Landowners are often alarmed and angered when they receive word that the oil/gas lease
they executed several years ago, after months of intense and personal negotiations, has
been assigned to an unknown, unfamiliar gas operator. This anxiety is amplified when the landowner’s phone calls or letters go unanswered, the royalty checks are late or are not made at all and the once well-maintained well pad site is now overgrown and in a state of disrepair. Can the landowner seek redress against the original gas operator? A federal court in Pittsburgh recently addressed this issue and suggested that the assignment of an oil/gas lease may not relieve the original gas operator from liability.
A case heard by the Fifth District Court of Appeals in Ohio in which a landowner claimed that the relatively little drilling done on a small portion of their land should allow them to reclaim title to the mineral rights and release the unused portions of the land to another driller. The court disagreed, ruling the language in the lease does not allow it.
A court case in which a landowner in Ohio sued to cancel a lease because the driller and the company that owns the lease have not paid any royalties since drilling. The Fifth Appellate District Court of Ohio found that because a specific provision in the original lease does not provide for cancellation due to non-payment of royalties, the landowners will have to continue to get screwed.
This document discusses property division issues that arise when same-sex couples dissolve their relationships. It provides an overview of cases from several states that address how courts have divided property in the absence of marriage, when determining parties' intent or preventing unfairness. Courts have considered enforcing written or oral agreements, and applying equitable principles like constructive trusts to avoid inequitable resolutions when dividing couples' jointly and individually held property.
This document is the defendants' closing argument in response to the plaintiffs' closing argument regarding trust documents presented in a real estate dispute. It argues that the plaintiffs' claims of fraudulent conduct by the defendant are unsupported and illogical. It asserts that the trust documents in question have no relevance to the legal issues being tried, which involve the interpretation of purchase and sale agreements for two properties. The defendant argues that the plaintiffs have presented no valid legal basis to rescind the agreements and that the evidence shows the plaintiffs were unable to complete the purchase for financial reasons.
The official motion filed with the New York State Court of Appeals, NY's highest court, to hear the case of Norse Energy v Town of Dryden over the town's vote to ban all fracking and drilling throughout the township.
Copy of Order issued by U.S. District Court suspending AB 219, a new statute which made deliveries of ready-mix concrete subject to California Prevailing Wage Law.
5 30-12 notice of ruling re motion to amend judgment to add judgment debtorsjamesmaredmond
The court granted the defendants' motion to amend the judgment to add additional judgment debtors. Specifically, the court ruled that several entities and trusts are alter egos of the judgment debtor Stephen Gaggero and added them and their trustee as judgment debtors. The court found the defendants presented sufficient evidence to establish the alter ego relationship and that the judgment debtors' arguments against the motion were precluded or barred.
Loughman v EQT - Decision Rejecting Landowner Request to Sever Production Lea...Marcellus Drilling News
A case in which a Greene County, PA landowner requested the court sever production rights under a lease from storage right. The landowners say EQT never produced oil/gas from the property, and lack of production cancels that portion of the lease. PA Superior Court said no, the two are together in the same lease and one OR the other is enough to keep the lease enforceable.
A case heard by the Fifth District Court of Appeals in Ohio in which a landowner claimed that the relatively little drilling done on a small portion of their land should allow them to reclaim title to the mineral rights and release the unused portions of the land to another driller. The court disagreed, ruling the language in the lease does not allow it.
A court case in which a landowner in Ohio sued to cancel a lease because the driller and the company that owns the lease have not paid any royalties since drilling. The Fifth Appellate District Court of Ohio found that because a specific provision in the original lease does not provide for cancellation due to non-payment of royalties, the landowners will have to continue to get screwed.
This document discusses property division issues that arise when same-sex couples dissolve their relationships. It provides an overview of cases from several states that address how courts have divided property in the absence of marriage, when determining parties' intent or preventing unfairness. Courts have considered enforcing written or oral agreements, and applying equitable principles like constructive trusts to avoid inequitable resolutions when dividing couples' jointly and individually held property.
