Lease & Royalty Payments

Energy Services | Industrywide Issues | Lease & Royalty Payments | NEXUS Pipeline | Ohio | Pipelines | Statewide OH

Columbus Law Firm: How to Get the Best Pipeline Easement Deal
December 22, 2015December 22, 2015

Goldman & Braunstein is a Columbus, OH law firm that’s carved a niche out of representing landowners in eminent domain disputes with pipeline companies. Earlier this year the firm asked the Federal Energy Regulatory Commission to disallow Energy Transfer Partners’ use of eminent domain in building the ET Rover pipeline (see OH Law Firm Asks FERC to Stop ET Rover Pipeline Eminent Domain). Michael Braunstein and Bill Goldman are at it again. Last week they held a meeting in Huron County, OH to advise landowners who potentially face eminent domain action by the NEXUS Gas Transmission pipeline project. They offer some good counsel. But make no mistake–they’re there to drum up business. Goldman & Braunstein do not say landowners can block the pipeline from coming through their property. What they do say is that their firm can get landowners a better deal, and ensure pipeline installation is “put in properly” by using (yep) Goldman & Braunstein. The firm believes landowners should be paid “over $100 per foot” for any deal they do with NEXUS. That’s the highest per-foot price we’ve ever heard of when it comes to pipeline easements. If they can pull that off, more power to ’em!…
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Energy Companies | Gastar Exploration | Lease & Royalty Payments | Marshall County | Statewide WV | West Virginia | Wetzel County

Gastar Deal to Lease Under the Ohio River in WV Falls Apart
December 21, 2015December 21, 2015

Remember the brouhaha over energy companies bidding to drill on land underneath the Ohio River in West Virginia? We told you about one such lease–Gastar won a bid on a 232-acre tract underlying the river at the border of Marshall and Wetzel counties. They paid $3,500 per acre as a signing bonus and 20% royalties in their winning bid (see Gastar Wins Lease to Drill Under Ohio River in WV). There were just a few minor details to settle before the deal closed. Guess what? Gastar never closed the deal. Since October 2014 the price of natural gas has crashed, making it uneconomical to drill in many (most?) locations, and Gastar didn’t want to part with its precious capital–so no deal was never finalized. And now the West Virginia Division of Natural Resources is about to call the deal dead and shop it again. Problem is, it’s now a buyer’s market for leases, not a seller’s market as it was in October 2014. WV won’t get anywhere near the same terms this time around, of that we’re sure…
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Bradford County | Chesapeake Energy | Energy Companies | Energy Services | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA | Williams

PA Atty General Sues Chesapeake Energy, Williams for Royalty Fraud
December 10, 2015December 10, 2015

Pennsylvania Attorney General Kathleen Kane, who has been indicted on numerous felony charges and likely to be forced from office any day now, filed a lawsuit yesterday against Chesapeake Energy in Bradford County Court over the issue of shorting landowners out of royalties. What every story we’ve seen (thus far) misses is this: The lawsuit also names Williams as participating in the scheme to defraud landowners out of royalty payments. So this is not just a Chesapeake story, it’s a Williams story too. Landowner groups are “hailing” the decision, jumping up and down with glee. Let us throw a little cold water on your face. Note to landowners and the groups that represent them: When you (metaphorically) crawl into bed with Kathleen Kane, you’re crawling into bed with a rattlesnake. Sooner or later she’s going to turn on you too. Mark it down. It’s in her nature. With that disclaimer in place, we’ll break down the news for you, and show you a copy of the lawsuit Kane’s office filed yesterday…
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Bradford County | Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

Packed Meeting in Towanda Discusses Chesapeake Royalty Settlement
December 9, 2015December 9, 2015

Last week MDN told you about a very important class action lawsuit that is about to be settled against Chesapeake Energy. It’s called the “Demchak” case and it involves thousands of Pennsylvania landowners who are currently, or even formerly, signed with Chesapeake (see Decision-time for Landowners in Demchak/Chesapeake Royalty Case). Landowners are automatically part of the settlement unless they opt out by December 17. A big confab was held last Wednesday (Dec. 2) at the Towanda (Bradford County), PA High School. It was a packed house with ~650 landowners attending. MDN had our very own reporter, Johnny Williams, on the scene. He files the following report, with important information for landowners…
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Bradford County | Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

