June 25, 2014

In This Issue

Pa. Eyes Severance Tax

Permit Fees Rise

Quotable Quote

Legislative Update

Minding the Bottom Line

Pa. Eyes Possible Severance Tax

In the face of budget woes, Pa. legislators are again considering a severance tax. Industry groups have responded with a letter to key state politicians.

Pa. Permit Fees Rise

Effective June 14, Operators will now pay $5,000 per unconventional horizontal well permit and $4,000 per unconventional vertical well permit. According to DEP, the additional funds will be used for IT projects and additional staff. See DEP's press release here.

Quotable Quote:

"Any darn fool can make something complex; it takes a genius to make something simple."
--Pete Seeger

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Pa. Legislative Update

HB 1684, a bill aimed at clarifying Pennsylvania's Guaranteed Minimum Royalty Act of 1979 (GMRA) (see our prior coverage here and here), will receive no further consideration until state lawmakers begin the fall legislative session. More here.

HB 2278, a bill that would require unconventional oil and gas drillers to report production data monthly, has been introduced in the Pa. House. More here.

SB 1378, a bill that would require the Environmental Quality Board to differentiate between conventional oil and gas wells and unconventional gas wells in its regulations, has been referred to the Senate's Environmental Resources and Energy Committee.

Minding the Bottom Line

These days, costs count. One of the first places E&P companies look to trim expenses is from the Land/Title budget. And, let's face it, legal and land fees can add up.

Lawyer vs. Landman

The most efficient Land Departments make judicious use of both experienced Oil and Gas Attorneys and knowledgeable Landmen/Abstractors. But choosing a Landman when you need a Lawyer is risky. And won't save you money in the long run, if legal problems arise.

Some guidelines to consider:

Attorneys deal in the law of oil and gas; Landmen deal in the business of oil and gas.
Abstractors report facts (what is of record or what a document says); Attorneys provide analysis (application of facts to law and legal principles).
Attorneys specialize in preparation of legal documents; Landmen specialize in dealing with landowners.
Choose a Land Services Professional for: Abstracting; Leasing; Recording; Right-of-Way Acquisition; Execution of Curative Instruments, etc.
Choose an Oil and Gas Attorney for: Title Opinions; Division Orders; Document drafting; Due diligence analysis; Acquisitions and Divestitures; Legal Proceedings (Quiet Title and DOGA actions); Lease Analysis, etc.

Other ways to keep legal fees in line

Be Clear. Define the scope of work for which you are retaining your lawyer.
Communicate. Discuss your cost expectations.
Be Efficient. Remember that a lawyer's time is his/her stock in trade. Keep calls and emails to the point.
Choose wisely. Seek out a boutique firm with lower overhead and experienced, specialized counsel.