Revisiting the PA AG Royalty Case Against Chesapeake Energy

It’s time to revisit a long-festering royalty lawsuit against Chesapeake Energy and Anadarko Petroleum filed by the Pennsylvania Attorney General’s office. The case has been through several layers of courts and finally ended up at the PA Supreme Court last fall (see PA Supremes to Consider Long-Running Chesapeake Royalty Lawsuit). The lawsuit hinges on the answer to this question: Are landowners/royalty owners the buyers or the sellers in cases of royalty leases?
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OH Landowners Sue Rice, Ascent, XTO, Gulfport for Drilling Too Deep

Do you remember the child’s game called “Simon Says”? That’s what we were thinking when we read about a lawsuit in Ohio by landowners against a group of shale drillers. The lawsuit, initiated by several landowners in Belmont County, OH, claims the drillers drilled too deep–into the Point Pleasant rock layer–when the leases signed only mention the Utica rock layer. The lawsuit, which is seeking class action status, claims “unjust enrichment” by the drillers.
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Northeast Natural Energy Settles $7.9M Lawsuit with PA Landowners

Last November MDN told you that Northeast Natural Energy, a small-to-midsized driller headquartered in Morgantown, WV, had lost an arbitration battle and owed a group of landowners in central Pennsylvania $7.9 million in payments for NOT drilling on their land (see Fed Judge: Northeast Natural Energy Owes $7.9M to PA Landowners). NNE continued to fight the arbitrated settlement–until Monday. Apparently both sides have agreed on a new settlement.
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Chesapeake Bankruptcy Puts PA Landowner Royalty Lawsuits on Hold

On Sunday a week ago (June 28) Chesapeake Energy filed for bankruptcy (see Chesapeake Files for Bankruptcy – Debtors to Take Ownership). As part of the filing, the company asked the bankruptcy court to allow it to break existing, legal, enforceable contracts with pipeline companies (see Chesapeake Asks Court to Break Pipeline Contracts, Including M-U). We’re just now learning the company’s filing also puts on hold lawsuits brought by landowners against it over Chessy’s royalty shenanigans. The cases on hold include a case brought by the Pennsylvania Attorney General’s office argued before the PA Supreme Court in May (see PA Supremes Hear Oral Arguments in Can of Worms Royalty Lawsuit).
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Ohio State University Offering Shale Leasing, DMA Webinars in June

Although many landowners in the Marcellus/Utica (at lease those who are interested) have already signed leases to allow shale drilling on and under their property, not all have. And sometimes leases expire with no drilling. Plus, not all landowners have leases that allow pipelines and other development (like solar projects). The Ohio State University Extension is offering several webinars at the end of June of interest to all landowners general, and Ohio landowners in particular, with an interest in leasing and mineral rights.
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Peregrine Energy Partners Buys More Royalty Rights in SWPA & WV

Peregrine Energy Partners, headquartered in Dallas, Texas, continues a program to buy royalty rights in the Marcellus/Utica. In January 2019 we told you about Peregrine’s purchase of rights from undisclosed sellers in southwest PA (see Peregrine Energy Buys Royalty Rights in Greene County, PA). In March of this year, Peregrine purchased more rights, in Fayette County, PA. Yesterday the company announced they’ve purchased yet another round of rights–in Washington, PA and two counties in WV.
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PA Supremes Hear Oral Arguments in Can of Worms Royalty Lawsuit

On Wednesday the Pennsylvania Supreme Court heard oral arguments in a case challenging whether or not the state Attorney General’s office has the right to use a consumer protection law to prosecute companies like Chesapeake Energy and Anadarko over royalty payment shenanigans. The law the AG’s office wants to use has never been used that way before. According to legal experts, drillers are very concerned if the AG’s office wins this one, as we reported last November (see Chesapeake Royalty Lawsuit at PA Supreme Court – Can of Worms?).
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OH Landowner Loses Post-Production Royalty Case to Chesapeake

Chesapeake Energy keeps winning Ohio royalty lawsuits in the U.S. Court of Appeals for the Sixth Circuit. In March the company beat a lawsuit by a group of Ohio landowners who claimed Chessy had cheated them out of a collective $30 million in royalties (see Chesapeake Energy & Total Beat Class Action Royalty Lawsuit in OH). In April Chesapeake won a second lawsuit that claimed the company had fraudulently concealed information on royalty statements dating back to 1993 (see Chesapeake Beats Another OH Royalty Lawsuit in Federal Court). And now, a third royalty lawsuit has gone Chessy’s way too. Strike three for landowners.
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Judge OKs Class Action Royalty Lawsuit Against 3 NEPA Drillers

