Lease & Royalty Payments

Economic Impact | Industrywide Issues | Lease & Royalty Payments | Ohio | Statewide OH | Utica Shale

Muskingum Watershed District: $77M in Utica Lease Revenue, So Far
August 12, 2013August 12, 2013

There’s no doubt a change has happened at the board of the Muskingum Watershed Conservancy District (MWCD). Last year they self-imposed a moratorium on selling water to Ohio Utica Shale drillers (Muskingum Watershed Reverses Decision to Sell Water to Drillers). This year, they can’t wait to lease MWCD land to Utica Shale drillers and sell them the water to frack it (MWCD to Sell 138M Gallons of Seneca Lake Water for Utica Drilling). Why the change?

An MWCD official talked about the change in thinking for the MWCD board at a meeting last week of the Guernsey (County) Energy Coalition…
Read More “Muskingum Watershed District: $77M in Utica Lease Revenue, So Far”
Energy Companies | EnerVest | EV Energy Partners | Guernsey County | Harrison County | Lease & Royalty Payments | Noble County | Ohio | Utica Shale

EVEP/EnerVest Cuts Deal to Sell 22.5K OH Utica Acres for $284M
August 9, 2013August 9, 2013

In September last year, EV Energy Partners/EnerVest put more than a half million acres of Ohio Utica Shale acreage on the market. Near the end of last year, a deal for 104,000 of those acres seemed to be almost done, but in April of this year, the deal fell apart (see EV Energy Partners Deal to Sell 104K Utica Acres Dead, What Now?). EVEP then changed gears and said instead of putting big blocks up for sale, they’ll look at selling off smaller chunks (see EV Energy: Changing from Big Deals to Small for Utica Land Sale). Looks like the change in strategy worked.

Today, EVEP announced they’ve made a new deal to sell 22,535 acres in Guernsey, Harrison and Noble counties in Ohio for $284.3 million to an unnamed buyer. According to EVEP, the deal works out to be a very high $12,900 per acre. We ran the math and came up with $12,616 per acre. Either way, EVEP is getting a LOT of money for unloading Utica Shale acreage they don’t want. This deal is scheduled to close in the third quarter–the next few months. Let’s see if this one actually happens.

The announcement from EVEP/EnerVest (with a map of the acreage sold):
Read More “EVEP/EnerVest Cuts Deal to Sell 22.5K OH Utica Acres for $284M”
Industrywide Issues | Lease & Royalty Payments | Ohio | Pipelines | Statewide OH

Some OH Landowners Get “Take it or Leave it” Pipeline Offers
August 6, 2013August 6, 2013

Apparently, some heavy-handed tactics are being used by some (not all) landmen in Ohio who are telling property owners to “take it or leave it” when it comes to offers on the table to allow pipelines to cross their land. Landowners beware: a landman may tell you the company will run the pipeline anyway by using the power of eminent domain. Very few of the pipelines now being constructed in eastern Ohio right now have eminent domain power.

If you hear such a statement from a landman, ask to see a certificate from FERC or the Ohio Public Utilities Commission stating that particular pipeline has eminent domain authority. If they can’t produce such a certificate, you know they’re blowing smoke…
Read More “Some OH Landowners Get “Take it or Leave it” Pipeline Offers”
Chesapeake Energy | Energy Companies | Lease & Royalty Payments | Statewide WV | West Virginia

The Marcellus Continues to be Star Performer for Chesapeake
August 5, 2013August 5, 2013

Different media outlets have analyzed the comments made last Thursday by Chesapeake Energy officials, looking for Chessy’s “take” on their particular region. A newspaper in West Virginia published the report below that looks at Chessy’s update on the Marcellus Shale in the southwestern corner of the play–otherwise known as the “wet gas” area. Bottom line: Although everyone continues to focus on the Chesapeake’s love affair with the Utica Shale, the Marcellus Shale is the play actually contributing to the company’s bottom line–in a big way. The Marcellus is helping turn around the good ship Chesapeake.

Of particular interest to MDN in this brief article is a short paragraph that mentions the signing bonus/royalty deals landowners in the Upper Ohio Valley have recently landed with Chesapeake and other drillers–some of the highest bonus and lease terms we’ve seen to date in the Marcellus…
Read More “The Marcellus Continues to be Star Performer for Chesapeake”
Lease & Royalty Payments | Muskingum County | Ohio | Utica Shale

Risky Business – OH Landowner Group Wants to Lease Sans Lawyer
July 26, 2013July 26, 2013

A Utica Shale landowner group in Muskingum County, OH with 90,000 acres available for lease has embarked on a risky venture. They want to strike a deal on behalf of their members to lease property for $5,000 per acre and 20% royalties. Certainly no problem with that–sounds like a fair deal in a “wet gas” area like Muskingum County, OH. The group is asking the Muskingum County Commissioners to not shop county land below that asking price (something that happened in neighboring Coshocton County) as that would undercut their bargaining power. We also have no problem with that–sounds like a smart strategy.

