At the Well Weekly (v.1.30.2026)
- George A. Bibikos
- 2 minutes ago
- 10 min read
Oil + Gas Update: Royalties, Statutory Pooling, and Pipelines Lead Early-2026 Docket.
Since our last report, natural gas prices and oil prices both moved higher in the wake of Winter Storm Fern, while the national rig count continued to trend modestly lower amid steady Appalachian activity.
In pipeline and regulatory developments, courts addressed federal preemption of state and local efforts to block or burden pipeline projects, the limits of NEPA and ESA challenges to ongoing construction, and state-law constraints on local fees and approvals for gas utility infrastructure.
In Appalachia, courts addressed post-production cost deductions under at-the-well royalty clauses, deed construction involving life estates and mineral interests, injunction efforts targeting pipeline construction, communications and payment practices in royalty class actions, state preemption of local pipeline fees, public-utility commission jurisdiction over producer claims, statutory pooling and “good-faith” offer requirements, surface-access disputes tied to unitization and horizontal drilling, and class-certification limits where class counsel also serves as class representative.
In other regions, courts addressed interstate pipeline preemption and foreign-policy concerns, operator liability under reciprocal waiver agreements, ownership of submerged riverbeds, co-tenant and co-owner disputes over lease operations, joint-operating-agreement payment obligations, force-majeure extensions for LNG projects, evidentiary failures in royalty class actions, federal environmental review of offshore decommissioning programs, and discovery obligations in Permian royalty-payment disputes.
Rig Counts, Spot Prices + Oil Prices
Rigs: National (🔻544); Marcellus (24); Utica/Point Pleasant (15)
Brent Crude: 🔺$64.49/bbl
West Texas Intermediate: 🔺$59.78/bbl
NYMEX: February 2026 @ 🔺$4.875/MMBtu; 12-Month Strip @ 🔺$3.97/MMBtu
Spot Prices: Henry Hub @ 🔺$4.98/MMBtu; Eastern Gas South (Dominion South) @ 🔺$4.43/MMBtu; TETCO M3 @ 🔺$4.65/MMBtu; Transco-Leidy (Leidy/Z6 region) @ 🔺$4.65/MMBtu
Headlines & Holdings - Appalachia
Fed. Ct. in PA Dismisses Claims for Improper Deductions of PPCs from Royalties. In a royalty class action in which lessors challenged deductions for their share of post-production costs from royalty payments, a federal court in Pennsylvania dismissed their claims with prejudice. In summary:
The court held that the royalty owners (a) lacked standing to press antitrust claims against the companies; (b) failed to establish a RICO enterprise in connection with their claims; and (c) failed to state breach-of-contract claims for improper deductions.
On the latter point, the court held that the leases called for royalties “at the wellhead” and therefore expressly authorized deductions for post-production costs using the net-back method under Kilmer and cases interpreting that decision.
The court rejected the argument that the lessees must prove in good faith that the PPCs are reasonable because, under Kilmer, the lessees have no such obligation and are incentivized to keep costs low such that the interests of lessors and lessees are typically aligned.
A&B Campbell Family LLC v. Williams Partners, L.P., --- F. Supp. 3d ----, No. 3:15-CV-00340, 2025 WL 3707966 (M.D. Pa. Dec. 22, 2025).
Ohio Ct. App. Tackles Life Estate Interests + Reservations vs. Exceptions in OGM Dispute. A court of appeals in Ohio held that a deed clearly and unambiguously reflected the grantors’ intent to create a life-estate interest in certain mineral rights for themselves and to convey a vested-remainder interest to their son based on the language they used in the deed despite differences between “reservations” and “exceptions” as those terms are used in deeds and despite the lack of any explicit terms such as “life estate” or “remainder” in the conveyance Hursey v. McPeek, --- N.E.3d ----, 2025-Ohio-5707, 2025 WL 3709148 (Ohio Ct. App. Dec. 23, 2025).
