Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A. presents

Utica Journal Discoveries - An Electronic Oil and Gas Newsletter

With offices located in the heart of the Utica Shale play in

Canton, Akron, Alliance, New Philadelphia & Sugarcreek, Ohio

 Editor:  Gregory W. Watts, Esq.

KWGD:  Oil, Gas & Mineral Law Section Chair William G. Williams Appointed To Energy & Mineral Law Foundation Board of Trustees

KWGD.com

Krugliak, Wilkins, Griffiths & Dougherty (KWGD) Attorney William G. Williams was recently elected and installed as a member of the Board of Trustees for the Energy & Mineral Law Foundation (EMLF) at the annual board of trustees meeting during the 36th Annual Institute.  The EMLF is a national nonprofit educational organization which fosters the study of the laws and regulations related to natural resource development and energy use.  A director at the firm, Williams serves as chair of the Oil, Gas & Mineral Law Section.  More may be found here.

KWGD:  Oil, Gas & Mineral Law Attorney Dean A. Swift Inducted as a Fellow with the Ohio State Bar Foundation

KWGD.com

Krugliak, Wilkins, Griffiths & Dougherty (KWGD) Attorney Dean A. Swift was recently inducted as a Fellow with the Ohio State Bar Foundation (OSBF).  A director of the firm, Swift is a member of the firm's Oil, Gas & Mineral Law Section. His practice focuses on asset acquisitions, corporate governance, and oil and gas matters. The Canton native has served as past president of the North Canton Hoover Track and Field Booster Club and the Legislative Committee of the Ohio Oil and Gas Association (OOGA). He is also a member of the Ohio State Bar and the Stark County Bar Associations. More may be found here.  

More Than Surface Value: Mineral Rights Ownership Issues Run Deep
TimesReporter.com
KWGD Oil, Gas & Mineral Law Attorney, Greg Watts, was quoted in an article on the recent decision from the Ohio Supreme Court in Dodd v. Croskey:  "The main issue from clients we represent involves the language in a deed between two third parties, neither of which would own the severed mineral interest," Watts said. "Should mere repetition of that language in the deed retain the original reservation? In our view, the repetition wouldn't make it any less dormant than it already was, so it shouldn't count as a renewing act to retain the mineral rights.  We contend that under the DMA there should be some kind of action by the rights holder, such as direct involvement in the transfer of the land, or production involving the minerals - not a mere repetition of the original language in the deed by a third party without any direct interest."

KWGD.com 

The Fourth District Court of Appeals, in Holland v. Gas Ents. Co., reversed a decision from the Washington County Court of Common Pleas finding an oil and gas lease forfeited for lack of production in paying quantities on the basis of the lessors' failure to join all parties with an interest in the lease pursuant to O.R.C. § 5301.10. More analysis may be found here. here. 

Lessors acceptance of royalty payments does not waive a claim for forfeiture of an oil and gas lease with a minimum royalty provision 
KWGD.com
In Sims v. Anderson, the Fourth District Court of Appeals reversed a decision from the Washington County Court of Common Pleas and held an oil and gas lease was forfeited as a result of the lessee's failure to make the minimum royalty payment.  The Fourth District found that neither the lessor's acceptance of royalty payments after termination of the lease nor the lessor's delay in seeking forfeiture provided the lessee an affirmative defense to the forfeiture.  Further analysis may be found here. 

Ohio Supreme Court accepts two additional cases involving Ohio's Dormant Mineral Act
KWGD.com

The Ohio Supreme Court has accepted appeals in two more cases involving Ohio's Dormant Mineral Act, O.R.C. § 5301.56: Albanese v. Batman, 2015-0120 and Lipperman v. Batman, 2015-0121.  Both Albanese and Lipperman concern the look back period for the 1989 version of the Ohio Dormant Mineral Act (i.e., 'fixed' vs. 'rolling'), and the effect of recording an out-of-state will as a title transaction.  More information may be found here. 

EIA Short-Term Energy Outlook
EIA.gov

The U.S. Energy Information Administration (EIA) released the July Short-Term Energy Outlook, forecasting Brent crude will average $60/b in 2015 and $67/b in 2016 and WTI crude to average $55/b in 2015 and $62/b in 2016.  The EIA also forecasts the Henry Hub to average $2.97/MMBtu in 2015 and $3.31/MMBtu in 2016.  A copy of the full report may be viewed here. 

