Chevron Leases Land Under Mon River for $4K/Acre, 20% Royalties

This post catches you up on both some old and some new news. In February of this year Chevron signed a lease with the Pennsylvania Dept. of Conservation and Natural Resources (DCNR) to lease 1,028.4 acres of land *under* the Monongahela River in Greene and Fayette counties (southwestern corner of the state). That’s the old news. The new news is that Chevron has just added another 235.6 acres to the original lease for a grand total of 1,264.3 acres. Chevron is paying DCNR just over $5 million in lease signing bonuses for the entire deal.
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OH Supremes Rule Landowners have 21 Yrs to Claim Lease Expiration

An interesting Ohio Supreme Court ruling from last week caught our attention, thanks to the legal beagles at Vorys. As with most of these cases, this one is complex. But we want to highlight *why* it’s important right up front: Landowners (or mineral rights owners, usually the one and the same but not always) have a longer period of time, 21 years, to bring an action to reclaim their severed mineral rights than the previously thought 15 years–in certain situations. That was the upshot in Browne v. Artex Oil Co.
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Fed Judge: Northeast Natural Energy Owes $7.9M to PA Landowners

Northeast Natural Energy (NNE) is a small-to-midsized driller headquartered in Morgantown, WV. It’s a young company, drilling its first shale well in 2013. In April 2017 MDN reported that NNE had obtained $300 million of investment from two investment firms (see WV Driller Northeast Natural Energy Gets $300M Investment). NNE currently owns 49,000 acres of leases “in the heart of the Marcellus Fairway,” operating 27 Marcellus wells and over 100 conventional oil and gas wells, mainly in West Virginia with some located in southwestern Pennsylvania.
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WVONGA Meeting: New Co-Tenancy Law Working, Still a Few Kinks

West Virginia’s new co-tenancy law is working, according to speakers at the West Virginia Oil and Natural Gas Association (WVONGA) 2019 Fall Meeting held yesterday and today. Several speakers from major WV drillers, including Antero Resources and CNX Resources, sang the praises of the new co-tenancy law. WVONGA executive director Anne Blankenship also sang its praises, but said there’s still a few things to work out before the new law is “fully understood.”
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Chesapeake Royalty Lawsuit at PA Supreme Court – Can of Worms?

Yesterday MDN brought you the news the Pennsylvania Supreme Court has agreed to hear 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 (see PA Supremes to Consider Long-Running Chesapeake Royalty Lawsuit). 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.
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PA Supremes to Consider Long-Running Chesapeake Royalty Lawsuit

In December 2015, Pennsylvania’s felony-indicted Attorney General, Kathleen Kane (who later was convicted and did jail time) brought a lawsuit against Chesapeake Energy and Anadarko accusing them of royalty fraud (see PA Atty General Sues Chesapeake Energy, Williams for Royalty Fraud). Her successor, Josh Shapiro, has continued the fight.
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Ohio Landowners Sue Encino Energy for Shorting Royalties

Landowners in Carroll and Columbiana counties (Ohio) have filed a class action lawsuit against Encino Energy claiming the company underpaid oil and natural gas royalties. Last November Encino Acquisition Partners (i.e. Encino Energy) completed its purchase of all of Chesapeake Energy’s Ohio Utica Shale assets for $2 billion (see Stop Press: Chesapeake Sells ALL of its Ohio Utica Assets for $2B). The deal included all of Chesapeake’s 933,000 Ohio acres–with 320,000 net Utica acres–and 920 operated and non-operated Ohio Utica wells.
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New Online Service for Buyers & Sellers of Mineral Rights

A common refrain for both landowners and drillers who want to buy/sell/swap mineral rights for drilling is the same: How do you find buyers (or sellers)? Some have resorted to auctions. Others, plain old word-of-mouth. They both have a new way to find buyers or sellers: Something called RealX, an online mineral rights property database. Kind of like Zillow for mineral rights, according to the Pittsburgh Business Times. The new service just launched with over 6 million acres of mineral rights.
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PA DCNR Leases SWPA Creek for $4K/Acre, 20% Royalties

