At the Well Weekly (v.12.19.2025)
- George A. Bibikos
- Dec 23, 2025
- 7 min read
Oil + Gas Update: Statutory Pooling, Surface Rights, and Royalty Accounting Shape Year-End O+G Cases.
Since our last report, natural gas prices climbed considerably amidst some volatility while oil prices continue to soften alongside a mixed rig-count picture.
In Appalachia, courts addressed statutory pooling and good-faith offer requirements, pipeline taxation and valuation disputes, surface rights related to plugging and abandonment, perpetual coal leases with legacy royalties, land-use approvals for pipelines and gas operations, and the taxation of royalty interests.
Beyond Appalachia, decisions spanned statutory interest on late royalty payments, the interplay between pooling orders and Pugh clauses, tax treatment of energy inputs, surface-use agreement damages, the scope of the implied marketing covenant, force-majeure standards after Winter Storm Uri, lease-expiration and retained-acreage disputes, TCPA protection for top-leasing communications, tax exemptions for natural-gas use in manufacturing, royalty claims tied to midstream earnouts, and federal oil-and-gas leasing.
Rig Counts, Spot Prices + Oil Prices
Rigs: National (🔻542); Marcellus (🔺25); Utica/Point Pleasant (14)
Brent Crude: 🔻$60.47/bbl
West Texas Intermediate: 🔻$56.52/bbl
NYMEX: January 2026 @ 🔻$4.024/MMBtu; 12-Month Strip @ 🔻$3.764/MMBtu
Spot Prices: Henry Hub @ 🔻$4.60/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
WV Ct. App. Upholds Reduction of Tax on Pipeline. A court of appeals in West Virginia upheld a 35% economic obsolescence reduction on taxes assessed on three pipelines in the state over the objections of local taxing authorities. Scott Lemley v. MarkWest Liberty NGL Pipeline, LLC, --- S.E.3d ----, No. 24-ICA-438, 2025 WL 3157884 (W. Va. Ct. App. Nov. 12, 2025).
WV Ct. App. Upholds Statutory Pooling Order. A court of appeals in West Virginia addressed in detail the state’s relatively new statutory pooling scheme in an appeal from an order of the Oil and Gas Conservation Commission. The court upheld a new drilling unit that included the plaintiff’s interests and held that the unit operator properly made three “good faith offers” to the plaintiff as required by the statute to obtain consent to pool or to renegotiate the leases to authorize pooling before seeking a statutory pooling order. Haughtland Res., LLC v. SWN Production Co., LLC, --- S.E.3d ----, No. 25-ICA-68, 2025 WL 3162008 (W. Va. Ct. App. Nov. 12, 2025).
WV Supremes Enjoin Surface Owners from Preventing P&A of Wells. The West Virginia Supreme Court upheld a preliminary injunction blocking surface owners from preventing successors to an oil and gas lease on the property from plugging and abandoning a well near the surface owner’s residence to make way for underground coal mining, holding that the lessee and coal company established their express and implied surface rights to engage in P&A operations without limitation as required by statute. L. Allen Wendt & Carolyn Wendt v. W. Virginia Land Res., Inc., --- S.E.3d ----, No. 24-459, 2025 WL 3284531 (W. Va. Nov. 25, 2025).
W.V. Ct. App. Affirms Tax Commissioner's Valuation of Oil and Gas Royalty Interests. A court of appeals in West Virginia upheld tax assessments on oil and gas royalty interests, rejecting the royalty owners’ arguments that taxing authorities failed to assess taxes based on the true and actual value of royalty interests as required by statute. Scott C. Sonda & the Estate of Mark Alan Sonda v. Matthew R. Irby, --- S.E.3d ----, No. 25-ICA-201, 2025 WL 3484801 (W. Va. Ct. App. Dec. 4, 2025).