This document is the defendants' closing argument in response to the plaintiffs' closing argument regarding trust documents presented in a real estate dispute. It argues that the plaintiffs' claims of fraudulent conduct by the defendant are unsupported and illogical. It asserts that the trust documents in question have no relevance to the legal issues being tried, which involve the interpretation of purchase and sale agreements for two properties. The defendant argues that the plaintiffs have presented no valid legal basis to rescind the agreements and that the evidence shows the plaintiffs were unable to complete the purchase for financial reasons.
The official motion filed with the New York State Court of Appeals, NY's highest court, to hear the case of Norse Energy v Town of Dryden over the town's vote to ban all fracking and drilling throughout the township.
Copy of Order issued by U.S. District Court suspending AB 219, a new statute which made deliveries of ready-mix concrete subject to California Prevailing Wage Law.
5 30-12 notice of ruling re motion to amend judgment to add judgment debtorsjamesmaredmond
The court granted the defendants' motion to amend the judgment to add additional judgment debtors. Specifically, the court ruled that several entities and trusts are alter egos of the judgment debtor Stephen Gaggero and added them and their trustee as judgment debtors. The court found the defendants presented sufficient evidence to establish the alter ego relationship and that the judgment debtors' arguments against the motion were precluded or barred.
Loughman v EQT - Decision Rejecting Landowner Request to Sever Production Lea...Marcellus Drilling News
A case in which a Greene County, PA landowner requested the court sever production rights under a lease from storage right. The landowners say EQT never produced oil/gas from the property, and lack of production cancels that portion of the lease. PA Superior Court said no, the two are together in the same lease and one OR the other is enough to keep the lease enforceable.
Over 500 landowners in Ohio have attended tax and financial meetings sponsored by OSU Extension about oil and gas leases. The meetings aimed to help landowners understand the federal, state, and local taxes owed on lease revenue which can be substantial, up to $6,000 per acre. Landowners reported gaining knowledge, with post-test scores 1.79 to 2.05 points higher than pre-test on average. Most plan to take financial actions like meeting with tax professionals. OSU Extension plans more educational outreach to help landowners and tax preparers manage the financial implications of the new revenue stream from oil and gas leases.
A bill introduced into the 129th General Assembly in Ohio by Rep. Mark Okey (D-Carrollton) in July 2012. The bill is supposed to fix "predatory" practices by oil and gas companies. But it also introduces new drilling rules aside from leasing practices. This is anti-drilling legislation.
This document contains a presentation by Ledger Partnerships about investing in oil and gas production. It discusses the company's strategy of purchasing producing oil and gas leases and consolidating them into portfolios to generate predictable cash flows. It notes the risks involved in oil and gas investments and that past performance is not indicative of future results. The presentation provides examples of production assets generating monthly revenues ranging from $9,000 to $110,000 and argues that current low oil and gas prices create opportunities to purchase production assets.
Economic &financial determinants of oil and gasNikhil Singh
This document discusses factors that influence oil and gas exploration activity. It notes that exploration spending declined from $55.7 billion in 1981 to $26.6 billion in 1986 due to world events that increased oil prices. As prices rose, exploration increased, but later declined as prices softened. The areas most affected were Texas, Louisiana, Oklahoma, Kansas, Colorado and Alaska. It also examines how oil and gas firms finance exploration projects through debt contracts with investors and financial institutions. Debt contracts aim to address agency problems and limit operator discretion through covenants.
The document discusses investing in oil shale deposits in the United States. It notes that U.S. reliance on foreign oil has decreased to its lowest level in over 20 years due to production from oil shale deposits, with imports down to 40% from 60% a few years ago. The largest known oil shale deposits in the world are in the U.S., with total known reserves of nearly 5 trillion barrels. Investing in finding, extracting, and delivering oil from these large domestic shale deposits is promoted as a way to profit from America's largest petroleum resource. Specific formations like the Bakken in North Dakota and Montana and areas in Texas and Louisiana are highlighted as particularly promising for continued oil and gas production.
