Lease & Royalty Payments

Industrywide Issues | Lease & Royalty Payments | Litigation | Ohio | Statewide OH

Video: OH Lawyers Explain Dormant Minerals Act & Impact on Utica
September 19, 2014September 19, 2014

An issue MDN has not previously tackled (until now) that is coming to the fore in Ohio is “the Dormant Minerals Right Act” (DMA) in that state. 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 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 $10,000-$12,000 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. A case now sits with the Ohio Supreme Court, Walker v Noon, that will sort out these important issues. The very sharp lawyers at Ohio law firm Bricker & Eckler have done a masterful job of explaining the case before the Supreme Court, a case brought by their firm…
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Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation

Mich. AG Continues to Target Chesapeake, Racketeering Charge
September 17, 2014September 17, 2014

In June 2012 Reuters tried to stir up trouble against Chesapeake Energy by broadcasting “leaked” (Watergate anyone?) emails that somehow magically appeared on the Reuters doorstep that supposedly show Chesapeake trying to collude with Encana Energy to keep the price of Michigan state land oil and gas leases artificially low (see Did Reuters Break the Law with Latest Chesapeake Story?). Eventually the Michigan Attorney General’s office filed charges against Chesapeake, even though the federal government had investigated and didn’t find anything worth pursuing (see Feds Clear Chesapeake & Encana in Collusion Case, Michigan Next?). Michigan is still hell-bent on shaking down Chesapeake (see Michigan AG (Unbelievably) Files More Charges Against Chesapeake). The same Michigan Attorney General, Bill Schuette, has also filed charges against Chesapeake’s leasing arrangements with private landowners. On Monday, a Michigan court said Chessy must face a trial on one charge of racketeering (a felony) and 20 counts of using false pretenses to allegedly defraud private landowners in the state…
Read More “Mich. AG Continues to Target Chesapeake, Racketeering Charge”
Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

Does PA Royalty Bill 1684 Still Have a Chance This Year?
September 11, 2014September 11, 2014

As MDN wrote back in June, Pennsylvania lawmakers punted on doing anything about House Bill (HB) 1684, what MDN calls the “stop Chesapeake Energy from screwing landowners out of their royalties” bill. We also pointed out, at the time, that it seems pretty likely nothing would get done on that bill for the balance of this year (see PA Royalty Bill 1684 Off the Agenda, Likely for Rest of 2014). We’re sorry to say (so far) we were right. However, MDN received a call from an MDN subscriber (and member of the PA National Association of Royalty Owners, or NARO) to say there’s still a chance–albeit a long shot–that if PA landowners and residents flood their representatives with calls and emails over the next few days before the end of this year’s session, HB 1684 may yet get a vote and go to the governor for a signature…
Read More “Does PA Royalty Bill 1684 Still Have a Chance This Year?”
Lease & Royalty Payments | Statewide WV | West Virginia

Drilling Under the Ohio River in WV – Smart or Dumb?
September 2, 2014September 2, 2014

As MDN reported last week, West Virginia Gov. Earl Ray Tomblin wants to lease the area under the Ohio River that runs through WV for Marcellus and Utica Shale drilling (see State of WV Looks to Lease Area Under Ohio River for Drilling). Tomblin wants a 20% royalty and no deductions (!) from the royalty check for expenses. Other than that, the lease will go to the driller who pays the largest per-acre signing bonus. Will any drillers bother to file a bid if they can’t deduct expenses from royalties? Is Tomblin crazy like a fox with his proposed lease for drilling under the Ohio River? Or is he just crazy? While a former WV Dept. of Environmental Protection (WVDEP) inspector doesn’t call Tomblin crazy, he does think drilling under the Ohio tends to the nutty side…
Read More “Drilling Under the Ohio River in WV – Smart or Dumb?”
Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

PA AG Kane Goes on Witch Hunt of Drilling Industry over Royalties
August 28, 2014August 28, 2014

You can’t say we didn’t warn you. In April MDN warned you that by inviting Pennsylvania’s avowed anti-drilling Attorney General Kathleen Kane (Democrat) to investigate Chesapeake Energy for shorting landowners on royalties, an invitation extended by PA Gov. Tom Corbett and PA Sen. Gene Yaw (both Republicans), they would unleash something far worse than they expected (see PA AG Kathleen “Anti-Driller” Kane Probes Chessy Royalty Issue). We were right. Word has filtered down that Kane is expanding the scope of her investigation “throughout the energy industry” in PA. Translation: the witch hunt has begun…
Read More “PA AG Kane Goes on Witch Hunt of Drilling Industry over Royalties”
Lease & Royalty Payments | Marshall County | Pleasants County | Statewide WV | West Virginia | Wetzel County

