Lease & Royalty Payments

BP | Energy Companies | Lease & Royalty Payments | Ohio | Trumbull County | Utica Shale

BP Calls it Quits in the Utica Shale – Total Write-off
April 29, 2014April 29, 2014

A sad day for landowners in Trumbull County, OH. Flashback: In March 2012 BP leased 84,000 acres in Trumbull County, OH from the Associated Landowners of the Ohio Valley (see BP’s Big Utica Shale Deal, Leases 84K Acres in Ohio). Just two years later and what started out with great fanfare is all down the toilet. BP announced today they are pulling out of the Utica Shale and writing it all off. In a very brief mention in a press release issued this morning about first quarter 2014 results, BP says: “Following on from the decision to create a separate BP business around its US lower 48 onshore oil and gas activities, and as a consequence of appraisal results, BP has decided not to proceed with development plans in the Utica shale. The Upstream result includes a write-off relating to the Utica acreage.”

Last November MDN wondered aloud whether BP would decide to move forward, or call it quits (see Decision Point: Will BP Drill Their Utica Acreage? Or Pass?). Now we know. Why leave? As we pointed out at the time, Trumbull County has proven to be mostly dry gas, and not wet gas (or natural gas liquids) which makes it a much less profitable part of the play to drill in. BP rolled the dice and bet wrong. The only other driller in Trumbull has been Halcon Resources. They pulled out too (see Halcon Resources Stops Drilling, Gives Up on the Utica Shale). Is there any hope for future Utica drilling in Trumbull County?…
Read More “BP Calls it Quits in the Utica Shale – Total Write-off”
Allegheny County | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Olympus/Huntley & Huntley | Pennsylvania | Range Resources Corp | Regulation

Republicans (!) Seek to Slow Approval of Deer Lakes Park Lease?
April 25, 2014April 25, 2014

To us, a somewhat strange case in the ongoing effort for Allegheny County, PA to lease land under Deer Lakes Park for drilling. Allegheny County Executive Rich Fitzgerald squeezed Range Resources hard and negotiated a deal to allow Range to drill under (not on) Deer Lakes Park for a $4.7 million in signing bonus and 18% royalties, which will net the county something over $70 million over the next 20-30 years (see Allegheny Co Exec Bests Range on Deer Lakes Park Lease Deal). It’s a sweet deal. The only thing that remains is for the 15-member county council to approve it.

The strange part is a bid by a pair of Republicans to enlist outside legal counsel to review the lease–when council already has its own attorney for that purpose. Normally it’s the Republicans who are pro-drilling. The effort to get outside counsel, which failed in committee along a party-line vote of 5-2, is nothing more than a “stall tactic” according to Rich Fitzgerald. That’s the strange part–why would the Republicans want to delay this lease? Council will meet next Wednesday to take up the Deer Lakes Park lease again–hopefully to approve it…
Read More “Republicans (!) Seek to Slow Approval of Deer Lakes Park Lease?”
Lease & Royalty Payments | Pennsylvania | Susquehanna County

Rural NE PA School Nets $1.7M in Royalties from 2 Marcellus Wells
April 24, 2014April 24, 2014

Get this: Elk Lake School District, in very rural Susquehanna County, PA (we’ve been there, it’s surrounded by farm fields), has raked in more than $1.7 million in royalties–from two Marcellus Shale wells drilled on its property.

And the royalties just keep comin’…
Read More “Rural NE PA School Nets $1.7M in Royalties from 2 Marcellus Wells”
Energy Companies | EQT Corp | Hydraulic Fracturing | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

Was PA Court Decision Really an OK for Forced Pooling?
April 24, 2014April 24, 2014

Sometimes language is a funny thing. Terms come into use and and thrown around–but in different contexts they mean different things. MDN recently noticed that earlier this month EQT won a lawsuit against landowners in Allengheny County, PA. The landowners had leased their land with EQT, but we’re guessing they were old leases, done some number of years ago, because the landowners said EQT could not drill under their properties collectively–in a drilling unit. Apparently the landowners wanted EQT to drill on each individual property–or perhaps (more likely) renegotiate the old leases for better money to allow horizontal shale drilling. Bear in mind EQT and the landowners–all of them–already have contractual leases.