Grant Thornton provided corporate finance advisory services to Advanced Insulation plc, a leading supplier of high performance insulation and fireproofing services to the offshore oil and gas industry. They helped the company find a private equity partner, Growth Capital Partners, to take the business to its next phase of growth and achieve the company's objectives of incentivizing management and securing value for shareholders. Grant Thornton managed a three stage bidding process that generated significant interest and secured an outcome that was beneficial for all involved parties.
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are currently finalizing the accounting regulations for leases, expecting to issue the new standards before the end of 2015. The new regulations will require organizations to capitalize many of their operating leases and record them in their balance sheets as assets and obligations.
With high volumes of complex lease contracts for drilling, equipment and joint operations, oil and gas operators are one of the groups that are most affected by the upcoming lease accounting standards. To ensure that they have the IT systems, applications, processes and controls ready to comply and to allow for potentially lengthy lead times, experts strongly recommend organizations to start considering today how technology can help them prepare, long before adopting the standard.
This document provides an overview of the oil, gas, and energy law solutions available through LexisNexis. It highlights several authoritative treatises, analytical works, news sources, forms and model documents, case law, administrative materials, and blogs and articles related to emerging issues in energy law. The document emphasizes the comprehensive coverage LexisNexis offers across federal and state primary law, regulations, and secondary sources to support legal research and transactions in the energy sector.
The document is an agenda for the Oil & Gas Technology Forum Drilling Day conference taking place on March 25, 2010 in London. The one-day conference will focus on maximizing resources and minimizing risks in drilling operations through technology and best practices. It will feature case studies, keynote speakers from major energy companies, and panels on topics like reducing costs, ensuring successful HPHT well delivery, and overcoming drilling challenges through innovation. Attendees can participate in speed networking and networking during meals and breaks to discuss issues with over 40 industry peers.
New Nominations for Oil and Gas Leases Received in Colorado Joshua Wolcott
Combining his project management and investment banking abilities, Joshua “Josh” Neale Wolcott of Denver brokers deals around the United States to lease and develop lands using environmentally friendly processes. As part of the management team of Cimmaron Resources, Inc., headquartered in Denver, Joshua “Josh” Neale Wolcott is the director of operations and land.
The document analyzes data from the Minerals Management Service (MMS) and Bureau of Land Management (BLM) on federal oil and gas leases from 1997 to 2004. It finds that while the number of non-producing leases is often cited, the leases are constantly changing over 8 years as companies explore, drill, and either begin production or allow leases to expire. The percentage of producing leases and acreage under production increased over this period. It concludes that companies are actively exploring the leases through drilling and that non-producing leases represent a working inventory being evaluated for potential production.
Many investors are looking for a safe place to put their money with the wild fluctuations in the financial market. Stable, predictable investment vehicles are increasingly hard to find, but smart investors do have choices. One of the better choices is to invest in single-tenant, net-leased properties, which many investors also call a corporate bond combined with real estate investments that still make sense today.
An ebook published by the law firm Porter Wright Morris & Arthur LLP. Contains several blog posts they've published on the topic of oil and gas lease issues for landowners. Our favorite article: My Sister is a Fractivist and Won’t Sign an Oil and Gas Lease. What Can We Do?
Over 500 landowners in Ohio have attended tax and financial meetings sponsored by OSU Extension about oil and gas leases. The meetings aimed to help landowners understand the federal, state, and local taxes owed on lease revenue which can be substantial, up to $6,000 per acre. Landowners reported gaining knowledge, with post-test scores 1.79 to 2.05 points higher than pre-test on average. Most plan to take financial actions like meeting with tax professionals. OSU Extension plans more educational outreach to help landowners and tax preparers manage the financial implications of the new revenue stream from oil and gas leases.
A bill introduced into the 129th General Assembly in Ohio by Rep. Mark Okey (D-Carrollton) in July 2012. The bill is supposed to fix "predatory" practices by oil and gas companies. But it also introduces new drilling rules aside from leasing practices. This is anti-drilling legislation.