State of WV Looks to Lease Area Under Ohio River for Drilling
August 26, 2014August 26, 2014

West Virginia Gov. Earl Ray Tomblin is a pro-drilling Democrat–an unusual occurrence. In fact, Tomblin is so pro-drilling, he’s looking to lease the land underneath the Ohio River for drilling! That’s sure to give the nutters in the WV Sierra Club heartburn. The governor and his Commerce Secretary, Keith Burdette, have published an official notice seeking bids from drillers. Tomblin and Burdette want a signing bonus AND a hefty royalty to boot. Although a target per-acre bonus amount has not been specified, Tomblin has publicly stated he’d like to see a 20% royalty on any such under-the-river leases…
Read More “State of WV Looks to Lease Area Under Ohio River for Drilling”
Energy Companies | Lease & Royalty Payments | Ohio | Protege Energy | Utica Shale | Washington County (OH)

Marietta Tries 2nd Time to Lease City Land for Utica Drilling
August 13, 2014August 13, 2014

The City of Marietta, OH has several parcels of land they’re interested in leasing for Utica gas drilling: (1) Gunlock Park, behind the Walmart complex off Pike Streeet, (2) city-owned land along Goose Run Road in Marietta Township, (3) city garage property off Alderman Street, and (4) Buckeye Park off Acme and Greene Streets, and (5) the Kroger swap (i.e. “wetlands”) off Acme Street. All five locations total 95 acres. MDN reported that because city council snoozed, they lost out on an earlier opportunity to lease the Gunlock Park and Goose Run properties (35 acres) back in May (see Delay in Leasing City-Owned Land Costs Marietta, OH Big $). The city will run a second advertisement (legal requirement) to lease all parcels, and once again, they may have some interest. If they don’t botch it this time…
Read More “Marietta Tries 2nd Time to Lease City Land for Utica Drilling”
Harrison County | Lease & Royalty Payments | Ohio

MWCD Neighbor Asks District to Include Them in Future Lease Deal
July 22, 2014July 22, 2014

The Muskingum Watershed Conservancy District (MWCD) was formed in 1933 to help control flooding and promote water conservation in the Muskingum River watershed area of Ohio, an area that covers 8,000 square miles. Over the past few years the MWCD has been aggressively leasing some of it’s 54,000 acres for shale drilling, a move that is making the organization big bucks (see MWCD Reinvesting $300M of Utica Shale Revenue over Next 10 Yrs). Some of the MWCD leases are for drilling under and around reservoirs (see Antero Pays $15K/Acre, 20% Royalties for MWCD Piedmont Lake Lease). Anti-drillers have, of course, tried to spoil it (see Anti-Drillers Win Minor Victory Against Muskingum Watershed Dist), but such efforts have been largely unsuccessful in their attempt to derail shale drilling on MWCD land. What you don’t usually hear about are stories like this one…
Read More “MWCD Neighbor Asks District to Include Them in Future Lease Deal”
Broome County | Lease & Royalty Payments | New York

Hope for NY Landowners? Kirkwood Coalition Gets Lease Offer
July 11, 2014July 11, 2014

Back in March, MDN started to hear rumors that the Kirkwood, NY Gas Coalition (outskirts of Binghamton, NY, in Broome County) would soon call for an all-hands meeting of coalition members to consider an offer to lease coalition land for drilling (see Kirkwood NY Landowner Group Actively Negotiating Lease Deal). Then all of the wheels fell off the wagon when NY’s highest court decided 3 of 5 town members can, at a whim, decide to ban shale drilling town-wide (see Shale Drilling in NY is Over – High Court Upholds Town Bans). We figured after that debacle the Kirkwood deal and any other pending deals would likely disappear like a summer morning fog when the sun rises. But what’s this? An offer has been made to members of the Kirkwood Coalition–and it appears to be a pretty good one…
Read More “Hope for NY Landowners? Kirkwood Coalition Gets Lease Offer”
Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

Court: PA’s Landlord & Tenant Act Doesn’t Apply to Oil/Gas Leases
July 11, 2014July 11, 2014

A Pennsylvania landowner signed an oil and gas lease on 98 acres and later sold part of that acreage to someone else. The someone else promptly filed a “quiet title action” making the argument that the lease is invalid because of the Landlord and Tenant Act of 1951. The quiet title action put a cloud on the title to the property and the whole thing ended up in court. PA Superior Court recently ruled that “no,” the lease is not invalid and not under the purview of the Landlord and Tenant Act. Our friends at top law firm Babst Calland break it down for us…
Read More “Court: PA’s Landlord & Tenant Act Doesn’t Apply to Oil/Gas Leases”
Lease & Royalty Payments | Ohio | Statewide OH