It’s not often (these days) we come across a new instance of publicly-known leasing terms in the Marcellus/Utica. We like to highlight such cases when we see them. In Saturday’s Pennsylvania Bulletin, the state Dept. of Conservation and Natural Resources (DCNR), the agency in charge of state-owned land, published details of a newly signed lease for 40.6 acres of creekbed in Greene County, PA. The DCNR got its standard $4,000 per acre signing bonus plus will get a 20% royalty from any gas produced. Who did they lease to? And why do we object to this practice so strenuously? To learn those details, you need an MDN subscription
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PA Landowners Push for “Royalty Check Stub” Law at NARO Conf

The National Association of Royalty Owners’ national convention has been under way this week in Pittsburgh, wrapping up today. One of the big topics at the event has been a push to get a “royalty check stub” bill passed in Pennsylvania. What’s that? It’s a bill that forces drillers to do a better, more detailed job of breaking down royalty statements so landowners/rights owners can see what expenses have been deducted from their royalty checks. Such a bill passed and went into law in West Virginia last year (see WV Royalty Transparency Law Sheds New Light Beginning June). PA landowners want the same kind of transparency that WV landowners get.
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Ohio Landowners Lose Royalty Lawsuit Against Chesapeake Energy

A group of Ohio landowners sued Chesapeake Energy in 2015 in a class action, alleging that Chesapeake had shorted them on royalty payments (see OH Landowners File Royalty Class Action Lawsuit Against Chesapeake). Four long years later and an Ohio federal judge ruled yesterday…in favor of Chesapeake.
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PA Landowners Receive $9.8 Billion in Royalty Payments 2010-2018

There is no way to track exactly how much royalty revenue is received by Pennsylvania landowners, because royalty income is not reported separately on the Pennsylvania income tax return. Royalty income is combined with rental, patent and copyright income on line 6 of the PA-40 state income tax return. However, the crack researchers at the Pennsylvania Independent Fiscal Office, a state government agency created in 2010, has a way of estimating how much revenue has been generated by oil and gas royalties. The IFO just released a report (full copy below) that shows they estimate royalties in 2018 hit their highest level since they began tracking oil & gas royalty revenue in 2010.
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Another 655 Acres in Ohio Wayne Natl Forest Auctioned for $1.3M

The federal Bureau of Land Management (BLM) recently announced the winners of Utica Shale mineral rights for 14 parcels of land, adding up to ~655 acres, located in Wayne National Forest (WNF). The 14 properties netted the government $1.326 million and all 14 were purchased by two (possibly more) Utica Shale drillers. Average price per acre paid across the entire lot: $2,024. Who did the leasing? You have to be a subscriber to find out. 🙂
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PA Landowners Feel Pinch of Low NatGas Prices in Royalty Checks

Like it or not, landowners are joined at the hip with the shale drillers who produce the natural gas from their land. When “the price” (which is actually a lot of different prices, depending on geography) of natural gas is high, everyone is in tall cotton. But when the price tanks, as it has over the past few months, every suffers. PA landowners are noticing very thin royalty checks. The big bone of contention is when drillers look to share more of their pain with landowners by claiming post-production deductions.
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PA Fed Judge Won’t Dismiss Landowner Royalty Case Against Range

Last October MDN brought to your attention a lawsuit filed by a Washington County, PA couple, Robin and Thomas Pflasterer, against Range Resources (see Range Resources Sued by PA Landowner re Post-Production Deductions). The Pflasterers maintain Range deducted post-production expenses not allowed under their lease. Range argued the Pflasterers didn’t have the proper paperwork to back up their claims and asked for the case to be dismissed.
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EQT Drops WV Lawsuit re Post-Prod. Deductions on Flat Rate Leases

The new leadership at the top of EQT continues to have a major impact on the company and its relationship with landowners and (in this case) entire states. Last year EQT launched an effort to overturn WV’s Senate Bill (SB) 360 (see EQT Still Fighting WV Minimum Royalty Law for Flat Rate Leases). The new SB 360 law disallows post-production deductions for flat rate leases, ensuring landowners receive a minimum 12.5% royalty. In April 2018 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. Last week EQT filed a motion to withdraw its lawsuit.
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