This document contains a presentation by Ledger Partnerships about investing in oil and gas production. It discusses the company's strategy of purchasing producing oil and gas leases and consolidating them into portfolios to generate predictable cash flows. It notes the risks involved in oil and gas investments and that past performance is not indicative of future results. The presentation provides examples of production assets generating monthly revenues ranging from $9,000 to $110,000 and argues that current low oil and gas prices create opportunities to purchase production assets.
Economic &financial determinants of oil and gasNikhil Singh
This document discusses factors that influence oil and gas exploration activity. It notes that exploration spending declined from $55.7 billion in 1981 to $26.6 billion in 1986 due to world events that increased oil prices. As prices rose, exploration increased, but later declined as prices softened. The areas most affected were Texas, Louisiana, Oklahoma, Kansas, Colorado and Alaska. It also examines how oil and gas firms finance exploration projects through debt contracts with investors and financial institutions. Debt contracts aim to address agency problems and limit operator discretion through covenants.
The document discusses investing in oil shale deposits in the United States. It notes that U.S. reliance on foreign oil has decreased to its lowest level in over 20 years due to production from oil shale deposits, with imports down to 40% from 60% a few years ago. The largest known oil shale deposits in the world are in the U.S., with total known reserves of nearly 5 trillion barrels. Investing in finding, extracting, and delivering oil from these large domestic shale deposits is promoted as a way to profit from America's largest petroleum resource. Specific formations like the Bakken in North Dakota and Montana and areas in Texas and Louisiana are highlighted as particularly promising for continued oil and gas production.
Grant Thornton provided corporate finance advisory services to Advanced Insulation plc, a leading supplier of high performance insulation and fireproofing services to the offshore oil and gas industry. They helped the company find a private equity partner, Growth Capital Partners, to take the business to its next phase of growth and achieve the company's objectives of incentivizing management and securing value for shareholders. Grant Thornton managed a three stage bidding process that generated significant interest and secured an outcome that was beneficial for all involved parties.
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are currently finalizing the accounting regulations for leases, expecting to issue the new standards before the end of 2015. The new regulations will require organizations to capitalize many of their operating leases and record them in their balance sheets as assets and obligations.
With high volumes of complex lease contracts for drilling, equipment and joint operations, oil and gas operators are one of the groups that are most affected by the upcoming lease accounting standards. To ensure that they have the IT systems, applications, processes and controls ready to comply and to allow for potentially lengthy lead times, experts strongly recommend organizations to start considering today how technology can help them prepare, long before adopting the standard.
This document provides an overview of the oil, gas, and energy law solutions available through LexisNexis. It highlights several authoritative treatises, analytical works, news sources, forms and model documents, case law, administrative materials, and blogs and articles related to emerging issues in energy law. The document emphasizes the comprehensive coverage LexisNexis offers across federal and state primary law, regulations, and secondary sources to support legal research and transactions in the energy sector.
The document is an agenda for the Oil & Gas Technology Forum Drilling Day conference taking place on March 25, 2010 in London. The one-day conference will focus on maximizing resources and minimizing risks in drilling operations through technology and best practices. It will feature case studies, keynote speakers from major energy companies, and panels on topics like reducing costs, ensuring successful HPHT well delivery, and overcoming drilling challenges through innovation. Attendees can participate in speed networking and networking during meals and breaks to discuss issues with over 40 industry peers.
New Nominations for Oil and Gas Leases Received in Colorado Joshua Wolcott
Combining his project management and investment banking abilities, Joshua “Josh” Neale Wolcott of Denver brokers deals around the United States to lease and develop lands using environmentally friendly processes. As part of the management team of Cimmaron Resources, Inc., headquartered in Denver, Joshua “Josh” Neale Wolcott is the director of operations and land.
