PA District Court Rules in Favor of Driller in NEPA Lease Dispute
A decision by the Middle District Court of Pennsylvania is worth noting–for both drillers AND landowners. A landowner in Susquehanna County, PA sold some land already under lease to a new landowner/rights owner. Neither the new landowner nor the previous landowner informed the driller of the change in ownership. The time came to renew the lease and under the terms of the contract the driller sent payment–but didn’t know about the change in ownership–so the driller sent the payment to the previous owner. The new landowner used that faux pas as a legal excuse to sue the driller to break the contract. The new landowner claimed the paperwork filed (not the full lease but an abstract) didn’t contain mention of informing the driller. In other words, the landowner used the “we didn’t know” excuse. The judge disagreed and said, a) the lease itself clearly outlines the responsibilities of the old/new landowners to inform the driller, b) there is a reasonable expectation for the new landowner to perform due diligence in seeking out a copy of the original lease to know that. Therefore the new landowner is still under lease. Here’s an outline of the case, with names…
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Yesterday we reported that a group of Ohio landowners calling themselves LEASE (Landowners for Energy Access and Safe Exploration) are encouraging Ohio residents to write in support of drilling in the Wayne National Forest (see 
This is the tale of landowners who negotiated a lease without consulting a qualified oil and gas attorney, and later regretted the decision. In 2008 the owners of a small hunting and fishing camp in Tioga County, PA negotiated and signed a lease with East Resources, which was later sold to SWEPI (i.e. the shale drilling arm of Shell). The lease, so the landowners thought, guaranteed that 11 wells would be drilled on the 240-acre property, and that a pipeline would be used to flow gas only from those wells. The landowners got a nice signing bonus–$287,000. They also got $164,000 for a pipeline right-of-way. But only one well was ever drilled–and it’s capped. And there is a pipeline–flowing other people’s gas through it. The landowners sued and a district court judge ruled last week that the landowners don’t have a case for their “shattered dreams” as they thought they did. It all comes down to a poorly worded lease and signing a lease without running it by a lawyer first…
Yesterday MDN brought you the news that EQT has cut a deal to buy all of Norwegian Statoil’s operated Marcellus assets in West Virginia for $407 million (see 
A circuit court judge recently ruled on a case in West Virginia with implications for unitization or pooling. No, NOT forced pooling–or forcing landowners who haven’t signed a lease into a drilling unit, forcing drilling under their land. That’s not what this case was about. This case was about landowners with an already-signed lease for vertical wells now being used to allow that land to be pooled with other land and a horizontal well allowed to be drilled under it. The landowners, who wanted a new lease for horizontal drilling (and more money, which is reasonable in our opinion) said because the lease was silent on the matter of pooling or unitizing, it should not be allowed. The judge disagreed and found in favor of the energy company, in this case American Energy…
In MDN’s daily trawl of the news, we came across a resource for landowners from Ohio State University (OSU), a program called “Pipeline Easement and Right-of-Way Agreements.” Apparently OSU’s Extension service conducts workshops on occasion for landowners and other interested parties. We don’t have a list of the workshops, but we do have copies of the resources they hand out–very useful resources, including four different fact sheets that we think landowners in any state will benefit from…
In a bit of encouraging “this too shall pass,” we spotted an article that says Southwestern Energy Company is actively renewing leases expiring in West Virginia. You may recall that in the fall of 2014 Southwestern purchased 413,000 Marcellus/Utica acres, most of it in West Virginia (see 
An important case regarding royalties was ruled on in the Superior Court of Pennsylvania on April 7th. As with many of these cases, this one is complicated. We’ll do our best to summarize it. A husband and wife leased their property in the 1990s to a company that eventually sold the least to CNX (i.e. CONSOL Energy). The couple later signed another lease with CNX in 2002. Both leases states that CNX will pay the couple one-eighth of the sale price for the gas as a royalty. But more than just the wells on the couple’s land are commingled in a drilling unit, so the way CNX calculate the royalties (as per the lease) is to measure the amount of production at the wellhead and divide accordingly. If the couple’s well produced 20% of the overall volume produced by all the wells in the unit, they get 20% of one-eighth of the sale price. But here’s the thing: the amount of gas that eventually gets sold “down the pipeline” is less than what is produced at the wellhead. As gas travels through pipelines and compressor stations, some of it disappears. The couple’s attorney says because CNX can’t account for 100% of the gas that disappears (maybe more disappears from the neighbor than his client), that CNX is in breach of the lease and owes the couple a royalty based on the gas produced at the wellhead and not based on what is eventually sold “down the pipeline.” A lower court ruled in favor of CNX. Now, the Superior Court of PA has also ruled in favor of CNX and says the clever legal reasoning by the couple’s attorney doesn’t hold water…