeals has reversed a trial court decision that an oil and gas lessee had waived its right to refer to arbitration a dispute with its lessors over the deduction of post-production costs under an arbitration clause in an oil and gas lease. See Chevron U.S.A., Inc. v. Bonar, No. 16-1213,2018 WL 871567(W. Va. Feb. 14,2018) (unpublished), rev'g No. 16-C-153, 2016 WL 10807068 (W. Va. Cir. Ct. Dec. 11, 2016). In Chevron, the lessors granted an oil and gas lease in 2010 and claimed that the lessee had never deducted post-production costs in the calculation of royalties until 2016 when the lessee started to do so. Id. at *1. The lease contained an arbitration clause that provided that "[a]ny question concerning this lease" shall be arbitrated. Id. The lessors filed a declaratory judgment action to determine whether the lessee had the right to deduct these costs and the lessee moved to compel arbitration of the issue. Id. The lessors argued that the lessee had waived its right to compel arbitration because when it decided to start deducting post-production costs it had unilaterally decided the "question" about post-production deductions. Id. at *2. The trial court agreed with the lessors and refused to compel arbitration; the lessee appealed. Id.