As we approach the 20th anniversary of the Marcellus Shale play, one issue remains constant: the ongoing debate over the deduction of post-production costs. Landowners all across Pennsylvania have spent countless hours...more
12/20/2024
/ Deductions ,
EAP ,
Land Owners ,
Leases ,
Lessee ,
Lessor ,
Mineral Leases ,
Oil & Gas ,
Postproduction Costs ,
Royalties ,
Well Drilling
Let’s assume you own a 135 acre farm in Tioga County, Pennsylvania. In 2020, you negotiate a new oil and gas lease with XYZ Drilling Company. During the negotiations, you insist on a cost free, no deduction royalty of 17%. ...more
Let’s assume that you purchase a 105 acre farm in Greene County in 2022. You purchase only the surface estate while the seller, Farmer Jones, retains the underlying oil and gas rights. You intend to grow corn and winter...more
9/13/2024
/ Appellate Courts ,
Covenants that Run With the Land ,
Farms ,
Land Owners ,
Leases ,
Mineral Rights ,
Oil & Gas ,
Pipelines ,
Surface Owner ,
Texas ,
Well Drilling
Let’s assume you own 165 acres in Tioga County. In 2019, you sign a new oil and gas lease with ABC Drilling. You negotiate an 18% net royalty. The royalty clause, however, requires ABC Drilling to calculate the royalty on...more
Since the early 1900’s, your family has owned a 105 acre farm in Greene County, Pennsylvania. In 2024, you and your siblings sign an oil and gas lease with XYZ Drilling Company. The language in the lease states that it...more
3/21/2024
/ Deeds ,
Lease Termination ,
Mineral Leases ,
Oil & Gas ,
Ownership Interest ,
Pennsylvania ,
Popular ,
Property Ownership ,
Railways ,
Royalties ,
Well Drilling
Let’s assume you own 136 acres in Tioga County. In 2011, you signed a new oil and gas lease with ABC Production (the “2011 Lease”). The 2011 Lease had a five-year primary term which expired in October 2016. In 2014, ABC...more
The modern producing gas well is a sophisticated and complex piece of equipment. The basic well head itself consists of several meters, valves and other components, each of which is under constant stress and pressure. In...more
Let’s assume you own 95 acres in Greene County, Pennsylvania. In 2019, you signed an oil and gas lease with ABC Exploration. During the negotiations, you agreed that only those post-production costs which actually...more
9/26/2023
/ Deductions ,
Land Owners ,
Leases ,
Lessee ,
Lessor ,
Marcellus Shale ,
Mineral Leases ,
Oil & Gas ,
Pipelines ,
Postproduction Costs ,
Processing Fees ,
Product Enhancements ,
Royalties ,
Shale Gas ,
Well Drilling
This is a familiar yet troubling question. Imagine you own 135 acres in Washington County. You have received offers from several oil and gas drillers but have not yet signed a lease. Your neighbor, however, did sign a lease...more
On February 15, 2023, the Pennsylvania Supreme Court agreed to hear the appeal of PennEnergy Resources, LLC in the Dressler Family, LP v. PennEnergy Resources, LLC matter. The Pennsylvania Supreme Court’s review of this...more
An oil and gas lease with a “free gas” clause may be a valuable tool for landowners to push back against drillers’ inaccurate attempts to value gas at the “wellhead”. Prior to the advent of Marcellus Shale drilling, "free...more
As we have written about before, a troubling issue facing landowners in the Marcellus Shale region is the practice of retroactive pooling and unitization. Retroactive pooling and unitization occurs when a driller records an...more
Let’s assume you own 125 acres in Greene County, Pennsylvania. A landman from XYZ Gas Co. approaches you about a new oil and gas lease. The lease purports to grant XYZ Gas Co. exclusive drilling rights to the Marcellus...more
Many Pennsylvania oil and gas leases have what is commonly known as a “market enhancement” royalty clause (“MEC”). These MEC leases typically prohibit the deduction of any post-production costs that are incurred transforming...more
Let’s assume that you own 125 acres in Tioga County. In 2017, you negotiate a new oil and gas lease with XYZ Drilling. During the negotiations, you insist on a “gross royalty” which prohibits the deduction of...more
Let’s assume you own 114 acres in Tioga County Pennsylvania. In 2012, you signed an oil and gas lease with XYZ Drilling. Two years later they drill and complete the MUSKIE #1H Well. The royalty clause in the 2012 lease...more
2/25/2022
/ GMRA ,
Leaseholds ,
Leases ,
Oil & Gas ,
Oil Wells ,
PA Supreme Court ,
Payment-In-Kind ,
Pipelines ,
Postproduction Costs ,
Royalties ,
Well Drilling
Many Pennsylvania oil and gas leases have what is commonly known as a “market enhancement” royalty clause. These clauses typically prohibit the deduction of any post-production costs that are incurred transforming the raw gas...more
The modern producing gas well is a sophisticated and complex piece of equipment. The basic well head itself consists of several meters, valves and other components, each of which is under constant stress and pressure. ...more