Fourth Circ. Says Coal Owner Can’t Duck Perpetual Coal Lease with Low Royalty. In a dispute over a 1937 coal mining lease providing for a flat-rate royalty of ten cents per ton, the Fourth Circuit held that the lessor could neither terminate the lease for alleged breaches of the anti-assignment provision nor reform the lease as unconscionable, holding that the lessor is not entitled to forfeiture of the lease even though the royalty rate could be deemed commercially unreasonable by today’s standards because perpetual leases are valid in West Virginia and the forfeiture provision in the coal lease is too broad to be enforceable under West Virginia law. Rockwell Mining, LLC v. Pocahontas Land LLC, --- F.4th ----, No. 24-2051, 2025 WL 3496971 (4th Cir. Dec. 5, 2025).
Pa. Cmwlth. Ct. Upholds Revised Land Development Plans for NatGas Ops. In a challenge to local land use approvals brought by an environmental group, the Commonwealth Court of Pennsylvania upheld revised land development plans for natural gas operations, holding that special exception and preliminary land approvals did not expire under the local ordinance. Protect PT v. Township of Penn, --- A.3d ----, No. 1560 C.D. 2024, 2025 WL 3537322 (Pa. Cmwlth. Dec. 10, 2025).
Pa. Cmwlth. Ct. Upholds Land Use Approvals for Pipeline Interconnect Facilities. The Commonwealth Court of Pennsylvania upheld local land use approvals for a pipeline interconnection facility, holding that an “interconnect” is part of “oil and gas development” under the local ordinance that is authorized as a conditional use, and the environmental group challenging the approval failed to meet its burden that the land use qualified as a “deep well site” subject to other requirements the company allegedly failed to meet. Concerned Residents of West Deer v. Township of West Deer, --- A.3d ----, No. 1358 C.D. 2024, 2025 WL 3552396 (Pa. Cmwlth. Dec. 11, 2025).
Headlines & Holdings - Beyond Appalachia
Tenth Circ. Upholds Royalty Interest Award in Class Action. The Tenth Circuit partially upheld a judgment against a lessee for withholding interest on late royalty payments under the state’s Production Revenue Standards Act, holding that late royalty payments must include statutory interest at the default rate of 12%. Cline v. Sunoco, Inc. (R&M), --- F.4th ----, No. 22-7018, 2025 WL 3197087 (10th Cir. Nov. 17, 2025).
Fed. Ct. in Tex. Says Statutory Pooling Trumps Pugh Clause. A federal court in Texas concluded that a Pugh clause in a lease doesn’t apply when a well operator obtains a statutory pooling order. Triple C. Minerals, LLC v. XTO Energy, Inc., et al., --- F. Supp. 3d ----, No. CV 24-0004, 2025 WL 3252708 (N.D. Tex. Nov. 21, 2025).
Wyo. Supremes Reverse Tax Exemption for Electricity Used in Oilfield Operations. The Wyoming Supreme Court reversed the State Board of Equalization's decision granting a sales tax exemption to an oil and gas company for electricity purchased for operations, holding that the company did not meet the requirements for the sales tax exemption because it bought electric power for production purposes not transportation purposes. Wyoming Department of Revenue v. PacifiCorp & Merit Energy Company, LLC, --- P.3d ----, 2025 WL 3457932 (Wyo. Dec. 2, 2025).
Tex. Ct. App. Grapples with Right of First Refusal in Surface Use Agreement. A court of appeals in Texas reversed a multi-million dollar award of damages to surface owners for an oil well operator's alleged failure to comply with a right of first refusal provision in a surface use agreement, holding that certain damages based on the value of the wells was improper and constituted impermissible double recovery. SM Energy Co. v. Buzzard Roost Farms, Inc., --- S.W.3d ----, No. 11-23-00222-CV, 2025 WL 3454614 (Tex. App. Dec. 1, 2025).
Fed. Ct. in NM Clarifies Marketing Covenant. In a dispute over royalty payments, a federal court in New Mexico held that the implied duty to market does not require a lessee to obtain the highest wellhead value for the sale of gas as measured by the netback method; instead, the lessee must act as a reasonably prudent operator in obtaining the “best reasonable sales price” for gas. The Anderson Living Trust v. ConocoPhillips Company, LLC, --- F. Supp. 3d ----, No. CIV 12-0039 JB/SCY, 2025 WL 3527088 (D.N.M. Dec. 9, 2025).
