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Court Orders Ohio Drillers to Produce Documents in Royalty Dispute
Back in the summer of 2020, MDN told you about a lawsuit brought by an Ohio rights owner called TERA, an organization that appears to own the royalty rights for a number of leases with wells in Belmont County, OH, drilled by different producers, suing the producers for drilling into the Point Pleasant shale layer when the lease only mentions the Utica layer (see OH Landowners Sue Rice, Ascent, XTO, Gulfport for Drilling Too Deep). That lawsuit continues to grind on. Last week, a judge ruled the drillers being sued must produce certain documents sought by the plaintiff (rights owner).
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This is one of those little gems we delight in unearthing for MDN readers — especially for our landowner/rights owner readers. Researchers from the University of Rochester and the University of Pittsburgh assembled a dataset of lease deals used in the Pennsylvania Marcellus (some 60,000 of them!) and analyzed the leases for compensation and clauses that may protect landowner health and the enjoyment of their properties. The researchers used the data to produce three main findings…
A lawsuit of interest for all landowners is playing out in West Virginia between a class of landowners and EQT Corporation, the largest natural gas producer in the country. We searched our extensive archives high and low and found no mention of this lawsuit! Somehow, it has escaped our attention — until now. As these cases often are, this one is long and complicated. However, the nub of the case, the essence of the dispute, is whether or not EQT can pay royalties to landowners based on the “raw” gas that comes out of the borehole (methane plus NGLs) or whether, as the plaintiffs argue, EQT should pay royalties based on the post-processed gas and NGLs (presumably at a much higher rate).
In December, Murrysville (PA) Council members will make a decision about leasing land for shale drilling under Duff Park (234 acres) and Murrysville Community Park (305 acres). Murrysville is located in Westmoreland County in the southwestern part of the state. Olympus Energy is interested and has pitched proposals to lease under both parks, using their adjacent leased acreage (on private land) to set up rigs to drill under the parks. However, Murrysville recently sought proposals from other drillers to avoid any appearance of insider deals (see 
WhiteHawk Energy, headquartered in Philadelphia with ownership of mineral and royalty interests for 850,000 gross unit acres and over 2,500 producing horizontal shale wells between the Marcellus and the Haynesville, announced yesterday the acquisition of additional Marcellus Shale natural gas mineral and royalty assets for a total purchase price of $54 million. WhiteHawk owns mineral and royalty rights across nearly half a million M-U acres. The deal does not increase WhiteHawk’s total acreage but does increase the company’s percentage of ownership across that acreage.
A company called Southern Tier CO2 to Clean Energy Solutions, based in Binghamton, NY (where MDN is located), is sending fliers to landowners in Broome, Tioga, and Chemung counties (along the border with Pennsylvania, where there is no doubt large amounts of Marcellus and Utica gas beneath the ground) inviting landowners to sign up for what appears to be an exciting opportunity to sell gas rights. The flier (below) and company website say the company plans to use carbon dioxide (CO2) to (a) store it underground, but also (b) use it to extract natural gas from underground and then (c) either sell the gas via pipeline or burn it to produce electricity. The technology envisioned is an alternative to fracking. Will it work? And, will it be profitable for landowners?
Once upon a time (roughly 12 years ago), Chesapeake Energy and other shale drillers were leasing property in Columbiana County, OH, in deals that often paid $6,000 per acre for a signing bonus and granted 20% royalties for any oil or gas produced. According to an analysis by the Youngstown Business Journal, those days are long gone. However, many of those original leases have expired, and there is a new push to re-lease in the county, says a Youngstown attorney specializing in oil and gas. Just don’t expect big signing bonuses and royalty rates.
An important decision was recently issued in a federal court case (in Ohio) that has the potential to affect landowners and drillers with shale leases throughout the Marcellus/Utica. At least, we believe it has broader implications. The case is known as Grissoms et al. v. Antero Resources Corporation. The case revolves around the issue of a “market enhancement” royalty clause (MEC), which is common in many shale leases throughout the M-U. An MEC lease typically prohibits the deduction of any post-production costs incurred in transforming raw gas into a marketable product. The question is, when is the gas marketable? At the wellhead or later on, after it has been cleaned up? The judge in the Grissoms case ruled in favor of the landowner and said the gas is NOT “marketable” in its raw form at the wellhead.
Last week, the Pennsylvania Board of Game Commissioners announced it had cut two different deals with Pennsylvania General Energy (PGE). Both deals involve land swaps with the prospect of new shale drilling by PGE on the way in both Lycoming County and Sullivan County. The Game Commission’s remit is “to protect, propagate, manage and preserve the game or wildlife of Pennsylvania.” Money from shale drilling helps the Game Commission accomplish its objectives. Both deals with PGE will provide the Game Commission with a 16% royalty for any natural gas produced.
Two Marshall County, WV landowners with the same last name (obviously related) sued Southwestern Energy (SWN), accusing the company of “well bashing,” in March of this year (see 
Yesterday we told you about a new $2 billion hydrogen project coming to West Virginia (see 
Last week MDN told you that WhiteHawk Energy, headquartered in Philadelphia with ownership of mineral and royalty interests for 850,000 gross unit acres and over 2,500 producing horizontal shale wells between the Marcellus and the Haynesville, had proposed marriage to PHX Minerals, based in Fort Worth, Texas, owner of 75,000 leased mineral acres principally located in the SCOOP and Haynesville plays (see 
At the end of May, WhiteHawk Energy, headquartered in Philadelphia with ownership of mineral and royalty interests for 850,000 gross unit acres and over 2,500 producing horizontal shale wells between the Marcellus and the Haynesville, sent a letter to the board and management of PHX Minerals, based in Fort Worth, Texas, owner of 75,000 leased mineral acres principally located in the SCOOP and Haynesville plays. The letter proposes marriage–a combination of the two companies. WhiteHawk received no response and tried again about three weeks later. Still nothing. So WhiteHawk has gone public to catch the attention of PHX shareholders, hoping to convince them to pressure PHX’s board–the M&A equivalent of a shotgun wedding.
We spotted an in-depth article by RBN Energy about mineral rights, royalties, and working interests. Private investors and companies have sprung up to buy such rights. RBN says competition to buy these rights has heated up in recent years. The article gives us a better understanding of the scope, size, and inner workings of the royalty and rights marketplace.