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At the Well Weekly (v.11.13.2020)

Oil + Gas Update | WV Top Lease Takes Priority Over Base Lease Under State's Recording Act.

Spot prices in Appalachia climbed since our last report as did oil prices and the national rig count. In pipeline news, the Fourth Circuit stayed MVP's water crossings permit, DEP shut down parts of Revolution Pipeline, and nuns claim that Transco pipelines violate religious rights. In Appalachia, the West Virginia Supreme Court addressed top leases and overrides while Commonwealth Court addressed condemnation powers of storage operators in PA. In other news, a Delaware bankruptcy court OK's debtor's rejection of another gathering agreement.

Here's your week in review...

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (+312); Marcellus (+27); Utica/Point Pleasant (-4)

  • Brent Crude: +$43.88/bbl

  • West Texas Intermediate: +$41.37/bbl

  • NYMEX: November 2020 @ -$3.031/MMBtu

  • Spot Prices: Henry Hub (+$2.77/MMBtu); Dominion South (+$.1.38/MMBtu); Tenn. Zone 4 (+$1.36/MMBtu)

("+" or "-" or blank denotes increase, decrease, or flat. )

WOPL - Appalachia

  • Adelphia Project (Greater Philadelphia Region): Nothing new to report.

  • Atlantic Sunrise (Northeastern PA to SE Pennsylvania): Nothing new to report.

  • Dakota Access (Northwest US): Nothing new to report.

  • Empire Pipeline (NY to PA): Nothing new to report.

  • Keystone Pipeline (Canada/US): Nothing new to report.

  • Leidy South - Benton Loop Expansion (PA): Nothing new to report.

  • Mariner East (Western PA to Eastern PA): Nothing new to report.

  • Mountaineer XPress (WV): Nothing new to report.

  • Mountain Valley Pipeline (Northern WV to Southern Va. and NC): Water crossing permits issued for the Mountain Valley Pipeline have been put on hold pending an appeal by environmental groups that argue the project puts protected species at risk. A local judge ordered tree-sitter protesters out of their stands.

  • NEXUS (Ohio to Michigan): Nothing new to report.

  • NFG (PA): Nothing new to report.

  • NFG FM100 Project (NC PA to Transco): Nothing new to report.

  • Northeast Supply Enhancement Project (NJ/NY): Nothing new to report.

  • Northern Access (NW PA to Western NY): Nothing new to report.

  • Northern Supply Access Project (Appalachia to Gulf Coast): Nothing new to report.

  • PennEast (PA to Central Jersey): Nothing new to report.

  • Regional Energy Access (NE PA to PA/NJ): Nothing new to report.

  • Revolution Pipeline (PA): DEP issued an order to prevent ETC Northeast Pipeline, LLC from putting natural gas in unstable sections of the Revolution Pipeline located in Butler, Beaver, Allegheny and Washington Counties.

  • Rover (OH, WV, PA to Michigan): Nothing new to report.

  • TransCanada Eastern Panhandle Project (PA to WV): Nothing new to report.

  • Transco (Interstate): A group of catholic nuns sued Transco again, this time for damages under the Religious Freedom Restoration Act resulting from easements acquired by eminent domain, claiming that the pipeline violates the nuns’ “deeply-held religious beliefs to use and protect their land as part of God's creation.”

Headlines & Holdings - Appalachia

  • No De Facto Taking Claim Against Gas Storage Company. The Commonwealth Court held that UGI Storage Company is a public utility clothed with the power of eminent domain but cannot be subject to a de facto condemnation proceeding before formal condemnation of property owned by the landowners. Hughes v. UGI Storage Co., --- A.3d ---, No. 453 C.D. 2019, 2020 WL 6601408 (Pa. Cmwlth. Nov. 12, 2020).

  • WV Supreme Court Breaks Up Overriding Royalty Dispute. The Supreme Court of West Virginia reversed an order of the trial court granting summary judgment for Antero that declared that Bison Interests, LLC was not entitled to an overriding royalty interest in certain gas wells, holding instead that the declaratory judgment sought by Antero was barred by the doctrines of res judicata and judicial estoppel. Bison Interests, LLC, v. Antero Resources Corp., --- S.E.3d ---, No. 19-0527 (W. Va. Nov. 10, 2020).

  • WV Supreme Court Says Top Lease Takes Priority over Base Lease Under Recording Act. The Supreme Court of West Virginia held that a top lease took priority over a base lease under the state’s recording statutes, reasoning that (a) the parties to the top lease executed and recorded a memorandum before the parties to the base lease executed and recorded an amendment extending the lease, giving the top lease first-in-time priority; (b) the top lease restricted the lessor’s ability to extend the base lease; and (c) the base lease did not have any ROFR or option to extend to put the top lessee on notice of any possible extended primary term.EQT v. Antero Resources, --- S.E.3d ---, (W. Va. November 12, 2020).

Headlines & Holdings - Beyond Appalachia

  • Del. Bankruptcy Court OK's Another Rejection of Gathering Agreement Under Bankruptcy Code. The bankruptcy court in Delaware concluded that a debtor could reject a gas gathering agreement in bankruptcy, holding that the agreement did not contain any real covenants that ran with the land under Wyoming law. In re: Southland Royalty Co. --- B.R. ---, No. 20-10158 (KBO), 2020 WL 6685502 (Bankr. D. Del. Nov. 13, 2020).

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