OH Court: Landowners Can’t Cancel Lease for Royalty Nonpayment
An unfortunate decision in an Ohio court case may have far-reaching implications for Ohio landowners. In Armstrong v. Chesapeake Exploration, L.L.C., landowners Myron and Nikki Armstrong purchased 61 acres of land in Tuscarawas County, OH in 2003 with an existing oil and gas lease (dating back to 1972). After purchasing the property, the Armstrong’s land was pooled into a drilling unit and a well was drilled. We do not know how much (or even if) the well produced in the way of gas and oil. We don’t know if it was hooked up to a pipeline for production. We assume it was hooked up and is producing because the Armstrongs have sued to cancel the lease saying they haven’t received a single royalty check since the well was drilled. Tuscarawas County Court ruled that because there is no express provision in the original lease saying “you can cancel this lease if we don’t pay you the royalties we say we’ll pay you,” the court ruled in favor of Chesapeake and the company that owns the lease and is supposed to pay the royalties–Belden & Blake. The Armstongs appealed the decision to the Ohio Court of Appeals, Fifth Appellate District. That court has just ruled the same way–saying even though royalties haven’t been paid, that’s not a good and sufficient reason to cancel the lease…
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We have to chuckle. Anti-drillers are so predictable. As we’ve said going back as far as an event we attended in Binghamton when the former mayor of DISH, Texas, Calvin Tilman (in 2010), we observed that many in the audience are 60s hippies with a new cause in life–to oppose drilling/pipelines/fossil fuels in general (see 
Our favorite government agency, the U.S. Energy Information Administration (EIA), published an article on Friday that appears to “take sides” in the Pennsylvania debate over whether or not to institute a severance tax. Which is a disappointment. Until now the EIA has stayed above the fray in such issues. The EIA article from Friday offers a grossly misleading side-by-side comparison of where states get their primary source of revenue to feed their voracious appetites to transfer wealth from those who earn it to those who don’t–and how much is contributed by oil & gas severance taxes. The EIA compares tax revenues from five major fossil fuel generating states–Alaska, North Dakota, Wyoming, Texas and Pennsylvania. The graphic they use is powerful (and misleading) and appears to support calls to increase a severance tax in Pennsylvania. We disagree–strongly–with that position. Here is the EIA post from Friday, followed by MDN’s explanation of how it is grossly flawed…
Two Republican members of the Pennsylvania House of Representatives have penned a column that points out the math for PA Gov. Tom Wolf’s so-called severance tax on the Marcellus Shale industry a) doesn’t add up, and b) doesn’t actually end up funding education. What makes the column noteworthy is that the two Republicans are not the conservative leaders of the PA House, but instead are from the Philadelphia area. Every Republican we’ve seen from the Philly area are moderate at best–usually RINOs (Republican in Name Only)–and certainly not anywhere near conservative. Yet these two, Rep. Tom Quigley from the 146th district in Montgomery County, and Rep. Warren Kampf from the 157th district in parts of Montgomery and Chester counties, ever-so-eloquently skewer Wolf and his inane high tax plan. Remarkable, coming from two Philly-area Republicans…
Although MDN caught and reported on the Bloomberg article questioning Aubrey McClendon’s high roller ways (see 
The Supreme Court of Kentucky has just ruled, in a pair of cases, that producers (i.e. drillers) CAN deduct post-production costs before calculating royalties to landowners. Once case involves landowners suing Magnum Hunter, the other involves landowners suing EQT, claiming (much like what has happened in Pennsylvania) that post-production costs mean they are getting less than one-eighth or 12.5% of the fair value of the gas as a royalty payment. The Supreme Court of Kentucky ruled the language in the leases is unambiguous as is the law–and that the lease allows for post-production expenses to be deducted. Here’s a summary from the legal beagles at Vorys…
Pennsylvania’s Attorney General, Kathleen Kane, will appear in court today to answer charges that she is, herself, a criminal. She will appear in Montgomery County court to face nine criminal charges, including perjury (i.e. lying under oath). As we have reported, Kane is attempting to divert attention away from her own criminal actions by resurrecting an old porn case, claiming angry white men are out to get her (see 
While MDN has long commented that while natural gas burns cleaner than coal and oil, we are by no means against other forms of fossil fuels. We have not fallen pray to the temptation to “pile on” coal and oil as inferior forms of energy in a vain attempt to prop up natural gas. Why? Because we know how liberals like Obama and the Democrats think. Once they are through destroying coal, they’ll come for natural gas and attempt to destroy it as well. That is now happening. As Robert Murray, chairman and CEO of Murray Energy Corp (big coal company) says, all forms of fossil fuels are under attack by the Obama administration. Murray also points out those who support natural gas and have supported Obama’s rhetoric against coal should not be surprised they have been betrayed by Obama and now are, themselves, a target for elimination. As Murray rightly says, affordable, reliable electricity in America is being destroyed by Big Green groups like the odious Sierra Clubbers…
It’s not often that MDN writes about natural gas drilling in Australia. This time there’s a tie-in with the Utica/Marcellus. Aubrey McClendon, former CEO of Chesapeake Energy ejected from the company he-cofounded by an evil corporate raider (Carl Icahn); Aubrey McClendon, founder of American Energy Partners and subsidiary American Energy Appalachia Holdings that has since fled and become its own company called Ascent Resources; Aubrey McClendon, who could charm a billion dollars from Satan himself and leave old Lucifer smiling at being shafted; that Aubrey McClendon has just signed a deal with an Australian company to secure the rights to drill on 21.5 MILLION acres Down Under (in Australia). This is Aubrey’s first foray outside of the United States–and boy what a splash he’s making! Never mind McClendon’s Ascent Resources is saddled with so much debt it can’t repay that Moody’s Investors Service has downgraded the company to its lowest rating level, meaning “Substantial risks – In default” (see