April 22, 2014
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In This Issue
Natural Gas Prices
NAPE East Recap
Quotable Quote
Landowner Royalites
New York State News
About Us

Natural Gas Prices Hold Steady

Gas prices held steady the first quarter of 2014 at well above $4.00/MMBtu. 
See 2014 prices here.

NAPE East Recap

We were thrilled to be a part of NAPE East on April 10th and 11th.  Many thanks to those of you who were able to join us at Eleven Contemporary Kitchen.

Quotable Quote:
"Common Sense is genius dressed in its working clothes."

-Ralph Waldo Emerson 

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Landowner Royalty Deductions Still in the News 


In last month's Update we told you about HB 1684, a bill aimed at clarifying Pennsylvania's Guaranteed Minimum Royalty Act of 1979 (GMRA).  Now Chesapeake Energy Corp. is facing a growing group that alleges is it improperly deducting post-production costs (e.g. marketing and transportation costs) from royalty payments.  Scout Petroleum, a land-based oil and gas company, is asking an arbitration panel to order a full refund for those deductions.  On April 1, Chesapeake filed an injunction to prevent Scout and similarly-situated claimants from being granted class action status.  Chesapeake's practices are also being reviewed by the Pa. Attorney General (see here). 


The issue is a complex one.  While the GMRA sets the minimum payment to landowners for production at one-eighth, it does not clarify how royalties should be calculated.  In 2010, the Pa. Supreme Court held in Kilmer v. Elexco that the GMRA should be read to permit the calculation of royalties at the wellhead and adopted a definition of the term that allows post-production deductions.  Meanwhile, the growth in Pennsylvania's gas production has created strain on the Midstream infrastructure, causing marketing and transportation costs to rise.  The upshot is that producers look to lessees to help bear the burden of those increased costs to better protect themselves from market fluctuations.


Stay tuned to the Update for the latest developments on this critical issue. 

New York State News


  • Dr. Nirav Shah, Commissioner of the NY Dept. of Health and charged with completing the as-yet-unissued health impact analysis on high volume hydraulic fracturing, is resigning May 4.
  • Oral Arguments have been set for April 25 on Motions to Dismiss made by the NY Attorney General against both Norse Energy and the Joint Landowners Coalition of New YorkThe state Attorney General's office is trying to dismiss the pair of lawsuits, which both seek to force a decision on hydraulic fracturing for natural gas in New York (see here), alleging both of the suits lack merit and should be dismissed for lack of standing.

About Lindhome & Songster      


With over three decades of experience in the PA/NY oil and gas patch, Rick and Jessica specialize in drilling, division order, leasehold, and acquisition title opinions.  Facing a thorny title issue?  Email us