EQT sued (EQT Production Co. v. Opatkiewicz et al.) to “force” the landowners to allow them to do their job–drill horizontally under several properties as part of a drilling unit. The court ruled in favor of EQT (copy of the decision is embedded below) saying the landowners can’t stipulate how EQT gets the gas from leased contiguous properties. That is our essential understanding of the case. However, it’s widely being reported that the court “supported forced pooling”…
Read More “Was PA Court Decision Really an OK for Forced Pooling?”
Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

PA HB 1684 Guaranteed Minimum Royalty Act Hits a Snag
April 24, 2014April 24, 2014

For nearly a month, the National Association of Royalty Owners (NARO) Pennsylvania Chapter has been pushing for passage of House Bill (HB) 1684, the Guaranteed Minimum Royalty Act (see PA NARO Alert: Tell Your State Rep to Vote YES on HB 1684). HB 1684 would ensure landowners get a minimum 12.5% in royalty payments from drillers. This is in response to alleged rumors that Chesapeake Energy has been screwing landowners by deducting transportation and other costs in a somewhat underhanded way. HB 1684 is supposed to stop that–going forward.

However, HB 1684 has “hit a snag” according state Rep. Matt Baker. As MDN has previously noted, this particular bill has divided landowners and drillers, something we don’t see often (see Rare Schism Between Landowners & Drillers over PA Royalty Law). The latest on the fate of HB 1684:
Read More “PA HB 1684 Guaranteed Minimum Royalty Act Hits a Snag”
Antero Resources | Belmont County | Energy Companies | Guernsey County | Harrison County | Lease & Royalty Payments | Ohio | Utica Shale

Antero Pays $15K/Acre, 20% Royalties for MWCD Piedmont Lake Lease
April 21, 2014April 21, 2014

All’s we can say is “WOW!” Last Friday the Muskingum Watershed Conservancy District (MWCD) signed another (new) lease with Antero Resources to lease more than 6,300 acres in and around Piedmont Lake, in Guernsey, Harrison and Belmont counties in Ohio. The land is in prime Utica Shale territory and Antero must have wanted it bad, because they paid a $15,000 per acre signing bonus. Plus 20% in royalties for anything produced from the land. That is, by far, the largest bonus payment we have ever heard of in the Marcellus and Utica region.

Landowners in the MWCD area should be thankful. Because of this deal and other leases signed by the MWCD, the rates landowners pay to the MWCD are going down–by 50%–starting next year. What a fantastic story where everyone wins. Landowners win with lower watershed fees, Antero wins by scoring what will no doubt be very productive property for shale wells, America wins with more (and cheaper) natural gas. There are no losers in this scenario. Here’s more on Friday’s meeting of the MWCD board and the decisions they made…
Read More “Antero Pays $15K/Acre, 20% Royalties for MWCD Piedmont Lake Lease”
Bradford County | Chesapeake Energy | Crime | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Statewide PA

PA AG Kathleen “Anti-Driller” Kane Probes Chessy Royalty Issue
April 17, 2014April 17, 2014

Pennsylvania Attorney General Kathleen Kane’s office is interviewing people on the Chesapeake Energy royalties screwing scandal, reportedly. We have mixed emotions about it. Yes, the state needs to investigate and see if there has been malfeasance. However, we question whether an avowedly anti-drilling AG has the moral or ethical ability to do so honestly. Yes, we ARE questioning her fitness for the office. Problem is, Gov. Tom Corbett and other PA Republicans like State Sen. Gene Yaw asked her to investigate–so it’s on their heads if she turns into the proverbial bull in a china closet and takes the opportunity to try and destroy the drilling industry as part of her “investigation.”

Here’s the latest from the rumor mill on Kane’s so-called royalty investigation…
Read More “PA AG Kathleen “Anti-Driller” Kane Probes Chessy Royalty Issue”
Energy Companies | Fossil Creek | Lease & Royalty Payments | Marshall County | Utica Shale | West Virginia

Fossil Creek Targets WV Utica Shale, Big Bucks for Leases/Drilling
April 16, 2014April 16, 2014

The Utica Shale “rush” has arrived–in West Virginia. Bedford, TX-based Fossil Creek Ohio (a company we’ve not heard of before today) is signing up Utica Shale leases in Marshall County, WV and says they will begin to sink wells “in the near future.” Fossil Creek President Chris Rowntree declined to say how much the company is paying for lease bonuses and royalties, but he did say it’s more than any other company is paying (which would indicate something north of $7,000 per acre and 20% royalties).