Fed. Ct. in WV Scraps Attempt to Enjoin Pipeline. A federal court in West Virginia denied a bid to enjoin a natural gas pipeline project for lack of federal approvals, holding that (a) NEPA requirements and Section 7 consultations under the ESA only attach to federal agency decisions; and (b) plaintiffs did not establish that the project required these federal approvals before beginning construction. Danny Hatfield v. TransGas Development Systems, LLC, --- F. Supp. 3d ----, No. CV 3:25-0714, 2025 WL 3721861 (S.D.W. Va. Dec. 23, 2025).
Fed. Ct. in Ohio Denies Bid to Block Lessee from Communicating with Class Plaintiffs about Royalty Payments. A federal court in Ohio denied an emergency motion for protective order filed by class plaintiffs in an attempt to block the lessee’s communications with and planned royalty payments to class members following the Sixth Circuit’s decision in Grissoms, LLC v. Antero Resources Corporation, 133 F.4th 605 (6th Cir. 2025), holding that the lessee’s decision to issue supplemental payments to some, but not all, members of the class based on Grissoms does not threaten the fairness of this litigation and upheld the text of lessee’s proposed communications with class plaintiffs. Brian Christopher Eaton v. Ascent Resources-Utica, LLC, --- F. Supp. 3d ----, No. 2:19-CV-3412, 2025 WL 3728322 (S.D. Ohio Dec. 23, 2025).
Pa. Cmwlth. Ct. Says PA Law Preempts Local Fees for Gas Utility Pipelines. The Pennsylvania Commonwealth Court held that state law preempted a portion of a township’s ordinance requiring over $40,000 in fees for pipeline replacement projects. Columbia Gas of Pennsylvania, Inc. v. Menallen Twp., --- A.3d ----, No. 530 M.D. 2022, 2026 WL 15658 (Pa. Cmwlth. Jan. 2, 2026).
Ohio Supreme Say PUCO has Jurisdiction over Gas Producers' Claims. The Supreme Court of Ohio held that the state’s public utilities commission has exclusive jurisdiction over natural gas producers' class-action claims of conversion and unjust enrichment against a utility for allegedly selling or using gas delivered into its pipeline system without compensation. E. Ohio Gas Co. v. Croce, --- N.E.3d ----, 2026-Ohio-75, 2026 WL 96843 (Ohio Jan. 14, 2026).
WV App. Ct. Sends Back Pooling Order to Evaluate “Good Faith” Offer. A court of appeals in West Virginia reversed a pooling order issued by the state’s conservation commission, holding that the agency failed to reconcile conflicting evidence of whether the well operator made the prerequisite “good faith” offer to pool the plaintiff’s interests before resorting to the statutory program. Amy Hull-Wright v. Arsenal Resources, LLC, --- S.E.3d ----, No. 25-ICA-304, 2026 WL 125974 (W. Va. Ct. App. Jan. 16, 2026).
Fed. Ct. in Ohio Says Surface Owner can Amend to Challenge Unlawful Access. In a dispute over a lessee’s failed injunction bid to access a surface owner’s property to recover oil and gas from under the property and adjacent properties using horizontal drilling, a federal court in Ohio said the surface owner could amend its counterclaim to prevent lessee from relying on recent unitization orders to expand its surface rights, add new surface-damage claims, and add the lessee’s bond issuer as a defendant. EOG Resources, Inc. v. Lucky Land Management, LLC, --- F. Supp. 3d ----, No. 2:23-CV-4232, 2026 WL 145473 (S.D. Ohio Jan. 20, 2026).
Ohio Ct. App. Says Class Can’t Survive When Class Rep is also Class Attorney. In a class action royalty dispute in which the class representative also serves as class counsel, a court of appeals in Ohio upheld an order decertifying a class action against the lessee, holding that the roles of class representative and class attorney cannot be played by the same person in a class action. Donald E. Wood v. Energex Power, Inc., --- N.E.3d ----, 2026-Ohio-176, 2026 WL 166599 (Ohio Ct. App. Jan. 22, 2026).
