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At the Well Weekly (v.1.29.2021)

Oil + Gas Update | PA Superior Court Addresses Dunham Rule in O+G Deal

Gas and oil prices climbed slightly across the board alongside a slight jump in the rig count. In pipeline news, Mountain Valley faces more obstacles as opposition groups asked the DC Circuit to stay several FERC orders that jump-started construction activities. In the case law, the Pennsylvania Superior Court addressed a "Dunham" issue, the Oklahoma Supremes saved an ORRI claim, and the Tenth Circuit tossed a challenge to a Colorado pooling order under abstention principles.

Here's your week in review:

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (+384); Marcellus (30); Utica/Point Pleasant (5)

  • Brent Crude: +$57.88/bbl

  • West Texas Intermediate: -$55.08/bbl

  • NYMEX: March 2021 @ +$2.720/MMBtu

  • Spot Prices: Henry Hub (+$2.71/MMBtu); Dominion South (+$2.41/MMBtu); Tenn. Zone 4 (+$2.43/MMBtu)

WOPL - Appalachia

  • Mountain Valley Pipeline. MVP has abandoned its plan to use a general permit from the U.S. Army Corps of Engineers for stream crossings and instead will apply for individual approvals for each open-cut crossing. In other news, conservation groups asked the DC Circuit to stay three orders authorizing MVP to resume operations. The groups asked the court to stay all new construction on the pipeline.

Headlines & Holdings - Appalachia

  • Reservation of “Minerals” Includes Oil + Gas Despite Dunham Rule. The Superior Court interpreted an agreement of sale of that contained a reservation of “minerals” as including oil and gas – despite the common-law “Dunham Rule” of interpretation that requires parties to specifically reserve "oil" or "gas" – based on handwritten language contained in the agreement, testimony that the parties' discussed minerals as including the oil and gas, and "reasonable, evidence-based inference" that the extensive history of oil and gas development in the region, compared to the sparse history and value of mineral extraction, made it unlikely that the parties would discuss "minerals" and not oil and gas. Walters v. McIlvee, --- A.3d ---, No. 1415 WDA 2019, 2021 WL 248540 (Pa. Super. Jan. 26, 2021).

Headlines & Holdings - Beyond Appalachia

  • ORRI Holder Timely Filed Royalty Claim. The Supreme Court of Oklahoma held that a plaintiff holding an overriding royalty interest under 1973 leases timely filed a cause of action for unpaid royalties on gas produced from new formations in 2012 despite intervening leases in 1984 that purportedly extinguished the ORRI, holding that the 1984 leases did not reasonably give plaintiffs notice of an adverse interests and reasoning that the cause of action accrued when the lessee produced from the new formation. Claude C. Arnold Non-Operated Royalty Interests LLC v. Galeeta M. York Revocable Trust, --- P.3d ---, No. 15807, 2021 OK 4, 2021 WL 248252 (Okla. Jan. 26, 2021).

  • Tenth Circuit Tosses Due Process Challenge to Colo. O+G Pooling Order Under Burford Abstention. The Tenth Circuit upheld an order dismissing a challenge to a Colorado Conservation Commission pooling order under Burford Abstention, holding that the group of landowners subject to the order integrating their interests in a unit did not exhaust state court remedies before challenging the agency's actions under the state statute and on federal due process grounds, reasoning that the state agency's actions raise important questions of state law. Wildgrass Oil and Gas Committee v. State of Colorado, --- F.3d ---, No. 20-1151, 2021 WL 318203 (10th Cir. Feb. 1, 2021).

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