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At the Well Weekly (v.2.21.2020)

Oil + Gas Update - TX Supremes Tackle ORRI Interpretation.

Natural gas prices inched up a few cents more since our last report while oil prices and rig counts remained flat. In pipeline news, the Constitution Pipeline is officially on the shelf, DEP issued a couple of permits for Mariner East II construction activities, and FERC approved PennEast's request for an extension of time to complete the project. In Appalachia court news, the Commonwealth Court upheld a judge's order denying a request by Chester County officials to stop Mariner East construction on county-owned property. In other regions, the Texas Supreme Court interpreted an overriding royalty interest broadly despite some arguably limiting language in the conveyance.

Here's the week in review...

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (+791); Marcellus (38); Utica/Point Pleasant (11)

  • Brent Crude: ­-$55.68/bbl

  • West Texas Intermediate: ­+$51.37/bbl

  • NYMEX: March 2020 @ +$1.955/MMBtu.

  • Spot Prices: Henry Hub (­+$2.02/MMBtu); Dominion South (­+$1.79/MMBtu); Tenn. Zone 4 (+$1.80/MMBtu)

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

WOPL - Appalachia

In our new section, WOPL ("waiting on pipelines"), we provide the latest news on the status of various pipeline projects in Appalachia:

  • Adelphia Project (Greater Philadelphia Region): DEP republished notice of the E&S permit application for Adelphia Gateway Natural Gas Pipeline and invited public comment.

  • Atlantic Coast (W. Va. to Va. and NC): SCOTUS set to hear oral argument on February 24, 2020.

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

  • Constitution (Northeastern PA to NY): Williams confirmed that it has shelved the Constitution Pipeline.

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

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

  • Mariner East (Western PA to Eastern PA): DEP issued permits for installing 20” pipe along the Mariner East II route in three counties.

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

  • Mountain Valley Pipeline (Northern WV to Southern Va. and NC): A protester was arrested this week on three charges of assaulting workers for the Mountain Valley Pipeline.

  • NEXUS (Ohio to Michigan): 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.

  • PennEast (PA to Central Jersey): FERC granted PennEast Pipeline a two-year extension to complete the construction of pipeline project facilities.

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

  • Revolution Pipeline (PA): Nothing new to report.

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

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

Headlines & Holdings - Appalachia

  • Chester County Injunction Appeal Dismissed by Commonwealth Court. Commonwealth Court Judge Wojcik held that Chester County did not show that it would suffer irreparable injury if Sunoco is allowed to continue installing part of the Mariner East II pipeline project on two county-owned properties.

  • Court in Section 10(b) Securities Class Action Against ETP Appoints Class Plaintiff and Counsel. A federal court in Pennsylvania appointed the lead class plaintiff and class counsel in a putative class action filed against Energy Transfer LP and two of its senior executives for securities fraud under Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5. Allegheny County Employees’ Retirement System v. Energy Transfer, LP, --- F. Supp. 3d ---, No. CV 20-200, 2020 WL 815136 (E.D. Pa. Feb. 19, 2020).

  • Commonwealth Court Upholds Denial of Grants for CNG Stations. The Commonwealth Court agreed that compressed natural gas stations do not meet the definition of “public structures” under the Commonwealth Procurement Code to qualify for a $1.2 million grant and therefore upheld a decision to deny the challenge for lack of subject matter jurisdiction. U.S. Venture, Inc. v. Commonwealth, --- A.3d ---, No. 78 C.D. 2019, 2020 WL 769631 (Pa. Cmwlth. Feb. 18, 2020).

  • PA Superior Court Says No Link Between Denial of New O+G Lease and Mortgage Alteration. The Superior Court of Pennsylvania denied a breach of contract claim for damages against a bank for allegedly altering a mortgage and causing an oil and gas company to back away from a new lease with the plaintiff, concluding instead that the company didn’t enter into a new lease with the plaintiff due to a mortgage foreclosure, not because of any alleged alteration to the mortgage. Neff v. PNC Bank, --- A.3d ---, No. 28 WDA 2019, 2020 WL 838363 (Pa. Super. Feb. 20, 2020).

Headlines & Holdings - Beyond Appalachia

  • Texas Supreme Court Broadly Construes ORRI Assignment. The Texas Supreme Court interpreted an assignment of an override that referred to a specific well on specific property subject to a specific lease as unambiguously conveying an overriding royalty interest on all production covered by the lease, not just from the specific well or specific lands that include the specific well. Piranha Partners v. Neuhoff, --- S.W.3d ---, No. 18-0581, 2020 WL 854929 (Tex. Feb. 21, 2020).

  • KY Court Backs Royalty Class Owners Claim to Portion of Volumetric Production Payment. A federal court in Kentucky denied a bid to dismiss a class action seeking recovery of royalties on a large volumetric production payment received by the lessee where the complaint alleged the lessee didn't calculate royalties on what the buyer paid but on a lower price determined by the lessee. Back v. Chesapeake Operating, LLC, --- F. Supp. 3d ---, No. CV 7:16-192-KKC, 2020 WL 806362 (E.D. Ky. Feb. 18, 2020).

  • Illinois Appellate Court Upholds County's Clawback of Bad Tax Sale. A court of appeals in Illinois upheld a trial court order blessing a county treasurer's decision to set aside a tax sale for mineral rights after a redemption period expired but before issuing a tax deed, concluding that as a result of a clerical error the original mineral owner never received notice and the treasurer therefore properly petitioned to set aside the tax sale. In re: Dome Tax Serv. Co., --- N.E.3d ---, 2020 IL App (5th) 190170, 2020 WL 857869 (Ill. Ct. App. Feb. 20, 2020).

  • Second Circuit Reluctant to Revive Exxon’s Free Speech Challenge to Climate Change Investigations. During oral argument in Exxon’s free speech fight in response to climate change investigations, Second Circuit judges questioned whether the company’s recent win over NY that ended the investigation and ongoing litigation in Mass. mooted out its federal free speech case.

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