However, the landowner group wants to cut a deal with a driller without the help of attorneys. Attorneys typically take a small per-acre fee in return for their legal guidance on very complicated oil and gas drilling contract law. You can be sure the driller drawing up a lease agreement has an army of attorneys working on it–so why would you willingly disadvantage yourself by not using one too? It comes down to money…
Read More “Risky Business – OH Landowner Group Wants to Lease Sans Lawyer”
Lease & Royalty Payments | Ohio | Pennsylvania | Statewide OH | Statewide PA | Statewide WV | West Virginia

New Report Shows Permits, Wells Drilled & More Near Your Address
July 23, 2013July 23, 2013

As you may know, MDN editor Jim Willis has been partnering with ShaleNavigator founder Ed Camp for more than a year now to bring you the three volume Marcellus and Utica Shale Databook series. The 2012 series was a huge success, and the new 2013 series (Volume 1 is out now) is shaping up to be the same. The Databook is a series of maps created using the excellent ShaleNavigator service to display where (and to whom) permits have been issued, county by county, throughout the Marcellus and Utica Shale region. However, the ShaleNavigator itself service is far more than just permits, displaying multiple “layers” of information users can turn on and off to display lease offers, pipeline locations, compressor station locations and much more (24 different layers in all).

Ed has just released an exciting and important new feature for the ShaleNavigator service: Subscribers may now produce reports displaying shale oil and gas wells, well permits, pipelines, and lease offer information near a specific address “on the fly.” Type in any address (your address maybe?), wait a few seconds, and get a PDF report detailing all of the permits issued, wells drilled, pipelines and lease offers within both a 2 mile radius and within a 5 mile radius of that address (see an example report embedded below). Folks, this is beyond cool!…
Read More “New Report Shows Permits, Wells Drilled & More Near Your Address”
Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

Some PA Landowners Mull Decision to Sue Chesapeake over Royalties
July 19, 2013July 19, 2013

Are you a landowner in Pennsylvania leased with Chesapeake Energy? And if you are, do you feel cheated with your royalty payments? If so, you may want to join what’s shaping up to be a class action lawsuit in PA against Chessy over what some claim are underpaid royalties.

Landowners are being pursued by a couple of Scranton-area lawyers working with a couple of out-of-state lawyers–from New York City–to go after Chesapeake on the issue of what they say are shorted royalty payments. Are these lawyers champions of the downtrodden, defending the rights of shafted landowners? Or the real estate equivalent of ambulance chasers? You decide…
Read More “Some PA Landowners Mull Decision to Sue Chesapeake over Royalties”
Energy Companies | Hess | Lease & Royalty Payments | Newfield Exploration | Pennsylvania | Wayne County

DRBC Delay Costs Wayne County Landowners $187.5M, Hess Pulls Out
July 16, 2013July 16, 2013

Thank you Carol Collier (Executive Director) and the other members of Delaware River Basin Commission (DRBC): You’ve just cost Wayne County, PA landowners a collective $187.5 million by your continued inaction to allow drilling in Wayne County. Newfield Appalachia PA and Hess Corp. started sending notices last week to Wayne County landowners that they’ve decided to terminate the leases they made with them in 2009–on more than 100,000 acres.

Not wanting to tick off the DRBC and the member states of NY, NJ, PA and DE, the drillers blamed the lease terminations on a change in strategy–they want to drill in oily shale plays. But we know the real reason…
Read More “DRBC Delay Costs Wayne County Landowners $187.5M, Hess Pulls Out”
Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Statewide PA | Taxation

PA DCNR Nears Total Self-Funding from Marcellus Leases/Royalties
July 3, 2013July 3, 2013

Most people would view this as good news: The Pennsylvania Dept. of Conservation and Natural Resources (DCNR) is within striking distance of becoming self-funding. Only $30 million (out of a $136.5 million budget) comes out of PA taxpayer pockets–just 22%. We’d call a self-funding government agency nothing short of a miracle! What would PA’s elected Democrats call it? A problem–because the self-funding comes from lease and royalty payments to the DCNR from Marcellus Shale wells drilled on state-owned land, and not from Democrat shell games in moving money around in Harrisburg to derive political power.

Currently about one-third of all state-owned land is leased for potential drilling with a voluntary moratorium on the rest first started by Gov. Rendell and later upheld under Gov. Corbett. Nearly 900 wells have been permitted on state-owned land, of which only 325 are drilled and producing (providing royalties)–so the DCNR may hit total self-funding at some point in the next few years when the other 575 wells get drilled. If partial self-funding has led to the current apoplexy in Harrisburg, total self-funding may lead to a full brain hemorrhage in PA’s elected Democrats…
Read More “PA DCNR Nears Total Self-Funding from Marcellus Leases/Royalties”
Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

New PA Royalty Bill SB259 Faces Opposition from NARO
July 2, 2013July 2, 2013

Pennsylvania landowners listen up: The PA legislature has just passed a new bill (SB259) that will provide for better reporting on royalty statements. Better reporting would normally be something supported by the National Association of Royalty Owners (NARO). However, NARO is advising PA Gov. Tom Corbett to NOT sign this new bill into law as passed because at the last minute a provision was inserted that can weaken the bargaining position of landowners who have older drilling leases (pre-shale drilling) who want to renegotiate those leases to allow shale drilling. We concur. This bill, as it is, would not be favorable to some landowners.

