There are companies that will purchase landowners’ (rights owners) royalty payments–giving them a lump sum payment up front in return for signing over all future royalty payments to the company buying the rights. Peregrine Energy Partners is one such company and has just purchased an unspecified amount of royalty payments in Greene County, PA.
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Category: Lease & Royalty Payments
Big Crowd Turns Out to Support/Oppose Drilling Under SWPA Park
The mystery is now solved. Last week we incorrectly (based on a Pittsburgh Tribune-Review article) reported that FirstEnergy wants to drill a well under (not on) Linbrook Park, located in the Borough of Franklin Park in Allegheny County (see original story here). It’s not FirstEnergy but PennEnergy that wants to do the drilling.
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PA Leases Youghiogheny River Land in SWPA to Chevron $4K/Ac
The Pennsylvania Dept. of Conservation and Natural Resources (DCNR), every now and again, will lease state-owned land for gas drilling. The DCNR has just leased land under the Youghiogheny River in Allegheny and Westmoreland counties. We have the full lease, and lease terms, below…
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PennEnergy Offers $3.5K/Ac to Drill Under SWPA Town Park
NOTE: This story and the headline have been updated to correct an earlier error from the source we used. It is not FirstEnergy but PennEnergy that is proposing to drill under the park.
We spotted a second story today about a new lease, in this case proposed lease terms, for land in southwestern Pennsylvania. This time the driller, PennEnergy, wants to drill under (not on) a town park that sits on the border of Allegheny and Beaver counties.
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BLM Auctions 75 Acres in OH’s Wayne Natl Forest for $209/Acre
Last week the Bureau of Land Management’s (BLM) Eastern States Office ran another oil and gas lease auction for federal land on the eastern side of the country. Up for auction was 2,456 acres in Ohio, Michigan and Mississippi. Only half of the property listed for auction actually brought bids and sold. Of the 2,456 acres offered, a piddly 75 acres, in two parcels, was located in Ohio’s Wayne National Forest (WNF)–in Monroe County. That is, 3% of all the acreage in the BLM sale was in the Ohio Utica–and yet that 3% brought in 69% of the revenue from the sale: $15,720 total. However, the amount paid per acre for the WNF parcels seems to be small–just $209 per acre. So who picked up the 75 acres for a song?
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OH Supremes “Clarify” Preservation of Royalty Interest Under OMTA
If a deed refers to a previously reserved royalty interest where the reference identifies the type of interest created and the person to whom the interest was granted (with no other details), is that sufficiently specific enough to preserve the royalty interest under the Ohio Marketable Title Act (OMTA)? According to a decision rendered last week by the Supreme Court of Ohio, the answer is, “Yes.” In a case with its roots dating back to 1915, landowners attempted to sever royalty interests under the Ohio Dormant Mineral Act, attempting to cancel the old interest because a 1969 deed that referred back to the original deal (of one-half royalty interest) was not “specific enough.” The 1969 reference didn’t include the volume and page number of the instrument that originally created the royalty interest. In other words, it wasn’t a “Simon Says” kind of thing–it didn’t follow the exact legal standard. The current landowner tried to cancel the original royalty sharing obligation via a legal loophole.
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EQT Avoids Trial, Settles WV Class Action re Royalty Deductions
Two weeks ago MDN told you about a class action lawsuit that’s been brewing in West Virginia since 2013, brought by 10,000 WV landowners and royalty rights owners against EQT over the company’s practice of deducting post-production expenses from royalty payments (see WV Class Action Against EQT re Royalty Deductions Heads to Court). The trial was set to begin this past Tuesday, but we’re just now learning that late last week EQT settled with the plaintiffs out of court. We don’t have many details. What we do have is confirmation that there’s been a settlement and that the trial was canceled. Here’s the details we have so far.
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PA Supreme Court Agrees to Hear Briggs “Rule of Capture” Case
This is big news that will impact nearly every landowner and shale driller in Pennsylvania. In April, MDN brought you the news that Pennsylvania Superior Court had handed down a decision (known as the “Briggs” case) that has the power to greatly restrict, perhaps even stop, Marcellus drilling in PA (see PA Superior Court Overturns “Rule of Capture” for Marcellus Well and PA “Rule of Capture” Case has Power to Limit Marcellus Drilling). The issue, in brief, is that a PA Superior Court decision disallows using the age-old principle called the “rule of capture” when it comes to shale drilling and fracking in PA. Southwestern Energy successfully argued in a lower court that the odd crack here and there that may slip under a neighbor’s property from fracking is permissible. The neighboring landowner, not signed with Southwestern, appealed that decision to Superior Court and won. Southwestern then appealed the case to the PA Supreme Court and the court has just announced it will hear the case. How will this affect nearly every landowner, signed or not, in shale regions of the state?
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Painting with a Broad Brush re Post-Production Deductions
Is the Marcellus/Utica industry giving itself a black eye with respect to post-production deductions? It’s always dangerous to paint with too broad of a brush. There are some drillers who don’t deduct post-production costs, and the landowners signed with them are happy as clams (we know some personally). But there are other drillers, perhaps under pressure by investors, perhaps from greed (as is said by those opposed to shale drilling) that are making profits on the backs of landowners. Regardless of motivation, it’s not right. The problem is, the media *does* paint with a broad brush and accuses the entire industry of behaving the same way. The following Charleston Gazette-Mail editorial is a perfect example.