Also of interest to MDN are the numbers thrown out by Fossil Creek for how much they will spend to drill a single Utica well in WV: $22 million on average. That is a startling number. Most Marcellus wells in the area cost around $7 million to drill. If you spend three times that to drill a Utica well, you better be convinced you’ll get three times the return you would receive from a typical Marcellus well to make it a profitable venture–unless you simply have money to burn. Yes, color us skeptical that anyone will make money by spending $22M to drill a shale well! Here’s more on Fossil Energy and several other companies pursuing the Utica Shale “rush” in the Mountain State…
Read More “Fossil Creek Targets WV Utica Shale, Big Bucks for Leases/Drilling”
Antero Resources | Energy Companies | Lease & Royalty Payments | Ohio | Statewide OH | Utica Shale

More Info on MWCD Proposed Lease with Antero Resouces
April 15, 2014April 15, 2014

See our companion story today about the potential downsides to drilling around the 6,700-acre area around (and under) Piedmont Lake in Ohio. We also spotted a brief story the deal that stands a good chance of being signed on Friday. Here’s a status report…
Read More “More Info on MWCD Proposed Lease with Antero Resouces”
Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

Bad to Worse: PA Royalty Owner Asks Court for Chessy Class Action
April 9, 2014April 9, 2014

Chesapeake Energy continues to find itself under the metaphorical gun with respect to royalty payments in Pennsylvania. The PA legislature is considering a bill (HB 1684) that would plug a legal loophole and require Chesapeake and other drillers to pay landowners a 12.5% minimum royalty regardless of post-production costs (see PA NARO Alert: Tell Your State Rep to Vote YES on HB 1684). Landowners in Bradford County sued Chessy held an anti-Chesapeake rally to further express their extreme displeasure (see Bradford PA Landowner Rally over Chesapeake Royalty Shenanigans). Gov. Corbett asked PA’s anti-drilling Attorney General, Kathleen Kane, to investigate (showing how bad it’s gotten–to stoop to asking her to get involved).

And now from bad to worse: a company that owns royalty rights in PA, Scout Petroleum, claims they’ve been screwed out of royalties by Chesapeake and has asked a judge for a full refund and to force Chesapeake into arbitration and grant class-action status to the whole, festering mess…
Read More “Bad to Worse: PA Royalty Owner Asks Court for Chessy Class Action”
Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

Rare Schism Between Landowners & Drillers over PA Royalty Law
April 8, 2014April 7, 2014

Several weeks ago MDN told you that the Pennsylvania chapter of the National Association of Royalty Owners had sent out a flash email to encourage support of House Bill (HB) 1684, the Guaranteed Minimum Royalty Act. The bill would clear up shady dealings from Chesapeake Energy (and perhaps others) in deducting certain expenses leaving some landowners with checks for royalties way under the 12.5% guaranteed minimum (see PA NARO Alert: Tell Your State Rep to Vote YES on HB 1684). Not long after NARO sounded the rallying cry, the Pennsylvania Farm Bureau joined NARO in supporting HB 1684 (see PA Farm Bureau Joins Chorus Against Chessy on Royalty Issue).

However, this is one issue on which landowners, who are strongly pro-drilling, and the drilling industry itself, part ways. The Marcellus Shale Coalition, through its new grassroots organization called Shale Advocates, is asking shale supporters to oppose HB 1684. According to the Shale Advocates website, they want their supporters to “Take a few moments to contact your representative and let them know you oppose HB1684 and any effort by the Commonwealth to intervene in private contracts. Here’s your opportunity to be heard. Your voice will make a difference.” After HB 1684 has been larded up with amendments, NARO met to consider whether or not they would still support it and in the end, they see more to like than no like about the bill–so they issued the following press release last week to reaffirm their strong support:
Read More “Rare Schism Between Landowners & Drillers over PA Royalty Law”
Landowner Coalition News | Lease & Royalty Payments | Ritchie County | West Virginia | Wirt County | Wood County

Wirt County WV Coalition Still in Hunt for a Deal – Who With?
April 7, 2014April 7, 2014

Last summer it seemed like a deal to lease 241,000 acres of land in the Wood, Ritchie, Calhoun, Roane, Jackson and Wirt County area was imminent (see Wirt County Landowner Group Close to Deal for Huge 241K Acres). But then in October Jim Lydon, chairman of the Wirt County Oil and Gas Group said the deal fell through and they were still shopping for a deal (see Wirt County Landowner Deal Falls Through, Still Searching).

