Delay Rental Payments

By Paul R. Yagelski, Esquire
Rothman Gordon
Pittsburgh, Pennsylvania

Can the Primary Term of an Oil and Gas Lease Be Extended by Delay Rental Payments? Is Hite V. Falcon Partners Still Viable?

In Hite v. Falcon Partners, 13 A.3d 942 (Pa. Super. 2011), the Superior Court held that delay rental payments alone do not extend the primary term of an oil and gas lease if drilling has not yet commenced. Such an arrangement would be inconsistent with established rulings grounded in public policy that a lessee should not be able to postpone development indefinitely by payment of delay rentals. Id. at 948 (citing Jacobs v. CNG Transmissions Corp., 332 F. Supp. 2d 759, 790 (Pa. E.D. 2004)). Recently, the Superior Court in Wilson v. Snyder Brothers Inc., 232 A.3d 872 (Pa. Super. 2020) decided a case where delay rental payments were paid beyond the primary term of an oil and gas lease and the primary term was extended. As such, is Hite still good law?