The document analyzes data from the Minerals Management Service (MMS) and Bureau of Land Management (BLM) on federal oil and gas leases from 1997 to 2004. It finds that while the number of non-producing leases is often cited, the leases are constantly changing over 8 years as companies explore, drill, and either begin production or allow leases to expire. The percentage of producing leases and acreage under production increased over this period. It concludes that companies are actively exploring the leases through drilling and that non-producing leases represent a working inventory being evaluated for potential production.
Many investors are looking for a safe place to put their money with the wild fluctuations in the financial market. Stable, predictable investment vehicles are increasingly hard to find, but smart investors do have choices. One of the better choices is to invest in single-tenant, net-leased properties, which many investors also call a corporate bond combined with real estate investments that still make sense today.
An ebook published by the law firm Porter Wright Morris & Arthur LLP. Contains several blog posts they've published on the topic of oil and gas lease issues for landowners. Our favorite article: My Sister is a Fractivist and Won’t Sign an Oil and Gas Lease. What Can We Do?
Federal Court Rules that Assignment of Oil/Gas Lease May Not Extinguish Liability of Original Lessee
1. Lessee Liability
Three Gateway Center Federal Court Rules that Assignment of Oil/Gas Lease
401 Liberty Ave
May Not Extinguish Liability of Original Lessee
22nd floor
Pittsburgh, PA 15222 Landowners are often alarmed and angered when they receive word that the oil/gas lease
www.hh-law.com they executed several years ago, after months of intense and personal negotiations, has
been assigned to an unknown, unfamiliar gas operator. This anxiety is amplified when the
landowner’s phone calls or letters go unanswered, the royalty checks are late or are not made
at all and the once well-maintained well pad site is now overgrown and in a state of disrepair.
Can the landowner seek redress against the original gas operator? A federal court in Pittsburgh
recently addressed this issue and suggested that the assignment of an oil/gas lease may not
relieve the original gas operator from liability. This decision could impact thousands of leases
throughout the Commonwealth of Pennsylvania. Given the potential impact of this decision,
landowners and gas operators alike should carefully review the assignment clauses in their
leases and re-evaluate liability risks in light of the federal court’s opinion in Rice v. Chesapeake
Energy Corp., et al., 2012 WL 3144318 (W.D. Pa., August 1, 2012).
The Rice case was originally filed on March 5, 2012 in the Court of Common Pleas of Greene
County by the landowners, James and Veronica Rice (“State Court Action”). The State Court
Action arose out of the oil/gas lease the Rices signed with Dale Property Services Penn, LP
(“DPS Penn”) on November 24, 2009 (the “Lease”). Since DPS Penn had subsequently assigned
the Lease to Chesapeake Energy Corp. (“Chesapeake”), the Rices also named Chesapeake as
a defendant in the State Court Action. The Rices’ Complaint alleged various claims against both
DPS Penn and Chesapeake, including trespass, unauthorized access roads, crop damage and
failure to pay the well pad drilling fees.
On March 25, 2012, Chesapeake sought to “remove” the State Court Action to the federal court
sitting in Pittsburgh, Pennsylvania. Generally, a defendant such as Chesapeake may “remove”
an action to federal court only if there is complete “diversity of citizenship” between the
parties–i.e., each plaintiff and defendant must be from different states. Although both the Rices
and DPS Penn were Pennsylvania citizens, Chesapeake and DPS Penn argued that because
DPS Penn had assigned the Lease to Chesapeake, there could be no liability against DPS Penn
and, as such, DPS Penn’s citizenship could be ignored and the case should proceed in federal
court. The Rices opposed removal on the grounds that, under Pennsylvania law, the mere
assignment of the Lease did not automatically extinguish DPS Penn’s liability and, therefore,
the claims against DPS Penn remained viable. The federal court agreed with the Rices and
sent the State Court Action back to Greene County.