According to Lydon the land in their massive coalition is in the “super wet area” of both the Marcellus and Utica Shale–and indeed he’s right. The group is still searching for a deal and no one is talking (that we can tell) on the record–although an article published yesterday in the Parkersburg News and Sentinel does mention, in passing, a few possible companies that may be talking with the group about a new deal…
Read More “Wirt County WV Coalition Still in Hunt for a Deal – Who With?”
Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

PA Farm Bureau Joins Chorus Against Chessy on Royalty Issue
April 3, 2014April 3, 2014

The Pennsylvania Farm Bureau is adding its considerable weight behind the effort to pass new legislation that will guarantee landowners in the state don’t get shafted by companies like Chesapeake Energy when it comes to royalty payments. As MDN has previously reported, the royalty situation in PA has turned messy with claims that Chesapeake Energy has engaged in an elaborate scheme to pass post-production costs on to landowners–costs they technically don’t have a right to deduct (see Chesapeake Shafting Landowners out of Royalties Mess Gets Messier). What it means is that some landowners are getting peanuts–far below the state mandated 12.5% minimum royalty.

The Farm Bureau is up in arms because its members are up in arms–and so the organization is pushing for new legislation to plug the loophole that Chesapeake (and maybe others) are apparently exploiting…
Read More “PA Farm Bureau Joins Chorus Against Chessy on Royalty Issue”
Lease & Royalty Payments | Noble County | Ohio

The Curious Case of First Penn Oil & Gas in Noble County, OH
April 2, 2014April 2, 2014

MDN spotted a very brief mention that Noble County, OH signed a lease in February with First Penn Oil & Gas for 6.71 acres of county-owned land for $36,657, or $5,463 per acre. Which on the surface seems like a pretty good deal. We dug some more, having not heard of Penn Oil & Gas, and found that the Caldwell (Noble County), OH School Board also signed a lease with Penn, just a few weeks ago. The school is raking in the dough: terms were $5,400 for 38.6846 acres, or roughly $209,000.

Who is Penn Oil & Gas? They’re not a driller as far as we can tell. Likely a land company, or more pejoratively, a “lease flipper” that will lease the land then turn around and sell the lease to a driller. Who might the driller be that will ultimately inherit those leases? We have a guess or two…
Read More “The Curious Case of First Penn Oil & Gas in Noble County, OH”
Lease & Royalty Payments | Pennsylvania | Statewide PA

PA’s “Secret” Deal to Lease Land Under Rivers & Streams (Gasp!)
April 1, 2014April 1, 2014

Pssst. We need to whisper this news, because no one is supposed to know. Those nefarious Republicans in Harrisburg, PA have been (gasp) leasing land underneath rivers and streams to those nasty, evil shale drillers–shameless Republican mooks. And such leasing has brought in $5.9 million into the coffers of the state for politicians to redistribute.

So says the reliably anti-drilling StateImpact Pennsylvania–which is really just a couple of NPR reporters that issue their anti-drilling views via a website. The state, since 2012, has leased more than 1,000 acres under rivers and streams for $4,000 per acre signing bonus, and when/if drilling happens, 20% royalties. Pretty darned good deal if you ask us. So has Gov. Tom Corbett been hushing this up, keeping it a secret?…
Read More “PA’s “Secret” Deal to Lease Land Under Rivers & Streams (Gasp!)”
Lease & Royalty Payments | Meetings | Pennsylvania | Statewide PA

NARO PA Meeting: CA Speaker Says PA Needs Better Reporting
March 31, 2014March 31, 2014

More from the National Association of Royalty Owners PA chapter annual conference last week in State College, PA. One speaker who runs a California-based oil and gas appraisal firm was taking pot shots at the PA Dept. of Environmental Protection saying that twice a year reporting on production numbers is not enough–especially for those who want an accurate appraisal on what their oil and gas rights may be worth for leasing purposes.

Matt Henderson with Penn State’s Marcellus Center for Outreach and Research also chimed in with some thoughts on DEP reporting. Below is a report from the second day of the NARO event in State College…
Read More “NARO PA Meeting: CA Speaker Says PA Needs Better Reporting”