Decision-time for Landowners in Demchak/Chesapeake Royalty Case
December 1, 2015December 1, 2015

Is the long, sordid affair over Chesapeake Energy screwing Pennsylvania landowners out of royalties finally near an end? Chesapeake and some landowners, part of the “Demchak” class action lawsuit–certainly want you to think so. A year ago MDN told you about a settlement between “several thousand” Pennsylvania landowners and Chesapeake over the royalty issue–Chessy deducting post-production payments by pipeline companies in what some call a scam that leaves landowners signed with Chesapeake receiving royalty checks that are pennies on the dollar compared to what they should receive. The new settlement for those “several thousand” would be 2/3 of $11 million, after the lawyers get their 1/3 cut (see Chesapeake & PA Landowners Settle Royalty Lawsuit…Again). Many PA landowners who are leased with Chesapeake now face a decision–and doing nothing is not an option. The lawyers and the court are about to close the door on what is called the Demchak class action lawsuit. PA landowners with a “market enhancement clause” in their lease should have already received a form letter announcing that unless they opt out of the settlement, they will be included. Below we have an excellent outline of what your options are according to the PA National Association of Royalty Owners (NARO), along with the opinion of one Bradford County landowner who is less than thrilled with the Demchak settlement…
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Lease & Royalty Payments | Pennsylvania | Statewide PA

PA Game Commission Keeps on Leasing, Not Subject to Wolf’s Ban
November 30, 2015November 30, 2015

In a companion story today, MDN brings you news that anti-drillers are taking a case to the Pennsylvania Supreme Court that could potentially require the state to consider “environmental rights” when considering whether or not to allow drilling on state-owned land. That is, a requirement that drilling be banned on state-owned land. One state agency that owns state land–the Pennsylvania Game Commission–continues to lease land for drilling even though there is currently an executive order by Gov. Tom Wolf that prohibits drilling in state-owned parks and forests. The Game Commission is outside of the executive branch and therefore autonomous and continues to lease land. Here’s an update on who drills the most on and under Game Commission land, and the latest leases (signing bonus and royalties) the Game Commission most recently negotiated…
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CONSOL Energy | Energy Companies | Lease & Royalty Payments | Pennsylvania | Westmoreland County

Western PA Municipal Authority Overpaid $785K in Gas Royalties
November 20, 2015November 20, 2015

Oh oh. The Municipal Authority of Westmoreland County has been collecting royalties for gas drilling on property it doesn’t own the mineral rights for. How much? The Authority was paid $785,000 in royalties that actually belong to the heirs of the former property owner. The Authority will have to pay the royalties back–but not in a one-lump sum. They’ll stretch out payments from now until September 2017…
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Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

PA Superior Court Rules on 2nd Important Surface/Mineral Rights Case
November 16, 2015November 16, 2015

We have a second important Pennsylvania Superior Court case decision to bring you in less than a month. Last month we told you about Wright v. Misty Mountain Farm LLC, a case with implications for all land and mineral rights owners in PA (see PA Superior Court Rules on Important Surface/Mineral Rights Case). Another case decided Nov. 6, Northern Forests II, Inc. v. Keta Realty Company, also has big implications for rights owners. In the Northern Forests case (full copy below), the surface rights owner (Northern Forests) claimed they should also own the subsurface rights due to a legal principal called adverse possession. In reviewing the case, a PA trial court found the original case from 1989 awarding Northern Forests the mineral rights, was in error–the rights revert back to the original rights owners. PA Superior Court agreed and upheld the decision. Here’s the low down from legal beagles at McGuireWoods, the attorneys for Keta Realty, the winner in the case…
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Industrywide Issues | Lease & Royalty Payments | Litigation | Ohio | Statewide OH

Ohio Supreme Court Rules in Important Dormant Mineral Act Case
November 9, 2015November 9, 2015