EIA adds Ohio to the Monthly Crude Oil and Natural Gas Production monthly report

EIA.gov
The U.S. Energy Information Administration  (EIA) is expanding the coverage of natural gas production to include a breakout for an additional 10 states based on data from the EIA-914 survey.  The additional states include: Arkansas, California, Colorado, Kansas, Montana, North Dakota, Ohio, Pennsylvania, Utah, and West Virginia. Estimates for the 10 states were previously included in the "other states" total. Estimates for production back to January 2015 now include the new breakout.  EIA will continue to report natural gas gross withdrawals here instead of in the Natural Gas Gross Production Report.  Later this summer, EIA expects to report survey-based estimates for crude oil production (including lease condensate).  Later in 2015, EIA will report monthly crude oil production by API gravity category for each state.  The EIA reports Ohio increased natural gas production by 3.3% from April to May of 2015, producing an additional 78 MMCF/day in said period.  

Rex Energy Provides Operational Update
Rex Energy Corporation
Rex Energy Corporation (Nasdaq: REXX) provided an operational update on the company's Appalachian Basin operations.  The company plans to test its first dry gas Utica well in the Western Lawrence Utica region.  The Patterson 2H will be drilled to a lateral length of approximately 7,000 feet.  The well is expected to be drilled and completed in the third quarter of 2015 and placed into sales in the fourth quarter of 2015.  Gathering and processing infrastructure for the development of this region is already in place, with approximately 50 MMcf/d of firm transportation.  "Our first test well in the Western Lawrence Utica is another important step for Rex Energy as we continue to develop our core assets", said Tom Stabley, Rex Energy's Chief Executive Officer.  "With 200 drilling locations in the Western Lawrence Utica and gathering and processing infrastructure already in place, the Western Lawrence Utica acreage provides us with flexibility within our Appalachian Basin assets."

Magnum Hunter to pay down debt, resume drilling by selling stake in gathering system

Pittsburgh Business Times

Oil and gas producer Magnum Hunter Resources Corp. (NYSE: MHR) will use proceeds from the sale of its stake in a gathering system to pay down $300 million to $400 million in debt and to resume drilling. Ad

Magnum Hunter Resources Corp.'s (NYSE: MHR) CEO, Gary C. Evans, at the Hart Energy DUG East conference in Pittsburg, revealed that the company is intending to sell its 45.53 percent share in the Eureka Hunter pipeline and its TransTex Hunter gas processing services business.  The deal is expected to raise $600 million to $700 million in cash for the company, allowing it to restructure its balance sheet and greatly improve its liquidity.   In an ensuing question-and-answer session following the presentation, Evans declined to identify the buyer, but said it's a master limited partnership. He said the sale will be completed as soon as possible.   Additionally, Evans said the company is working on forming not one, but two, joint ventures to help it develop its Ohio and West Virginia acreage.  Evans said if the joint ventures come through, and he expects that they will "soon," the company could have three or four rigs running by the end of the year under the joint ventures.  He said there are two joint ventures in play, one for Ohio and one for West Virginia.  The Ohio would be the larger deal of the two, about $500 million.  The West Virginia would JV be worth around $100 million, he said.

Gastar Exploration Announces Production on Second Utica/Point Pleasant Well

PR Newswire

Gastar Exploration Inc. (NYSE MKT: GST) reported initial and 30-day average production on its second Utica Point/Pleasant well.  The Blake U-7H well located in Marshall County, West Virginia produced at a peak 48-hour gross sales rate of 36.8 MMcf/d of natural gas on a 32/64ths choke with approximately 6,235 psi of flowing casing pressure.  On a restricted flow basis, the well's post peak rate 30-day production averaged 20.2 MMcf/d on a 26/64ths choke with approximately 5,312 psi of flowing casing pressure.  The most recent 5-day average rate is 14.8 MMcf/d at approximately 5,008 psi of flowing casing pressure.  The Blake U-7H well was drilled with a lateral length of 6,617 feet and was completed with 34 hydraulic fracturing stages that used approximately 14.8 million pounds of proppant.  Gastar has a 50% working interest in the Blake U-7H well and 41.1% net revenue interest in the well.  J. Russell Porter, Gastar's President and Chief Executive Officer, commented, "We are very pleased with the results of our second dry gas Utica well as it demonstrates the consistency of the prolific production from the Utica/Point Pleasant play across our leasehold.  Currently, we have no plans to drill another Utica/Point Pleasant well on our acreage until regional natural gas prices improve and returns on investment become competitive relative to our other internal investment opportunities."