Headlines & Holdings - Beyond Appalachia
Fed. Ct. in Mich. Stops State’s Attempted Shut Down of Enbridge’s Line 5. A federal court in Michigan granted summary judgment in favor of Enbridge and enjoined state officials from enforcing a shutdown order for a portion of Line 5 underlying an easement granted by Michigan to Enbridge, holding that Congress expressly preempted state regulation of interstate pipeline safety through the Pipeline Safety Act of 1992 and that Michigan’s attempt to shut down a portion of the international pipeline interfered with federal foreign policy positions and trade relations between the United States and Canada. Enbridge Energy, Ltd. P’ship v. Whitmer, --- F. Supp. 3d ----, No. 1:20-CV-1141, 2025 WL 3707609 (W.D. Mich. Dec. 17, 2025).
Tex. Biz. Ct. Says Leaseholder is not a Third-Party Beneficiary of Operator Contracts. The Texas Business Court held that a leaseholder of one well operator is not a third-party beneficiary of its reciprocal waiver agreement with another well operator reasoning that to hold otherwise would create a presumption that all leaseholders would be third-party beneficiaries to industry contracts in violation of well-established Texas law disfavoring third-party beneficiary status on noncontracting parties. Slant Operating LLC v. Octane Energy Operating, LLC, --- S.W.3d ----, 2025 Tex. Bus. 52, 2025 WL 3716370 (Tex. Bus. Ct. Dec. 22, 2025).
Tex. Biz. Ct. Says Well Operator Breached Reciprocal Waiver Agreement. In the same dispute, the Texas Business Court also concluded in separate opinions that the defendant well operator breached the reciprocal waiver agreement by failing to waive objections to certain off-lease wells. Slant Operating, LLC v. Octane Energy Operating, LLC, --- S.W.3d ----, 2025 Tex. Bus. 53, 2025 WL 3716372 (Tex. Bus. Ct. Dec. 22, 2025); Slant Operating, LLC v. Octane Energy Operating, LLC, --- S.W.3d ----, 2025 Tex. Bus. 54, 2025 WL 3723355 (Tex. Bus. Ct. Dec. 22, 2025).
D.C. Fed. Ct. Grapples with Missouri Riverbed Ownership. A federal court in D.C. denied a summary judgment bid and remanded a dispute over ownership of a portion of the Missouri River that runs through an Indian Reservation in North Dakota, holding that fact issues remain about the “equal footing” doctrine (the test for determining whether title to the riverbed passed to a state upon statehood) and whether the presumption in favor of title passing to the state has been rebutted with evidence that the U.S. did not intend to include these submerged lands in the reservation given their passage through the Indian Reservation. Mandan, Hidatsa, and Arikara Nation v. U.S. Department of the Interior, --- F. Supp. 3d ----, No. CV 20-1918 (ABJ), 2026 WL 35570 (D.D.C. Jan. 6, 2026).
Fed. Ct. in Kansas Court Denies Bid to Oust Operator of Co-Owned Lease. A federal court in Kansas denied a bid by a majority interest owner in a co-owned lease to enjoin a minority owner from further operating the lease and from incurring costs for salt-water disposal rather than converting the lease into a UIC well, holding that the non-operator’s claims (that the operator’s actions risks lease expiration for lack of production in paying quantities) are too speculative to support injunctive relief because the lease still produces gas and the lessor expressly stated in writing that he has no intention of terminating the lease. Great Plains Petroleum, LLC v. Elk Energy Holdings, LLC, --- F. Supp. 3d ----, No. 25-1089-EFM-BGS, 2026 WL 63453 (D. Kan. Jan. 8, 2026).
Tex. Ct. App. Says JOA Doesn’t Require Non-Op Payments without a JIB. In a JOA dispute, a court of appeals in Texas held that the plain language of a JOA containing an agreement to share expenses neither required the non-operator to proactively calculate and pay its share of a lien debt without receiving a JIB nor prohibited the non-operator from acquiring, holding, or enforcing a preexisting third-party lien on the property. CL III Funding Holding Company, LLC v. Steelhead Midstream Partners, LLC, --- S.W.3d ----, No. 02-21-00188-CV, 2026 WL 71064 (Tex. App. Jan. 8, 2026).
