Lease & Royalty Payments

Lease & Royalty Payments | Ohio | Statewide OH

Strategy Change? Some Buy Mineral Rights in OH Instead of Leasing
March 23, 2015March 23, 2015

A change in strategy? The Wheeling News Register is reporting an uptick in the purchase of mineral rights in the Upper Ohio Valley area. If a landowner owns both the surface and mineral rights, the typical situation is that the landowner will lease the mineral rights to an energy company for a certain period of time, receiving an up-front signing bonus. If drilled, the landowner will receive ongoing royalties from any gas (or oil) produced. But in some cases, instead of leasing, energy companies are buying the mineral rights. That is, the mineral rights become separated from ownership of the land on the surface. The energy company then owns the mineral rights, along with the right to use a bit of the surface to locate a drill pad and wells. The landowner selling the mineral rights gets a higher initial signing bonus by selling the mineral rights as opposed to leasing. But they also get zero royalties when selling the mineral rights. It becomes a decision between a little more money now, or a lot more money later. What kind of money are we talking about?…
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Belmont County | Energy Companies | Lease & Royalty Payments | Ohio | Rice Energy | Utica Shale

Rice Energy Pays St Clairsville, OH $8,700/Acre Signing Bonus
March 16, 2015March 16, 2015

In March 2014, St. Clairsville (Belmont County), OH put out a request for bids on 195 acres of city-owned land. The request for proposal (RFP) came and went with no bids (see St Clairsville RFP to Lease 195 Utica Acres Comes & Goes, No Bids). But don’t let that fool you. Drillers were keenly interested in leasing the property. The initial RFP served a legal purpose. After the period for bids closed, the real negotiations began. St. Clairsville was looking for $7,300 per acre signing bonus and 20% royalties. They got an even better deal. In January, Rice Energy handed St. Clairsville with a check for $1,479,251.84 to lease 170 out of the 195 acres–or $8,700 per acre as a signing bonus…
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Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

Chesapeake’s PA Royalty Settlement Affects Some, Not All Landowners
March 16, 2015March 16, 2015

In December 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). However, not all PA landowners leased with Chesapeake are happy about it. Two other, separate lawsuits against Chesapeake are proceeding and, according to attorneys, the settlement will not affect these separate lawsuits which are proceeding, unless the leases have a “market enhancement” clause…
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Chesapeake Energy | Columbiana County | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Ohio

Columbiana Landowners Win Right to Renegotiate Some Lease Terms
March 11, 2015March 11, 2015

In 2008, before the word “Utica Shale” was on people’s lips and in their consciousness, landmen from Patriot Energy Partners “smiled and dialed” calling up landowners in Columbiana County, offering them a whopping $10 (yes 10 bucks) an acre to sign gas and oil exploration leases. Patriot mailed them the contracts, the landowners signed and sent them back, and then got pennies on the dollar for what those leases were actually worth. Patriot then flipped the leases, selling the deep exploration rights to Chesapeake Energy–for $1,100 an acre. Patriot claimed the practice (of hoodwinking landowners and flipping leases) is legal. The landowners wised up and in 2011, 25 landowner families sued to have their leases dissolved. Four years later the case, after going to arbitration, is resolved…
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Cunningham Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Tyler County | West Virginia

WV “Landowner” Wins $4.8M in Lawsuit for Failure to Drill
March 9, 2015March 9, 2015

By Andy Leahy

On March 3, a federal judge awarded a Tyler County, WV mineral owner $4.8 million in present and future royalties (plus interest) as damages in a dispute involving the operator’s failure to follow through on some unusually generous lease terms. The operator, Cunningham Energy LLC of Charleston, WV, had promised to horizontally drill eight wells to and through the Marcellus Shale formation within three years, but was unable to do so–largely because the leaseholds were far too small to develop as stand-alone units, and the surrounding lands turned out to be already under lease to other drillers…
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Lease & Royalty Payments | Ohio | Statewide OH | Utica Shale

Free/Accurate Online Royalty Calculator for OH Utica Wells
March 2, 2015March 2, 2015

A cool new online tool has just been released for landowners (and nosy neighbors) who want to calculate estimated royalties for any individual Utica Shale well in Ohio–with a reasonably high degree of accuracy. The tool is called the Ohio Shale Well Royalty Calculator and was created by WellRev Ohio LLC–a Canton, OH company that specializes in assisting county auditors, school districts and local governments calculate tax revenue from oil and gas wells. Below is a link to the new calculator along with MDN’s brief instruction guide for how to use it…
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American Energy Partners | Chesapeake Energy | Energy Companies | Harrison County | Lease & Royalty Payments | Ohio | Utica Shale

