WV Supreme Court to Rehear EQT Post Production Royalty Case, Maybe
More twists and turns to report with respect to an issue we previously reported with the potential to impact every mineral rights owner and driller in West Virginia. In December MDN reported on the huge West Virginia Supreme Court decision against driller EQT that disallows EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties). The justices, in their ruling, said that drillers can “not deduct from that (royalty) amount any expenses that have been incurred in gathering, transporting or treating the oil or gas after it has been initially extracted, any sums attributable to a loss or beneficial use of volume beyond that initially measured or any other costs that may be characterized as post-production.” A really big deal. Then in February, with a brand new justice on the bench, the WV Supreme Court agreed to rehear the case after an appeal filed by EQT–a rare and unusual step (see EQT Catches Big Break in WV Supreme Court re Royalty Deductions). A member of the West Virginians for Property Rights group said members are “pretty nervous about this.” Those who already won the case say the high court’s decision to rehear is tantamount to playing the fourth quarter of a playoff game all over again–fundamentally unfair. The court will rehear the case next Tuesday–IF they don’t grant a motion to dismiss the rehearing. The mineral rights owners involved filed the motion saying the newest justice who just came on the bench in January should not have voted to rehear a case she previously didn’t hear…
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Northeast Natural Energy (NNE) is a midsize driller headquartered in Morgantown, WV. NNE owns 49,000 net acres of leases “in the heart of the Marcellus Fairway,” and operates 27 Marcellus wells and over 100 conventional oil and gas wells. In 2011 NNE fought Morgantown for the right to drill a couple of wells just outside the city limits (
As previously reported, liberal Pennsylvania House of Representatives Democrat Pam Synder has now introduced a bill (HB 1283, copy below) to “clear up” what the state Public Utility Commission (PUC) is a loophole in the Act 13 law that may allow some drillers to avoid paying impact fees (i.e. drilling taxes) on some Marcellus Shale wells (see 
The Pennsylvania Dept. of Environmental Protection has just fined driller Seneca Resources $325,000 for a series of violations that occurred between 2013 and 2015. It seems in moving dirt around when building drill pads, Seneca caused erosion to occur. They also spilled ~100 barrels of crude oil in one location, and ~500 barrels of wastewater at another location. The violations happened in Forest, McKean, and Elk Counties. Here’s the notice issued by the PA DEP…
Last October EQT announced a deal to buy Trans Energy, Inc., a public pure-play driller in the Marcellus in West Virginia, which will become a wholly-owned subsidiary of EQT (see 
In May 2016, MDN told you that the Penn Township (in Westmoreland County, PA) zoning board voted to refuse to grant a permit to Apex Energy to build a DEP-permitted well pad in the town (see 
Sheesh, it seems like we just got done yesterday with reporting quarterly earnings/operations updates. And here we are again. Like the old Dunkin Donuts commercial where the guy who makes the donuts runs into himself coming and going making the donuts. First out of the gate in the Marcellus/Utica is Gulfport Energy, reporting their first quarter 2017 numbers. And the numbers for Gulfport look pretty darned good–at least operationally. Gulfport didn’t report their financials yesterday. On the operations front, production zoomed up 23% to 849.6 million cubic feet equivalent (MMcfe) per day in 1Q17 vs 1Q16–the vast majority of which came from the Utica Shale. The other interesting news is that Gulfport realized an average sale price of $3.98 per thousand cubic feet (Mcf) for the gas they sold. Below is the update along with a recent PowerPoint slide deck with some great slides…
Yeterday EQT Corp., one of the biggest drillers in the Marcellus/Utica, held its annual shareholder meeting in Pittsburgh. The crowd that turned up for the meeting wasn’t much of a crowd. There were more security guards on hand than non-board members in the audience. There were no shareholder resolutions on the table, and therefore no apparent interest. Unlike previous years when (at one meeting) security had to clear the room when it got rowdy. EQT Chairman David Porges took about 10 minutes to address those assembled, followed by newly elevated CEO Steve Schlotterbeck. Perhaps the biggest insight we gained in reading about the meeting is learning about EQT’s philosophy when it comes to investing in new drilling. According to Schlotterbeck, “trying to time the market [with capex spending] is a fool’s game.” And so the company is committed to making a “steady” investment in new drilling. They’ll spend $1.5 billion this year to drill 207 new wells…