Let’s Play Lease Poker – Calling the Lease Agent’s Bluff
July 10, 2014July 10, 2014

Psst, hey buddy, want to play some poker? A landman with inside knowledge sheds light on how drillers time their lease filings–particularly in Ohio. Bill Dannley writing in Ohio Oil & Gas likens the process to playing poker–knowing when to hold ’em and when to fold ’em. Before landowners are approached to sign a lease, a lot of work has already been done, according to Dannley. Expensive seismic surveys have been conducted and deeds have been researched. When a landowner signs on the dotted line, you might expect the landman to hustle on down to the courthouse to file the lease–but that’s not what usually happens…
Read More “Let’s Play Lease Poker – Calling the Lease Agent’s Bluff”
Lease & Royalty Payments | Ohio | Statewide OH | Utica Shale

MWCD Reinvesting $300M of Utica Shale Revenue over Next 10 Yrs
July 3, 2014July 3, 2014

The Muskingum Watershed Conservancy District (MWCD) covers more than 8,000 square miles of rivers, reservoirs and creeks that drain into the Muskingum River. It is the largest wholly contained watershed in the state of Ohio, covering about 20% of the state. MWCD owns 54,000 acres of land. Early in the Utica Shale boom in Ohio the MWCD was scared off from participating (see Muskingum Watershed Reverses Decision to Sell Water to Drillers). But it wasn’t long before the MWCD board found their resolve and started to not only sell water for Utica fracking, they started leasing land like crazy (see Antero Pays $15K/Acre, 20% Royalties for MWCD Piedmont Lake Lease). All of those water sales and leases for drilling are now paying off for MWCD rate payers and indeed for all Ohioans…
Read More “MWCD Reinvesting $300M of Utica Shale Revenue over Next 10 Yrs”
Lease & Royalty Payments | Statewide WV | West Virginia

WV Sees Rash of “Top Leases” for Shale Drilling
June 30, 2014June 30, 2014

Landowners in West Virginia who leased their property but for whom there has not been drilling may have a new source of income. According to an article in the Wheeling Intelligencer / News-Register, some companies are now offering what’s called a “top lease” to landowners without drilling. What, exactly, is a top lease?…
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Access Midstream Partners | Chesapeake Energy | Energy Companies | Energy Services | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

2nd PA Class Action Lawsuit Against Chesapeake re Royalty Fraud
June 26, 2014June 26, 2014

We’ve only spotted this news in (so far) two legal publications, but last Friday the Suessenbach Family Limited Partnership, using a Wilkes-Barre, PA law firm, launched a “sprawling class action” lawsuit against Chesapeake Energy and Access Midstream accusing the two companies of a $5 billion scheme to defraud landowners out of royalties rightfully due to them. MDN previously covered how this scheme worked (see Chesapeake Shafting Landowners out of Royalties Mess Gets Messier). This is the second such class action against Chesapeake over royalties in PA we’re aware of (see Bad to Worse: PA Royalty Owner Asks Court for Chessy Class Action). There are all sorts of ramifications from this latest lawsuit…
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Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

PA Royalty Bill 1684 Off the Agenda, Likely for Rest of 2014
June 20, 2014June 20, 2014

Pennsylvania landowners can and should be angry with the Republican-controlled PA House of Representatives. Word has just come that an important royalty bill–HB 1684–is now on the “back burner” until fall. Fall is the height of the election season and you know darned well nothing will get done on the bill at that point–so for all intents the bill is dead for this year. Which is a shame. What is HB 1684? Our shorthand name for the bill is the “stop Chesapeake Energy from screwing landowners out of their royalties” bill…
Read More “PA Royalty Bill 1684 Off the Agenda, Likely for Rest of 2014”
Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Ohio | Statewide OH

OH Landowners Lose Important Lease Case to Chesapeake
June 17, 2014June 17, 2014

Sometimes the drilling industry gets a well-deserved black eye for their sleazy actions. This is one of those times. Chesapeake Energy took over low-ball leases signed in Jefferson County, OH in 2007 that awarded landowners $10 per acre. The lease calls for paying $10 per acre until the land is drilled. Original term of the lease was five years. But at the end of the five years Chessy automatically renewed it based on something called “paragraph 19” in Ohio’s contract law. Chessy says the language in the lease allows them to renew with the same screw-ya terms. Thing is, landowners who waited now get thousands per acre when signing a lease…
Read More “OH Landowners Lose Important Lease Case to Chesapeake”