Fifth Circ. Denies Enviros Challenge to LNG Project’s Deadline Extension. The Fifth Circuit denied a petition for review filed by an environmental group challenging the TCEQ’s denial of a motion to overturn the executive director’s third extension of the construction deadline for the Texas LNG terminal project, holding that the executive director of the agency complied with state requirements to grant the extra time. S. Texas Env't Just. Network v. Texas Comm'n on Env't Quality, --- F.4th ----, No. 24-60580, 2026 WL 102902 (5th Cir. Jan. 14, 2026).
Fed. Ct. in Okla. Says O+G Class Action Royalty Claims Fail for Lack of Proof. A federal court in Oklahoma held that pro se class plaintiffs failed to present evidence of breach of contract, fraud, and accounting in connection with claims that the class defendants (a) unlawfully deducted post-production costs charged by affiliates before paying royalties and then (b) misrepresented those deductions on check stubs, despite the court giving the plaintiffs a final opportunity to reopen their case-in-chief to cure noted deficiencies in their proof. Kevin L. Jeter v. Wild West Gas, LLC, --- F. Supp. 3d ----, No. 12-CV-411-JDR-CDL, 2026 WL 174469 (N.D. Okla. Jan. 22, 2026).
Fed. Ct. in D.C. Upholds DOI Environmental Assessments for Decommissioning Offshore O+G Platforms. A federal court in D.C. held that environmental groups failed to establish a discrete and mandatory duty to update DOI’s programmatic environmental assessments on decommissioning oil and gas platforms and related infrastructure in Gulf Coast waters, reasoning that the lawsuit presented an impermissible programmatic challenge under the Administrative Procedure Act. Center for Biological Diversity v. Doug Burgum, --- F. Supp. 3d ----, No. 1:24-CV-02014 (TNM), 2026 WL 180258 (D.D.C. Jan. 23, 2026).
Fed. Ct. in N.M. Says Lessee Must Fork Over Docs in Permian Royalty Dispute. In a dispute alleging violations of the New Mexico Oil and Gas Proceeds Payment Act for underpaid royalties, a federal court in New Mexico granted plaintiff's motion to compel the production of documents regarding defendant’s payment and accounting systems. Snyder Ranches, Inc. v. Oxy USA Inc., --- F. Supp. 3d ----, No. CV 23-636 MLG/GBW, 2026 WL 184556 (D.N.M. Jan. 23, 2026).
Fed. Ct. in Mich. Dismisses Feds’ Challenge to Future Climate Change Claims. In an action seeking to block the State of Michigan from filing anticipated climate-related lawsuits against the fossil fuel industry, a federal court dismissed the case for lack of subject-matter jurisdiction, holding that the federal government failed to carry its burden to establish jurisdiction where it sought declaratory and injunctive relief against unspecified future claims that Michigan may bring against unspecified defendants with connections to the fossil fuel industry. United States v. Michigan, --- F. Supp. 3d ----, No. 1:25-CV-496, 2026 WL 194031 (W.D. Mich. Jan. 24, 2026).
Colo. Fed. Ct. Scraps Class Action for Underpaid Oil Royalties Subject to PPCs. In a longstanding class action over the value of “in kind” oil royalties and challenges to deductions therefrom for post-production costs, a federal court in Colorado concluded that (a) the royalty owed to a lessor under the leases is cost-free oil in the pipelines that attach to lessee’s wells on the lessors’ property; and (b) the valuation point of the oil is on the lessor’s property at the point where it connects its flow lines or gathering pipelines to its wells (the same location it would provide in-kind delivery of oil). Mike Boulter v. Noble Energy Inc., --- F. Supp. 3d ----, No. 1:24-CV-00710-SKC-KAS, 2026 WL 251700 (D. Colo. Jan. 30, 2026).
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