EQT Sues WV for Passing Minimum Royalty Law re Flat Rate Leases
Earlier this year the West Virginia legislature passed Senate Bill (SB) 360, which Gov. Jim Justice subsequently signed into law (see WV Gov Justice Signs Bill to Guarantee 12.5% Minimum Royalty). SB 360 overturns a ruling by the WV Supreme Court in Leggett v. EQT Production, a case in which the Supremes (in a very unusual move) reversed their own previous decision and allowed EQT to deduct post-production expenses in an old flat rate lease. In essence, SB 360 guarantees rights owners/landowners a 12.5% minimum royalty, regardless of post-production deductions–but only in flat rate leases. A flat rate lease is a lease in which a company pays a regular (in EQT’s case, annual) payment, regardless of how much oil/gas is produced. Traditionally drillers don’t deduct post-production expenses because the payments they make aren’t all that much anyway. But then EQT began to claim deductions, prompting a lawsuit that went all the way to the Supreme Court. The legislature aimed to “fix” what they considered an error in the court’s ruling. EQT claims the new law is unconstitutional and last week filed a lawsuit (copy below) asking a judge to block implementation of the law, set to take effect on May 31…
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Southwestern Energy has just taken the next very important step in a process that frankly has us holding our breath. Two weeks ago MDN brought you the news that the Pennsylvania Superior Court handed down a decision that has the power to greatly restrict, perhaps even stop, Marcellus drilling in PA (see 
Perhaps our headline for this article is a tad misleading. Maybe the better question is, Was a meeting held yesterday in Towanda, PA on the topic of gas royalties *meant* to resolve anything? The answer of which is, “Probably not.” PBS StateImpact Pennsylvania organized and hosted a forum yesterday on the topic of PA landowners getting screwed over by energy companies with respect to royalty payments. Both sides were well represented at the forum. We think it’s a cool concept, to get both sides talking about a very important issue. However, StateImpact, funded and controlled by Big Green backers including the William Penn Foundation and Heinz Endowments, is not an impartial, unbiased news organization that wants to honestly explore this important issue. StateImpact is NOT an impartial broker. Their purpose is to play both sides against each other and enjoy the chaos that ensues. Whip up more animosity between both sides. Make no mistake: StateImpact abhors shale drilling and prefers it not happen at all in PA. With that as the proper context to understand the event, some good points did emerge from the discussion, despite StateImpact’s bad intentions…
The fifth auction by the federal Bureau of Land Management (BLM) of federally-owned acreage in Wayne National Forest (WNF) to allow shale drilling was, in a word, a bust. The first four auctions offered up a total of 2,396 acres in total, and sold for over $8 million (average of $3,354 signing bonus per acre). The fifth auction of two smaller parcels–39.6 acres in Monroe County, and 305.8 acres in Noble County–sold for a piddly $2 and $3 signing bonuses per acre, respectively. What in the world happened? MDN reader and friend Charles Winslow, owner of The Wells Inn in Sistersville, WV, writes the INNformer publication. Charles recently published an excellent article about the recent auction and its lackluster results in the INNformer. He offered MDN the opportunity to reprint it (below). Charles finds there are a number of factors for the low auction price–but primarily the blame can be laid at the foot of regulatory uncertainty…
Back in January MDN told you about West Virginia House Bill (HB) 4270, a bill that provides more transparency for landowners on their royalty statements (see 
Cabot Oil & Gas, one of our favorite Marcellus drillers, has just published a new PowerPoint slide deck presentation as part of an investor’s conference they attended earlier this week (the Scotia Howard Weil Energy Conference). Normally a new slide deck isn’t all that big a deal. However, thanks to MDN friend Chris Acker who pointed it out to us, there is some new information in the deck worthy of note. Back in December MDN brought you the news that Cabot had signed a deal to sell off their Texas Eagle Ford Shale assets in order to concentrate solely on the Marcellus (see 
The Pennsylvania Dept. of Conservation and Natural Resources (DCNR) has just amended an existing lease with EQT that allows EQT to extract natural gas (and other hydrocarbons) from underneath the Monongahela River in Allegheny, Greene, Fayette, Washington and Westmoreland counties. EQT is paying $4,000 per acre for 392 acres ($1.568 million total) in a signing bonus, along with a big 20% royalty on anything produced. However, the announcement raises an important question we’ve asked for more than four years: Is the land under rivers and streams actually owned by the state? PA says yes. We suspect landowners who own land along those rivers and streams would say otherwise. The state grabbing money for land under bodies of water has been going on for years (see 
While everyone was focused on the passage of a co-tenancy bill in West Virginia (see 
Earlier this week MDN told you that West Virginia royalty owners are pushing Senate Bill (SB) 360 to fix the issue of post-production deductions drillers take from royalty checks (see 
West Virginia royalty owners (which sometimes means landowners, sometimes not) are pushing Senate Bill (SB) 360 to fix the issue of post-production deductions drillers take from royalty checks. A brief history: In December 2016, MDN reported on the huge WV Supreme Court decision against EQT that disallows EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see 
In a sure sign that the $1.1 billion, 120-mile PennEast Pipeline will get built, the Bethlehem Authority, which manages watershed land in the Pocono Mountains that supplies drinking water for the City of Bethlehem, has signed a $1.7 million deal to allow PennEast to traverse four miles of Authority land. Rather than challenge PennEast and potentially lose an eminent domain case, Bethlehem Authority officials said they brokered the deal–not only for the money it will bring in, but also to ensure there are certain protections in place during construction. The State of New Jersey is trying its best to stop the PennEast project (see 
In the end, it came to down to cold, hard cash. Last May, MDN told you about antis running the City of Green, Ohio who were/are hellbent on stopping the NEXUS Pipeline (see 
Wheeling, West Virginia–known as “the Friendly City”–is about to get an even bigger smile on its face. Wheeling city leaders are about to sign a lease agreement to allow American Petroleum Partners to drill under several “old city landfills” that have been closed for decades. The up-front signing bonus for 336 acres of Wheeling-owned land will be $2 million–which works out to ~$5,952 per acre. Once gas begins flowing, the city will get an 18.5% royalty. The money will be used for “paving, playgrounds, economic development and other city functions.” Does American Petroleum Partners (APP) sound familiar? In December we brought you the news that APP had leased the 66-acre Wheeling Park High School campus for shale drilling–under (not on) the campus–for $6,000 per acre (see 