Fifth Circ. Remands for Force Majeure Analysis in Winter Storm Uri Gas Dispute. The Fifth Circuit reversed a district court's decision that Winter Storm Uri was a force majeure event excusing gas supply obligations under a contract, remanding to evaluate whether the storm eliminated all the supplier’s gas supplies and whether the supplier made reasonable efforts to avoid the adverse impacts of the force majeure event. Mieco L.L.C. v. Targa Gas Mktg. L.L.C., --- F.4th ----, No. 23-20567, 2025 WL 3523835 (5th Cir. Dec. 9, 2025).
Tex. App. Ct. Says Quasi-Estoppel does not Save O+G Lease. In a dispute over lease expiration and retained acreage, a court of appeals in Texas held that, after remand from the Texas Supreme Court, (a) the doctrine of quasi-estoppel does not apply to save an oil and gas lease based on the lessors’ acceptance of royalty payments; (b) the retained-acreage provision applies from the point where the wellbore penetrates the producing formation to its terminus; and (c) accordingly, the lessee must account to the lessor based on 704 acres the lessee retained based on that measurement. MRC Permian Co. v. Point Energy Partners Permian LLC, --- S.W.3d ----, No. 08-19-00124-CV, 2025 WL 3532442 (Tex. App. Dec. 9, 2025).
Tex. Ct. App. Says TCPA Applies to Top Lease Communications with Landowners. In a dispute alleging that a top lessee’s leasing activities tortiously interfered with existing oil and gas leases, a court of appeals in Texas held that the Texas Citizens Participation Act precludes all of the base lessee’s claims based on alleged communications between the top lessee and landowners who previously leased mineral interests to the base lessee. Trivista Oil Co. LLC v. Fort Apache Energy, Inc., --- S.W.3d ----, No. 03-24-00682-CV, 2025 WL 3560683 (Tex. App. Dec. 12, 2025).
Wash. Ct. App. Says NatGas Use in Mfg. is Exempt from Taxation. A court of appeals in Washington held that natural gas used in the production of semiconductor materials to grow products is exempt from taxation, and the company is entitled to a refund of the tax paid to use natural gas for this purpose. REC Solar Grade Silicon LLC v. State of Washington, Department of Revenue, --- P.3d ----, No. 40685-7-III, 2025 WL 3546800 (Wash. Ct. App. Dec. 11, 2025).
Fed. Ct. in OK Says No Royalties on Earnouts. A federal court in Oklahoma held that the class plaintiffs failed to state a claim for royalties on certain “earnouts” payable for midstream services conducted on production pursuant to third-party gathering contracts, holding that the earnouts are not proceeds from the “sale” of gas under the oil and gas leases and therefore not subject to royalties. Teresa Garrison Pratt v. Calyx Energy III, LLC, --- F. Supp. 3d ----, No. 24-CV-452-GLJ, 2025 WL 3679038 (E.D. Okla. Dec. 18, 2025).
Fed. Ct. in D.C. Upholds BLM’s O+G Leasing Decisions. In a challenge to 35 oil and gas leases on federal lands in Utah, a federal court in D.C. upheld BLM's decision to end its “Master Leasing Plan” without further NEPA analysis and reaffirm the leasing decisions following remand, holding that (a) the decision to rescind the policy was reasonable and, though succinct, reasonably explained; (b) BLM did not have the obligation to conduct another NEPA analysis; and (c) BLM adequately considered the cumulative effects of its leasing decisions on the pronghorn antelope. Southern Utah Wilderness Alliance v. U.S. Department of the Interior, --- F. Supp. 3d ----, No. CV 24-2476 (RC), 2025 WL 3680685 (D.D.C. Dec. 17, 2025).
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