Harrison County, OH Hauls in $1.6M in 2 Weeks from Utica Leases
February 24, 2015February 24, 2015

Even though the price of oil and natural gas is depressed, there are still lease deals happening–particularly in the Ohio Utica Shale region–that make your eyes pop out. Whoops! Just had to put an eyeball back in. It popped out at the latest lease numbers coming from Harrison County, OH where they’ve taken in $1.6 million over the past couple of weeks…
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Access Midstream Partners | Bradford County | Chesapeake Energy | Energy Companies | Energy Services | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Williams

PA Landowners File RICO Royalty Lawsuit Against Chesapeake/Williams
February 19, 2015February 19, 2015

Along with acquiring Access Midstream (formerly Chesapeake Midstream), Williams has just acquired a brand new lawsuit. Two Bradford County, PA law firms along with a New Jersey law firm on Tuesday filed a RICO (Racketeer Influenced and Corrupt Organizations Act) lawsuit on behalf of 90 landowners in Bradford County against Chesapeake Energy and Williams Partners (because Williams is now the owner of what was Access Midstream) claiming Chessy and Williams/Access conspired to defraud landowners of royalty money by deducting post-production expenses they had no right to deduct…
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Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Susquehanna County

Cabot O&G Loses PA Supreme Court Case to Extend Lease
February 19, 2015February 19, 2015

In October MDN told you about an important lawsuit that went to the Pennsylvania Supreme Court, a case called Harrison v Cabot Oil & Gas (see Important Landowner/Driller Case Heads to PA Supreme Court). In brief, Susquehanna County, PA landowners Wayne and Mary Harrison signed a lease with Cabot Oil & Gas for $100 per acre and 12.5% royalties. Learning that others in the area got better deals and feeling they were not only hoodwinked but pressured into signing, they sued Cabot halfway through the lease to dissolve it. Ultimately that lawsuit was decided in favor of Cabot. But by the time the lawsuit was done and dusted, the original 5-year term had expired without Cabot drilling. The Harrisons claimed since Cabot hadn’t drilled, the lease is now over with. Cabot said the lease went on “pause” when the Harrison’s sued–you can’t very well drill with an active lawsuit. This “lease on pause” case was appealed all the way to the Supreme Court in PA, and on Tuesday they rendered their decision…
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Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

PA DCNR Program Leases Under Rivers/Creeks for Marcellus Drilling
February 17, 2015February 17, 2015

Well now THIS is just not supposed to happen. The pure-as-the-wind-driven-snow PA Gov. Tom Wolf’s Dept. of Conservation and Natural Resources (DCNR) is stepping up its program of leasing underneath rivers, creeks and mud puddles for Marcellus and Utica Shale drilling–much to the consternation of anti-drilling groups like PennFuture (whose immediate past president, Cindy Dunn, is about to become Secretary of DCNR). When DCNR collected for river and stream leases under Republican Gov. Tom Corbett, the Democrat media machine reported it as a clandestine and secretive activity (see PA’s “Secret” Deal to Lease Land Under Rivers & Streams (Gasp!)). It actually has been quite public–MDN told you about this program all the way back in 2012 when it was launched (see PA DCNR Wants Money for Drilling Under Public Streams/Rivers). Our concern was/remains that the state of Pennsylvania may be claiming money for land that belongs to private landowners–denying private landowners of lease bonuses and royalties. Below we have the lease terms dictated by DCNR, a map of the (almost innumerable) waterways PA claims they own, a list of the names for those waterways, and the criteria DCNR uses in determining whether or not a waterway is owned by the state…
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Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Statewide PA | Taxation

PA Dept of Revenue Still Takes Bite from Royalties, Just Smaller
February 17, 2015February 17, 2015

Last month we shared with Pennsylvania landowners who receive royalty checks the distressing news that the PA Dept. of Revenue is attempting to deny them deductions for certain production costs (see The Tax Man Returneth — for PA Landowners with Royalties). It appeared that the DOR was ramping up an aggressive campaign to drill landowners for money, sending out semi-threatening letters. Accountants told landowners to sit tight and see how this shakes out. Turns out that was good advice. DOR is now backing down on their previous aggressive claims. Oh they still want a pound or so of flesh–they still claim not all deductions are allowed that have been taken–but they are being more reasonable…
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Industrywide Issues | Lease & Royalty Payments | Litigation | Ohio | Statewide OH

OH Court: Developing Shallow Wells Enough to Hold Utica Layer
February 16, 2015February 16, 2015