The Rice decision illustrates the complex and unique nature of oil/gas leases. DPS Penn
argued that the Lease should be treated solely as a property conveyance. If viewed solely as
a conveyance, the promises and covenants set forth in the Lease “run with the land” and can
only be enforced against the party in possession of the property at the time of the alleged
breach. Pennsylvania law has long observed that “privity of estate” must exist in order to
2. Lessee Liability
enforce lease or deed covenants. See, Conti v. Duve, 15 A.2d 494, 495 (Pa.Super. 1940) (liability For more information, contact:
of lessee “grows out of privity of estate [and] ceases when the privity ceases. If he has assigned Robert J. Burnett, Esq.
before the time of performance, his liability would have ceased with his title, and liability would 412.288.2221
have attached to his assignee...”); See also, Goldberg v. Nicola, 178 A. 809, 813 (Pa. 1935)
rburnett@hh-law.com
(“the covenantor of ... an easement or a benefit attached to land is not liable after parting with
his title ...”). Under this analytical framework, DPS Penn maintained that since the Lease was
assigned to Chesapeake, “privity of estate” was lacking and, therefore, the covenants could only
be enforced against Chesapeake.
The Rices contended, however, that under Pennsylvania law, when it comes to the effect of an
assignment, oil and gas leases are treated the same as any other contract. According to the Rices,
oil/gas leases contain both “land use and contractual attributes” and that absent consent and
release by the lessor, a lessee retains liability even after an assignment. Since the Rices never
formally released DPS Penn from the original lease covenants, the Rices contended that the Lease
covenants could still be enforced against DPS Penn despite the purported assignment. As support
for their position, the Rices relied on a Pennsylvania Supreme Court decision from 1889. In
Washington Natural Gas Co. v. Johnson, 16 A. 799, 801 (Pa. 1889), the Supreme Court observed
“[t]hat [lessee] continued liable notwithstanding their assignment to [assignee] is very clear. The
covenant was their own, and their privity of contract with their lessors continued notwithstanding
their assignment of the lease.” Importantly, the Washington Natural Gas court did not require
“privity of estate” and enforced the covenants against the original lessee:
“...although their assignment had divested them of the lease, it could not relieve Robert J. Burnett is a Director at the
them from their contract.” downtown law firm Houston Harbaugh, P.C.
His practice is concentrated in business and
See, Washington Natural Gas, 16 A. at 801. The Rices maintained that, despite being over 120
commercial litigation. Robert is a member
years old, the Washington Natural Gas decision had never been overturned or reversed and
of the Environment, Energy and Resources
remained the law of Pennsylvania. As such, the Rices argued that, contrary to DPS Penn’s
section of the American Bar Association as
assertion, “privity of estate” is not required and the claims against DPS Penn could move forward.
well as the Pennsylvania Independent Oil
In remanding the State Court Action back to Greene County, the federal court was compelled and Gas Association.
to follow the rule set forth in Washington Natural Gas. The court observed that the “advanced
age of the [Pennsylvania Supreme Court’s] doctrinal rules does not, in and of itself, make them
inapplicable.” Rice, 2012 WL 314318 at 5. Since the Washington Natural Gas rule does not
require “privity of estate”, the lease covenants could still be enforced against DPS Penn despite
the assignment to Chesapeake. The Rice court observed that remand to Greene County was
appropriate even through “it is entirely possible, that in state court, [DPS Penn’s] theories to defeat
the claims asserted against it will ultimately prevail.” Id. In light of this ruling, the litigation against
DPS Penn and Chesapeake will now proceed in Greene County as opposed to federal court.
Although the Rice court did not rule on the actual merits of the Rices’ claims against DPS Penn,
the decision is nonetheless significant because it recognizes those claims as being viable against
the original lessee. What can we take away from the Rice decision? Unless the lessor specifically
“releases” the original lessee, the mere assignment of the lease to another gas operator may not
automatically extinguish the liability of the original lessee. Landowners who may have claims for
unpaid rentals, incorrect royalties or surface damage should carefully review the assignment
clauses in their respective leases. In the event of an assignment, such claims may be advanced
against the original lessee.
Three Gateway Center
401 Liberty Ave
22nd floor
Pittsburgh, PA 15222
www.hh-law.com