For several years MDN has been telling you about a thorny legal issue in Ohio, bubbling in the background–the Dormant Mineral Act (DMA). In a nutshell, there are two DMAs in Ohio–one passed in 1989 that went into effect in 1992, and another in 2006 which added certain additional procedural requirements to the 1989 version. The DMA in its various versions provides for mineral rights that had previously been separated from surface rights to transfer to the surface owner under certain conditions. The problem for both drillers and for landowners in Ohio, is in knowing which set of DMA rules to use (1989 or 2006) in determining who owns the mineral rights. There are a dozen cases sitting before the Ohio Supreme Court dealing with the DMA. Last December we gave you a run-down on four of the most important DMA cases before the Supremes (see 4 Important Dormant Mineral Act Cases with OH Supreme Court). One of those cases, Chesapeake v. Buell, was decided last week. It has big implications for both drillers and mineral rights owners…
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Chesapeake Energy | Columbiana County | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Ohio | Statewide OH

OH Landowners File Royalty Class Action Lawsuit Against Chesapeake
November 2, 2015November 2, 2015

A group of Ohio landowners is doing what others have previously done in Pennsylvania, Texas and elsewhere–they’ve filed a proposed class action lawsuit against Chesapeake Energy claiming Chessy has screwed them and about 1,000 other Ohio landowners out of a collective $30 million in royalty payments. The lawsuit was filed last Monday in Columbiana County Common Pleas Court (copy embedded below) by an Akron, OH woman and the owners of two Columbiana County farms. In addition to Chesapeake, French company Total E&P USA, Pelican Energy LLC and Jamestown Resources LLC were also named in the lawsuit. The plaintiffs claim the only allowed deduction from royalties, according to signed leases, is for taxes–not for drilling expenses, not for post-production costs, etc. The lawyers filing the lawsuit figure there are at least 1,000 landowners with 40,000 acres who have been negatively affected by Chesapeake’s royalty shenanigans…
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Lease & Royalty Payments | Ohio | Statewide OH

Gateway Royalty’s Latest Appeal to Buy Eastern OH Royalty Rights
October 30, 2015October 30, 2015

In March 2014 MDN alerted you to a pitch being made by Gateway Royalty to purchase royalty rights from landowners in eastern Ohio (see Company Targets OH Landowners – Buy Future Royalties for Cash Now). Gateway pays landowners a lump sum now in return for the right to receive that landowner’s future royalty payments for years to come. You (the landowner) get your money now, they (Gateway) get the money you would have gotten dribbled out over time. Of course the money you receive now is discounted and in all likelihood far less than you would have gotten if you had waited just a few years (the bulk of royalty payments come in the first four years). It’s a bit of a gamble by both parties because no one really knows how much a well will produce–nor what price the gas/oil will be sold for. Gateway is back with another appeal. We received the following email notice from an MDN subscriber, alerting us to Gateway’s renewed offer…
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Bradford County | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania

PA Superior Court Rules on Important Surface/Mineral Rights Case
October 20, 2015October 20, 2015

A complicated court case just decided by Pennsylvania Superior Court has implications for all land and mineral rights owners in PA. The case is called Wright v. Misty Mountain Farm LLC. This is how we understand it. In 1950 Fred and Jeanetta Buck sold some property in Bradford County, PA to Robert and Marjorie Wright. However, the Bucks kept the oil/gas/mineral rights for themselves, having already leased the mineral rights for the property. The mineral rights lease eventually expired in 1971. At that time, Robert and Marjorie Wright, the surface owners, figured with the expiration of the lease, the mineral rights reverted to them–so they signed a lease to allow oil and gas drilling. In 1988 the Wrights signed over the property and the lease to David and Patricia Wright (we’re assuming son and daughter-in-law). David and Patricia signed new leases on the property in both 2001 and again in 2005. Eventually Jeanetta Buck died and in 2010 while reviewing her estate and its assets, Shirley Matthews, administratrix of the estate, discovered/claimed the mineral rights still belonged to the Bucks. So Matthews conveyed the subsurface mineral rights to Misty Mountain Farm LLC. Patricia Wright argued that the when the original lease made by the Bucks in 1950 expired, ownership of the mineral rights also expired–in 1971. A lower court and then the Superior Court disagreed and ruled that unless there is specific language saying that when a lease expires so too do the mineral rights, then the mineral rights still belong to the original rights owner. Whew. Get all that? Bottom line: Just because a lease expires it doesn’t mean the party who owns the mineral rights loses their claim on those rights…
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Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Sullivan County

