Chief Oil & Gas | Energy Companies | Fayette County | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania
SWPA Landowners Settle Class Action Lawsuit with Chief for $5.5M
It took us a while to track down this story, but we finally have details about the settlement of a class action lawsuit brought by roughly 60 landowners in Fayette County, PA, against Chief Exploration and Development, the former drilling arm of Chief Oil & Gas (now called Cyprus Exploration and Development). The lawsuit alleged that in 2008, Chief and its landman had cut a deal to lease the landowners’ property and then never paid the stipulated signing bonus. The lawsuit sought $7 million. The landowners ended up settling for $5.5 million earlier this month.
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Just last week, we told you that a West Virginia Circuit Court judge who allegedly waved and pointed a gun at an attorney for EQT Corporation during a hearing about a case brought against EQT by landowners for improper deductions of post-production expenses from their royalty payments had resigned (see 
In January of this year, MDN reported on Pennsylvania State Senate Bill (SB) 806, aimed at providing clarity in the royalty payment statements landowners receive from oil and gas drillers (see 
These days we don’t often see the contract details for new leases signed by landowners to allow shale drilling. We used to see and report on large landowner coalitions and the deals they had struck back in the earlier days of the Marcellus/Utica. But today, about the only time you get any kind of insight into deal amounts comes when municipalities lease land for drilling, given that the business dealings of a municipality must be disclosed publicly. We’re always on the lookout for such deals. Allegheny Township in Westmoreland County (near Pittsburgh) has just approved a shale lease with Olympus Energy to drill under (not on) 27.7 acres of the Tredway Trail. The terms of the deal are…
We have chronicled a number of companies that buy royalty and/or mineral rights from landowners in the Marcellus/Utica over the years (see our previous stories about royalty mineral rights sales 
A press release issued yesterday announced the partnership between an Appalachian driller we aren’t familiar with, Oil Well Shares (OWS), and Canada-based OYA Renewables to form a joint venture called Chrysalis Energy. The new company will use OWS’s 1.5 million leased acres across Pennsylvania, Ohio, and West Virginia to build solar farms, wind farms, and “energy storage infrastructure projects.” We have some thoughts about this partnership and how it may impact landowners.
A court case decided in late April in Pennsylvania Superior Court appears (to us) to have significant ramifications for landowners and drillers with respect to deducting post-production expenses. The case is Dressler Family, LP v. PennEnergy Resources, LLC (copy of the decision below), and it addresses “market enhancement” royalty clauses found in many PA leases. Market enhancement clauses typically prohibit the deduction of post-production costs that are incurred when transforming gas into a marketable form. Some drillers ignore such clauses and deduct all “post-production costs” from the landowner’s royalty based on the drillers’ incorrect assumption that gas is “marketable” at the wellhead. This case and decision helped clear up definitions of what is and is not marketable gas.
According to law firm Houston Harbaugh, P.C., deducting fuel costs from landowner royalties continues to be an ongoing and widespread practice. Some leases allow the use of a portion of the raw gas recovered at a well to “fuel” well-pad operations (processing of the gas). Not only are landowners denied a royalty on the fuel gas volume, they also have that same “cost” deducted from their production royalty! According to Houston Harbaugh, this practice of deducting fuel costs must be closely monitored by all landowners.
An oil and gas mineral lease is a critical part of the process for extracting and selling hydrocarbon molecules. MDN editor Jim Willis will present at next week’s 
EnergyNet
In June, MDN told you about the merger of Falcon Minerals Corporation and Desert Peak Minerals (see 
The same old issue keeps returning in Pennsylvania for landowners and rights owners. The Pennsylvania Minimum Royalty Act guarantees payments to all rights owners of at least 12.5% of the value of the produced gas. Yet contracts signed by many landowners allow for post-production deductions, and those deductions sometimes (often?) result in landowners receiving less than 12.5% in royalty payments. This issue has been a thorn of contention between landowners and drillers for years–two groups that are normally allies. Farmers/landowners from several western PA counties gathered yesterday at the Washington County Farm Bureau’s annual legislative meeting to discuss, among other issues, minimum royalties.
The only thing the so-called Pennsylvania Environmental Defense Foundation (PEDF) “defends” is their own twisted philosophy of trying to gouge out the eyes of the oil and gas industry in PA–even at the expense of de-funding their own beloved PA Dept. of Conservation and Natural Resources (DCNR). In two PA Supreme Court rulings, one in 2017 and another in 2021, PEDF won the right to limit how revenues from oil and gas drilling on state land can be used. The PA legislature reworded its budget directives and began using those revenues to fund day-to-day expenses at DCNR. PEDF sued again. Commonwealth Court rejected PEDF’s arguments against how the legislature allocated the money, and two weeks ago, the PA Supreme Court upheld Commonwealth Court’s rejection. Translation: PEDF just lost a major case they’ve been waging since 2017 to block drilling on state-owned land (by blocking how royalty revenue is used).
In July, MDN told you about the newest chapter of the National Association of Royalty Owners (NARO), the Ohio chapter (see