Dan Haley, President & CEO, responds to Colorado Supreme Court Ruling
“This unanimous ruling is important for oil and natural gas operators in Colorado because it creates much-needed certainty by adopting a reasonable understanding of mineral leases, and it supports responsible production of our natural resources in this state.
The Colorado Supreme Court rightly rejected Boulder County’s attempt to terminate valid contracts, specifically, oil and gas leases the county purchased as part of its crusade against subsurface energy development. The Court recognized that Boulder County’s argument regarding the meaning of “production” ignores well-established canons of contract construction and thwarts the intentions of the contracting parties.
Boulder County’s position is wrong as a matter of law and bad policy. The county’s “actual extraction” position forces operators to conduct unnecessary and environmentally wasteful reworking or new drilling operations, disrespects lessees’ reasonably held expectations, and compels premature lease termination economically harming both lessor and lessee.
The Colorado Supreme Court saw through Boulder County’s political gamesmanship and upheld the validity of the contracts. In reaching its decision, the court appropriately re-affirmed the state’s law that oil and gas leases, like all other contracts, are construed under their own terms and that the general purpose of an oil and gas lease is to promote productivity and development.”