‘Minimum Royalty’ Language was Part of Wolf’s Poisonous Budget
October 12, 2015October 12, 2015

If you stick a cube of sugar in a batch of poison, the poison will still kill you, although it will taste better. Part of PA Gov. Tom Wolf’s poisonous budget that went down in flames last week (see PA Gov Wolf’s High Tax Budget Goes Down to Defeat – 9 Dems Against) included some sugar to make it taste better–something landowners have very much wanted for the past couple of years. Wolf included language in his poisonous budget bill found in House Bill (HB) 1391, a bill that guarantees landowners will receive a minimum 12.5% in royalty payments (see New Bill HB 1391 Will Guarantee PA Landowners 12.5% Royalties). Republican legislators from Marcellus drilling counties (like Bradford) have been pushing for such a bill to correct abuses by Chesapeake Energy in shorting landowners in royalty payments. Wolf’s budget was wrong on many levels and needed to be voted down. But the inclusion of HB1391’s language gives hope to Republicans that the royalty issue will be part of a final budget, whenever that happens, or that Wolf will be favorable to signing HB1391 when and if the legislature votes on it…
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Butler County | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | XTO

XTO Files Motion to Dismiss Royalty Lawsuit in Butler County, PA
September 28, 2015September 28, 2015

An update on a royalty lawsuit we first reported in July. Two Butler County, PA landowners with a combined 245.7 acres of land leased to (and drilled by) XTO Energy have sued XTO claiming the company is breaking the lease agreement by paying royalties below 1/8 of what XTO receives in revenue for the gas (see PA Landowners Sue XTO Energy for Shorting Them on Royalties). The landowners hoped the case would become a class action lawsuit. Last week XTO’s lawyers filed a motion to dismiss the lawsuit, hoping to prevent it from becoming a class action…
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Industrywide Issues | Lease & Royalty Payments | Litigation | Ohio | Statewide OH

Video: Update on DMA Cases Before Ohio Supreme Court
September 15, 2015September 15, 2015

For several years a thorny legal issue in Ohio has been bubbling in the background–the Dormant Minerals Right Act (DMA). In a nutshell, there are two DMAs in Ohio–one passed in 1989 that went into effect in 1992, and another in 2006 which added certain additional procedural requirements to the 1989 version. The DMA in its various versions provides for mineral rights that had previously been separated from surface rights to transfer to the surface owner under certain conditions. The problem for both drillers and for landowners in Ohio, is in knowing which set of DMA rules to use (1989 or 2006) in determining who owns the mineral rights. It’s a big problem when drillers are spending sometimes up to $15,000 per acre in lease bonuses, to say nothing of where to send the royalty check. Some drillers are holding back on leasing because of this issue. There are now 12 (!) different cases before the Ohio Supreme Court dealing with the DMA and decisions may come soon for many of them. We get a good overview and update on DMA litigation from the legal beagles at the Bricker & Eckler law firm…
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Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation

Chesapeake Settles Royalty Lawsuit in TX; Implications for PA?
September 14, 2015September 14, 2015

Landowners in Pennsylvania have been upset with shenanigans by Chesapeake Energy in shorting them out of royalties for years. In 2013 a group of landowners in Bradford County, PA filed a lawsuit against Chesapeake over the royalty issue (see Bradford County, PA Landowners Sue Chesapeake over Royalties). Since that time a number of lawsuits have popped up in PA against Chesapeake over the same issue (see Judge Rules Royalty Lawsuit Against Chesapeake in PA Continues). PA is not the only state where landowners have problems with Chesapeake’s royalty calculations. Another such case was filed in Texas in 2013–and Chesapeake just settled that case out of court…
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