On October 3, 2016, landowner James Slamon filed a lawsuit against Carrizo and Reliance Industries in the Susquehanna County (PA) Court of Common Pleas. Slamon alleged Carrizo and Reliance underpaid royalties on oil and gas leases to him and a class of other landowners “exceeding one hundred members.” The drillers got the case moved to federal court on October 31, 2016. Fast forward to this past Monday and a judge in the federal court case has certified (in part) the class-action request. The lawsuit will now move forward.
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LOLA Energy II Says 26 EQT Shale Wells Trespass on Their Leases

Last July MDN broke the news that LOLA Energy had filed a lawsuit in Greene County, PA against EQT for allegedly drilling shale wells under property EQT formerly leased, but property for which the leases had lapsed and were subsequently scooped up by LOLA Energy II (see LOLA Energy Sues EQT for Trespass, Drilling Wells Under LOLA Land). We also broke the news about a second LOLA lawsuit against EQT for the same thing (see LOLA Energy Files 2nd Lawsuit Against EQT for Trespass in SWPA). LOLA is now “ramping up” litigation having filed (or in the process of filing) seven lawsuits. LOLA claims EQT has infringed on 26 of its leases.
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Chesapeake Beats Another OH Royalty Lawsuit in Federal Court

A few weeks back MDN told you Chesapeake Energy had beaten a lawsuit by a group of Ohio landowners who claimed Chessy had cheated them out of a collective $30 million in royalties (see Chesapeake Energy & Total Beat Class Action Royalty Lawsuit in OH). A second lawsuit by a different set of Ohio landowners in the same court was recently decided. This second lawsuit has gone in Chesapeake’s favor as well. The second lawsuit claimed Chesapeake had fraudulently concealed information on royalty statements dating back to 1993 (for conventional wells). The court found otherwise. Strike two for Ohio landowners.
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Chesapeake Energy & Total Beat Class Action Royalty Lawsuit in OH

In 2015 a group of Ohio landowners did what landowners had previously done in Pennsylvania, Texas and elsewhere–they filed a proposed class-action lawsuit against Chesapeake Energy claiming Chessy had screwed them and about 1,000 other Ohio landowners out of a collective $30 million in royalty payments (see OH Landowners File Royalty Class Action Lawsuit Against Chesapeake). It took nearly five years with a lot of twists and turns, but yesterday the U.S. District Court for the Northern District of Ohio ruled in favor of Chesapeake, dismissing the claims against them.
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Ohio House Bill 55 Aims to Make Royalty Checks Understandable

Is history repeating itself? Ohio House Bill 55 would require certain pieces of information to be included on royalty statements landowners receive from Ohio drillers. Ohio State Rep. Jack Cera (Democrat from Bellaire) introduced HB 55 last year–for the third time since 2011. Like the two previous times, the bill is now mired in committee and doesn’t appear to be making any headway toward a vote. Let’s look at what information landowners receive now under existing law, and what details they would receive under this bill if passed.
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New IFO Report: PA Shale Drillers Paid $1.5B in Royalties in 2017

Just coming to light for us now is a report issued by the Pennsylvania Independent Fiscal Office (IFO) that estimates the amount of gas production royalties paid by drillers to landowners for calendar year 2017 (the most recent year available). It’s a fascinating report that breaks down royalty payments by the eight top gas-producing counties in the state. You may be surprised to learn the county producing the most natural gas in the state (Susquehanna County) does NOT, in fact, pay out the most in landowner royalties.
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PA Superior Court Rules Landowner Can’t Nix Lease for Shut-ins

A recently decided court case, while not precendential (doesn’t apply to anyone else other than the landowners/drillers in this case), is still instructive. This story begins when the Wilson family in Armstrong County, PA (western part of the state) leased three different tracts of land totaling 473 acres to Synder Brothers in 2003 for vertical drilling.
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Snyder Bros Pays $1.2M to Drill Under Allegheny River in W PA

Armstrong County, PA

Snyder Brothers, headquartered in PA, used to drill mostly conventional (vertical only) wells in PA. However, these days the company drills horizontal shale wells in the Marcellus in southwestern PA. Just coming to light now is a lease Synder Brothers signed with the PA Dept. of Conservation and Natural Resources (DCNR) in 2019 to pay DCNR $1.2 million to lease land under the Allegheny River in Armstrong County.
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