Cabot Oil & Gas had the highest production in the county with the highest amount of production (Susquehanna County) in 2016 in Pennsylvania. Cabot had the second highest amount of production (coming from that single county) in PA for all of 2016, not far behind Chesapeake Energy. Last year using their “Gen 4” completions in the Marcellus, Cabot increased estimated ultimate recovery (EUR) rates from 3.8 billion cubic feet (Bcf) per 1,000 feet of lateral well to 4.4 Bcf (see 
In 2012 Pennsylvania under then Gov. Tom Corbett passed the Act 13 law, a major revision to PA’s oil and gas laws. Part of Act 13 would have established a uniform set of zoning ordinances, replacing and superseding any such local ordinances. But then seven selfish towns got together and sued to the state to retain the right of imposing their own zoning ordinances for some oil and gas development. The lawsuit was a years-long process with the case ending up at the PA Supreme Court–where the seven selfish towns won the right to impose their own ordinances on o&g development–up to a point (see 
Did you know that the second largest U.S. natural gas exploration and production (E&P) company as measured by how much natural gas it produces is Southwestern Energy? Chesapeake Energy is #1, and Southwestern is #2. Who woulda thunk? And did you know that just five years ago Southwestern’s name was synonymous not with the Marcellus/Utica where they operate today, but with the Fayetteville Shale play in Arkansas? Over the past five years Southwestern has refocused its drilling efforts here in the Marcellus/Utica. Like most drillers across the country, 2016 was a rocky year for Southwestern. They idled their rigs during the first part of the year and ended up losing money (see 
“You never let a serious crisis go to waste.” That sentiment was famously mouthed by Rahm Emaneul, first chief of staff during Barack Hussein Obama’s reign of terror, later (and still) the highly unpopular mayor of Chicago. That philosophy also applies to other leftists, like anti-driller Ray Kemble, who lives in Dimock Township, PA. Kemble has been trying to shake down Cabot Oil & Gas for big bucks for years. Kemble, whose property has multiple junk cars on it, claims after Cabot began drilling (in 2008) his water well began producing black water. He blamed Cabot–even though junkyards are notorious for leaking nasty chemicals. Years ago Kemble, who has been seen at just about every anti-fracking rally from here to Timbuktu carrying a little brown jug of supposedly tainted well water, settled with Cabot. But a couple of Kemble’s neighbors did not settle. They sued and, in a sham trial, won a jury award of $4.2 million (see 
It seems the controversy in Pennsylvania over the Snyder Brothers’ strippers isn’t going to end any time soon. No, not those kinds of strippers, silly! We’re talking about stripper wells, which are defined in PA as wells that produce less than 90 thousand cubic feet (Mcf) for a one month period. Stripper wells are vertical wells that don’t produce nearly as much gas as horizontal shale wells. In 2012 PA passed the Act 13 law that includes a fee on wells targeting shale layers, including the Marcellus. And here’s where it gets a little complicated. Snyder Brothers drills mostly conventional (vertical only) wells. In 2011-2012 they drilled 45 vertical-only wells, but targeting the Marcellus (all of them fracked). Initially those wells produced more than 90 Mcf/month, but by December of the year they were drilled, they produced less than 90 Mcf. The way the 2012 Act 13 law is written, if a well produces less than 90 Mcf/month for “any” month it is considered a stripper well and exempt from paying the impact fee. The state’s Public Utility Commission (PUC) assessed the fee anyway because for 11 months the wells produced more than 90 Mcf. The argument back and forth is whether the intent was “any single month” or not as the trigger to exempt a well from paying the fee. Snyder Brothers went to court and in March, they won, exempting those wells from impact fees (see 
Last June MDN shared with you the news that Munroe Falls (Summit County), OH had filed yet another frivolous lawsuit against Beck Energy to prevent drilling–after already losing a similar case before the Ohio Supreme Court (see