A copy of Senate Bill 259 is included below. Here’s our analysis of it…
Read More “New PA Royalty Bill SB259 Faces Opposition from NARO”
Atlas Energy | Chesapeake Energy | Columbiana County | Energy Companies | Lease & Royalty Payments | Ohio

Lease Activity in Columbiana OH Heats Up, Drilling on the Way?
June 20, 2013June 20, 2013

Carroll County, OH has been the epicenter of Utica Shale drilling activity in Ohio. While that’s not expected to change anytime soon, Columbiana County, which borders Carroll County to the northeast, may see its own boom in drilling soon, based on recent lease filings:
Read More “Lease Activity in Columbiana OH Heats Up, Drilling on the Way?”
Economic Impact | Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Statewide PA

New Report: PA Marcellus Royalty Payments Rising Rapidly
June 11, 2013June 11, 2013

A new report analyzing the rapid rise and impact of Marcellus Shale royalties in Pennsylvania was recently released by the Allegheny Institute for Public Policy. Among the startling facts in the “policy brief” are: The Institute estimates that $731 million in Marcellus Shale royalties were paid to Pennsylvanians in 2012. In rural northeastern Susquehanna County, PA, residents received $133 million in royalty payments–in 2010. That number will be higher for 2012. Can you imagine the profound impact that money has in the farming communities across Susquehanna County?

Here’s the full policy brief/analysis from the Allegheny Institute:
Read More “New Report: PA Marcellus Royalty Payments Rising Rapidly”
Energy Companies | Lease & Royalty Payments | Olympus/Huntley & Huntley | Pennsylvania | Westmoreland County

Conventional Driller Eyes Marcellus Under Murrysville, PA Park
June 6, 2013June 6, 2013

A privately-held, small conventional driller from southwestern PA near Pittsburgh, Huntley & Huntley, wants to begin drilling unconventional wells that target the Marcellus Shale. They’ve chosen Westmoreland County, PA as the place to do it. Huntley & Huntley has already leased land surrounding the Murrysville Community Park and now wants to lease the 305-acre park too. They plan to set up drill pads outside of the park, on adjoining land, and drill under the park.
Read More “Conventional Driller Eyes Marcellus Under Murrysville, PA Park”
Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

PA Judge Rules on When Drilling “Begins” & Extends a Lease
June 5, 2013June 5, 2013

An important question for PA landowners whose leases are set to expire soon: When, exactly, does the law consider a driller has begun drilling? Sometimes drillers will do the bare miniumum to prepare a site without doing any actual drilling and declare they’ve met their lease obligation, and those very basic actions reset the clock, giving the driller more time (sometimes years) to actually drill the well. Such was the case with Range Resources and Good Will Hunting Club in southwestern PA. Last week a district court judge ruled and said the drill bit doesn’t have to touch the ground for drilling to have “commenced”…
Read More “PA Judge Rules on When Drilling “Begins” & Extends a Lease”
Lease & Royalty Payments | Pennsylvania | Statewide PA

Some PA Landowners Resell Royalty Rights – Good or Bad Idea?
May 29, 2013May 29, 2013

A few weeks ago the Pittsburgh Post-Gazette ran an article about a relatively new trend happening in shale country: landowners reselling their already leased royalty rights (see the PPG story Pennsylvania landowners can get cash on spot for mineral rights). It’s sometimes referred to as “flipping” their royalty rights. In essence, it works like when a person wins the lottery but the payments are stretched over a period of years–like 15-20 years–but the winner would prefer to have their money now. There are companies that will pay the winner a discounted price for the right to receive the future payments. Maybe the winner would have ended up getting $1 million when all payments are made, but the company is willing to pay them, say, $600,000 right now. So the winner takes the money now and signs over the future payments to the company. The winner gets half or more now, the company pockets a nifty sum but has to wait to get it.

Something similar is happening with potential (not even actual) royalties from shale drilling in the Marcellus–except the stakes are higher, and the risk much greater…
Read More “Some PA Landowners Resell Royalty Rights – Good or Bad Idea?”
Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

PA House Bill 1414: New Reporting for Royalty Calculations
May 21, 2013May 21, 2013

Listen up drillers and landowners in PA: Pennsylvania House Bill 1414 (copy embedded below) is making its way through the PA legislature. That bill, if passed, will require new reporting standards when it comes to calculating oil and gas royalties.

From the ShaleEnergyLawBlog:
Read More “PA House Bill 1414: New Reporting for Royalty Calculations”