Landowners in Westmoreland County, PA Reach Settlement with Rex Energy for Contract Breach & Non-Payment

A group of 230 landowners in Westmoreland County, PA have settled a longstanding dispute with Marcellus drilling company Rex Energy. Landowners say they were approached by Rex representatives in 2007 and 2008 to sign leases, and they did sign, but then never received the promised payments. Lawyers charged that Rex was signing as many people as possible in a bid to make it look as though they controlled a significant amount of land in the area to impress investors. Rex claims they never countersigned some leases and therefore did not owe money for those leases.

After two years of litigation, an out-of-court settlement has finally been reached.

A Westmoreland judge has signed off on a $14 million out-of-court settlement that ends a two-year dispute over Marcellus shale drilling rights between 230 property owners and State College-based Rex Energy Inc.

The settlement was signed Friday by Judge Gary Caruso and formally resolved a class action lawsuit filed against Rex by property owners in rural areas of Cook, Derry, Fairfield, Ligonier, Mt. Pleasant and Unity townships.

The property owners filed the civil suit in 2009, alleging that the company reneged on 137 drilling contracts the owners claimed they had finalized in 2008. The lawsuit alleged the energy company did not honor promises of bonus and rental payments on the drilling leases. Rex countered it chose not to finalize the contracts after landowners signed them and therefore did not owe any payments.

The disputes involve oil and gas drilling rights on about 7,200 acres, or almost 11 square miles, according to court documents.

"We feel this is a pretty good settlement. Basically, the property owners get what they were originally seeking," said Scottdale attorney James S. Lederach, who was co-counsel for many of the property owners involved in the lawsuit.

The settlement permits landowners who had not signed leases with other companies and still wished to sign with Rex to do so at $2,500 per acre. The new, five-year leases give landowners a 15 percent royalty on any gas produced.*

Rex denies any wrongdoing and maintains their conduct was lawful.

*Pittsburgh Tribune-Review (Jul 19, 2011) – Rex Energy to pay $14 million in Marcellus shale rights settlement