WV Supreme Court: Non-Participating Rights Owner Can’t Stop Lease
Just yesterday we told you about an important court case that had gone to the West Virginia Supreme Court of Appeals (see WV Rights/Pooling Case May have Big Impact on Shale Industry). In brief, the case was appealed from a lower court where a judge found that a “non-participating” mineral rights owner, someone who owned a quarter of the rights for a property in Marshall County, had the power to object and stop a lease of the property for oil and gas drilling. We thought it strange that the lower court judge would make such a decision, which threatens to up-end thousands of leases in WV that are similar. Little did we know that as we were publishing that story, the WV Supreme Court was rendering its decision. All five justices voted to overturn the lower court ruling and preserve sanity for leases in the Mountain State…Continue reading
A court case from Marshall County, WV decided in April 2016 is heading to the WV Supreme Court of Appeals (the state’s highest court). The stakes in Contraguerro v Gastar Exploration could not be higher for the Marcellus industry in the Mountain State. In brief, 70 years ago a 106-acre track of property was sold. The sellers retained a one-quarter “non-participating interest” in the oil and gas rights. That means the buyer got to decide when/if to lease the property for drilling, and if so, has the right to negotiate the price, etc. The remaining one-quarter non-participating interest holders would get royalties, but nothing else. Fast forward several generations and the heirs of the original sellers didn’t even know they owned an interest in the land until contacted by Gastar, which needed a signature in order to send them checks for royalties. The heirs decided to sue to stop the deal, either in a bid to negotiate a better deal or perhaps because they don’t like fossil fuels. Who knows? The case went to the Circuit Court of Marshall County and a judge there found in favor of the heirs–giving them, and by extension any minority rights owner, the power to stop lease deals. An unmitigated mess that threatens many lease deals because divided rights ownership is common in WV. Perhaps this case was part of the motivation to pass a new law this year addressing “co-tenancy” (see 
What a difference a few months, or even a week, can make. In August, Gastar Exploration, which owns roughly 60,000 acres of leases in the Marcellus/Utica mostly in Marshall and Wetzel counties in West Virginia, was talking up their drilling program in the northeast (see 
Short selling of Gastar Exploration stock has increased–certainly not a positive sign for the company. From time to time we bring you a story, like this one, that on the surface appears to be of interest only for investors rather than landowners or companies that sell goods and services to the shale industry (supply chain). MDN does have a number of investors who subscribe, but if you think stories like this one are only for investors, you are mistaken. Landowners, supply chain companies, even those in elected government are all affected and should pay attention. Short selling is when investors buy stock on a gamble that the stock will decrease–not increase–in price. When a company’s stock decreases in price, the company has a lower market capitalization and it makes it (a) harder to borrow money, and (b) if they can borrow the money, they have to do it at a higher interest rate, making business activities less profitable. If we cut out all of the connections from point A to point B and just boil it all down: when a driller’s stock price decreases significantly, it means less drilling and financial instability for the company, which does not benefit landowners and the supply chain companies that want to sell goods and services to that driller. In other words, it means less royalties, less business opportunities, less jobs and less economic impact. That’s why we report stories like the following…
The Independent Petroleum Association of American (IPAA) held their San Francisco Oil and Gas Investment Symposium on Monday. Among the speakers was J. Russell Porter, president and CEO of Utica Shale driller Gastar Exploration. Porter gave his thoughts on the Marcellus/Utica, wet and dry gas, and what’s ahead for his company…
Gastar Exploration, which concentrates its shale drilling program in Oklahoma and West Virginia, earlier this year announced they would not drill any new wells in the Marcellus/Utica until commodity prices in Appalachia improve (see 
A slide we spotted in a Gastar presentation got us to thinking: What are the top 10 Utica Shale wells? Who drilled them? And how much was their initial production (IP) rates? So we went searching and came up with the handy list below. This list is current as of August 2015. A few caveats: First, some of the wells in the list produced not only methane (“dry gas”) but also oil, condensate and natural gas liquids–i.e. other hydrocarbons. However, the numbers in the list below are for the methane/dry gas only portion of what the well flowed during an initial period of time (typically the first 24 hours). So keep that in mind. These are not necessary dry gas only wells, but the numbers are for the dry gas portion coming from the well. Second, we scoured the MDN archives and other sources to compile the list. If you believe we’ve overlooked a well–let us know! We would be happy to correct the list. As it is, we believe it to be accurate. It tells a pretty incredible story. Below the Top 10 list is another list–of MDN stories covering the details for the wells in the Top 10 list…