An important Ohio Appellate Court case was recently decided in Ohio relating to Utica Shale lease rights. The case is called Marshall v Beekay Company. Beekay Company had drilled shallow, non-shale wells on the property of Gary and Cora Marshall. At some point along the way, Beekay had separated the deeper mineral rights (shale) from the shallower mineral rights. The landowners said because Beekay didn’t develop the deeper mineral rights by drilling in the deeper layers, they had broken the original contract. The upshot was the landowners hoped to lease the lower layer to someone who would develop it. But the court found that development and continuous extraction of gas from the shallow layer effectively holds the rights to the deeper layer. That is, the court shot down the request by the landowners to force development of the shale layer…
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Energy Companies | JKLM Energy | Lease & Royalty Payments | Pennsylvania | Potter County | Utica Shale

Potter County, PA Hospital Leases Land to JKLM for Utica Drilling
February 13, 2015September 28, 2015

UPDATE: A sharp MDN reader tipped us with more of the details on this deal. The Cole property is 742.9 acres (located in the Townships of Eulalia and Sweden, and in the Borough of Coudersport); the lease signing bonus payment is reportedly $2,200 per acre, which makes the up-front payment to Cole Memorial a whopping $1,634,380; and the royalty is rumored to be 15%. Thanks to our great reader!

Cole Memorial Hospital in Coudersport (Potter County), PA has reportedly signed a lease with JKLM Energy to allow shale drilling on a “substantial amount” of hospital-owned property. What we don’t know about the deal is more than we do know. We don’t know how many acres. We don’t know how much the signing bonus was for. And we don’t know what royalty was agreed to. How’s that for good reporting? What we do know is that they signed a lease, JKLM has “ties” to Buffalo “Marcellus” Bills owner Terry Pegula. JKLM is potentially interested in the Utica layer and they will only be allowed to drill on non-hospital campus property…
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Chief Oil & Gas | Energy Companies | Lease & Royalty Payments | Marshall County | Ohio County | Tug Hill Operating | West Virginia

Lease Terms Revealed for Land Deal in Marshall County, WV
February 9, 2015February 9, 2015

In November, MDN brought you the news that Tug Hill Operating, a privately-owned exploration and production company, did a deal with the Marshall and Ohio County Landgroup in West Virginia for a $100 million signing bonus for about 500 families (see Panhandle WV Landowners Broker $100M Deal with Tug Hill Operating). We later learned that Tug Hill’s CEO was at one time concurrently the COO of Chief Oil & Gas, meaning the two companies are “tight” and perhaps share a drilling program (see More Details on Tug Hill $100M Lease in WV Panhandle). In November we had precious few details, beyond the $100 million signing bonus and a claim that royalties may end up being another $400-$500 million. Can you imagine a half BILLION dollars rushing into the economy of those two panhandle counties? Astonishing. Behold the miracle of fracking! At any rate, we now have an inkling of what the terms may have been. The Marshall County Commission is considering signing a lease with Tug Hill for 72 acres behind the animal shelter. The deal isn’t done yet, but the we know the proposed terms, both for the signing bonus and the royalty…
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Energy Services | Energy Transfer Partners | Industrywide Issues | Lease & Royalty Payments | Ohio | Pipelines | Richland County | Statewide OH

Advice to OH Landowners Approached for Pipeline Easements
January 29, 2015January 29, 2015

The Energy Transfer Partners Rover pipeline (ET Rover) is probably the biggest pipeline project currently under way in the U.S. It’s bigger than the Keystone XL pipeline! In places like Richland and Crawford counties in Ohio, ET Rover is actually two pipelines–42 inches in diameter, sitting side by side. The entire length is 820 miles and will stretch from WV and PA through OH and into Michigan and eventually to Canada. Landowners in Richland and Crawford attended a meeting sponsored by a Columbus law firm last night to hear some sobering truth: the pipeline will happen and it is coming. But that doesn’t mean landowners are helpless. The attorneys offered some good advice that all landowners approached for pipeline easements should listen to…
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Allegheny County | Lease & Royalty Payments | Ohio | Pennsylvania | Statewide OH | Statewide PA | Statewide WV | West Virginia

Pittsburgh Private Equity Fund Looks to Lease in Marcellus/Utica
January 28, 2015January 28, 2015

Not everyone is sitting on the sidelines during the downturn in shale drilling in the northeast. And yes, there is no doubt there’s been a downturn, along with the dropping price of gas (and oil). Ridgetop Capital, located in the Pittsburgh area, has just raised it’s sixth round of private investment capital (cash from wealthy people)–a huge $200 million. Ridgetop’s owner, Brad Carpenter, is now on the prowl to snap up Marcellus and Utica Shale leases that he hopes to get at a bargain because of the slow-down…
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