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EnCap Looks to Sell Royalty Stake in “Core” of Ohio Utica
EnCap Investments is a venture capital investor that funds independent companies in the U.S. oil and gas industry. EnCap has its fingers in a number of pies in the Marcellus/Utica. EnCap is the major investor behind Eclipse Resources and was instrumental in Eclipse selling itself to and merging with Blue Ridge Mountain Resources (see Eclipse Resources Merging with Former Magnum Hunter). EnCap is also a major investor in (i.e. owner of) PennEnergy Resources, which recently cut a deal to buy Rex Energy (see Rex Energy Sells Itself to PennEnergy Resources for $600M). Another way EnCap invests in our region is by funding drilling programs in return for royalty payments (or more properly, for a thin slice of the royalties). EnCap has put their royalty interests in several “core” Utica Shale counties up for sale.
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EQT Tries to Gut WV 1982 Minimum Royalty Law for Flat Rate Leases
EQT certainly isn’t following Dale Carnegie’s advice on How to Win Friends and Influence People. Just the opposite, as the company continues to squeeze every last penny it can out of landowners’ pockets who hold old “flat rate” leases in West Virginia. We’ve reported on EQT’s efforts to overturn WV’s Senate Bill (SB) 360, passed earlier this year and signed into law by Gov. Jim Justice (see EQT Still Fighting WV Minimum Royalty Law for Flat Rate Leases). That law disallows post-production deductions for flat rate leases, ensuring landowners receive a minimum 12.5% royalty. In April, EQT sued to overturn the original law, from 1982, on which SB 360 rests–the law that guarantees a 12.5% royalty. Get rid of the original law, and the later law (disallowing deductions) disappears too.
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WV Class Action Against EQT re Royalty Deductions Heads to Court
It’s been five years in the making, but finally a class action lawsuit that began in 2013, on behalf of 10,000 West Virginia landowners and royalty rights owners against EQT’s practice of deducting post-production expenses from royalty payments, will finally get its day in court in two weeks. That’s what we learn from an extended article published by ProPublica and the Charleston Gazette-Mail on the topic of WV drillers and their practice of “whittling away payments” from rights owners. Just over a month ago MDN told you about an elderly WV couple who won their private lawsuit against EQT on the same matter (see EQT Loses Post-Production Deduction Lawsuit to WV Couple). Based on the outcome of that lawsuit, EQT should be a tad nervous about this class action proceeding to trial.
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Pipelines are Dumping MLP Structure but Royalty Firms Aren’t
For some time we’ve covered the story of MLPs–master limited partnerships–and how they are being phased out. An MLP is an alternative form of organizing a company (or subsidiary company), different from a corporation. The primary purpose of an MLP is for investors, who buy “units” in the MLP instead of shares of stock, so the investor can pay less in taxes. Trump’s tax cut, while benefiting the little guy (yeah!), disadvantages MLPs (boo!). Which has caused many pipeline companies organized as an MLP to give up that form of structure. Meanwhile, new companies are being formed to buy royalty rights–using the MLP structure! So while pipeline companies are dumping the MLP structure, royalty companies are embracing it.
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Range Resources Sued by PA Landowner re Post-Production Deductions
In the absence of a guaranteed minimum royalty in Pennsylvania–an issue which continues to divide landowners and drillers–individual landowners are left to litigate in order to get what they are fairly due. Such litigation is time consuming and expensive, and without a certain outcome, which is why most landowners don’t do it. In Washington County, PA a couple who signed a lease with Range Resources have just filed a lawsuit against Range in county court alleging Range violated the terms of the lease by deducting post-production expenses.
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EQT Loses Post-Production Deduction Lawsuit to WV Couple
It’s this kind of story that makes our blood boil–we won’t lie. EQT tried to shaft an elderly couple in Ritchie County, West Virginia out of royalty money by slipping in not only post-production deductions never agreed to in the contract, but also by slipping in a deduction for WV severance taxes owed by EQT itself. Maddening!
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Peters Twp Votes to Allow Fracking Under Town Property, Again
Peters Township, the most populous township in Washington County, PA, is one of the seven selfish towns that sued the state in 2012 over the zoning provisions in the then-new Act 13 law, eventually winning at the PA Supreme Court level (see PA Supreme Court Rules Against State/Drillers in Act 13 Case). The Act 13 victory gave townships like Peters the right to pass local zoning ordinances that restrict, but don’t outright ban, Marcellus/Utica drilling. In September 2016, Peters decided to officially screw Marcellus drillers. Town council passed a drilling ordinance that says drilling is ONLY allowed in areas zoned for industrial uses, which rules out areas zoned for agricultural uses, where most drilling happens (see Peters Twp Gives the Middle Finger to Drillers One Final Time). Even the theoretical drilling that would happen in industrial areas, a grand total of 138 acres in the township, would have to be a “conditional use” with loads of permits and reviews. In other words–don’t bother drilling in Peters. So we found it quite ironic that in May 2017 Peters Township Council threw their lordly “principles” right out the window by signing a five-year lease with EQT allowing drilling under (not on) some of the township’s own land, something they’ve denied every other landowner in the township (see Peters Township Votes to Allow Fracking Under Town Property). They’ve just done it again. Peters Township Council voted Monday to approve a lease with Range Resources for the very same terms as they agreed to with EQT. This time the land is located under Peters Lake Park. That’s right, drilling and fracking under a lake, in Peters Township, where the town can get away with it, but not private citizens. How much will Peters get this time? Keep reading for the answer, available only on MDN…
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