At the Well Weekly (v.4.4.2025)
- George A. Bibikos
- Apr 4
- 11 min read
Oil + Gas Update: Trespass-by-Frac Claim Fails in PA Federal Court.
Since our last report, gas prices hovered around $4/MMBtu alongside a relatively flat rig count while oil prices recently slid in the wake of oversupply and tariff worries. In pipeline news, there is renewed optimism that more and more projects will move forward with an energy-friendly administration at the federal level. In Appalachia, courts addressed market-enhancement royalty clauses; lease-busting bids; oil + gas deed interpretation; interest on royalties; leasing of state lands; arbitration of PSA/JOA disputes; pipeline protesters; flat-rate royalty leases; natural gas bans; co-tenants; injection wells; and trespass-by-frac claims. In other regions, courts grappled with royalty class actions; interpreting technical terms in oil and gas leases; equitable recoupment; lease-busting attempts; valuation of damages to mineral estates; LNG projects; jury verdicts against environmental groups; and climate change.
Rig Counts, Spot Prices + Oil Prices
Rigs: National (592); Marcellus (23); Utica/Point Pleasant (12)
Brent Crude: $69.89/bbl
West Texas Intermediate: $66.95/bbl
NYMEX: May 2025 @ $4.055/MMBtu; 12-Month Strip @ $4.560/MMBtu
Spot Prices: Henry Hub @ $4.05/MMBtu
Headlines & Holdings - Appalachia
Sixth Circuit Addresses Market Enhancement Royalty Clause. In a royalty class action, the Sixth Circuit interpreted a market-enhancement royalty clause in the class members’ leases as prohibiting their lessee from deducting their share of certain “processing” and “fractionation” costs from royalty payments, holding that “the text of the lease, the various forms of gas products covered by the lease, and the market realities of this operation” demonstrate that processing and fractionation are necessary to transform raw gas and non-methane gas (ethane, propane, etc.) from the well into a marketable product such that the lessee bears those costs alone. The Grissoms, LLC v. Antero Res. Corp., --- F.4th ----, No. 24-3676, 2025 WL 984418 (6th Cir. Apr. 2, 2025).
PA Superior Ct. Denies O+G Lease-Busting Bid Based on “Gaps” in Operations. In a lease-expiration case, the Superior Court of Pennsylvania declined a bid by a top lessee to bust out the base lease, holding based on the habendum clause that the lease did not expire because (a) the lessee maintained its lease by engaging in preliminary work to build a pad and drill wells; obtaining permits and later renewing them after they expired; and engaging in such activities in good faith to maintain the lease and ultimately drill and produce a well; (b) the lease did not expire despite “reasonable gaps” between activities that occurred before the primary term’s expiration date and after that date; and (c) alternatively, the lessee made “prescribed payments” to the lessor in the form of royalties to keep the lease alive. LOLA Drilling II, LLC v. Rice Drilling B, LLC, --- A.3d ----, No. 880 WDA 2023, 2025 WL 636828 (Pa. Super. Ct. Feb. 25, 2025).
Pa. Super. Ct. Applies Dunham Rule to in Dispute over O+G Rights. The Pennsylvania Superior Court confirmed the longstanding principle that “oil and gas rights are distinct from mineral rights” in Pennsylvania deed-interpretation situations and held that language in a deed excepting and reserving mineral rights for the grantor without mentioning oil and gas in those provisions creates a rebuttable presumption that the parties did not intend to except and reserve the oil and gas for the grantor. Cavallo Mineral Parnters v. EQT Production Co., --- A.3d ----, No. 1515 WDA 2023, 2025 WL 800433 (Pa. Super. Ct. Mar. 13, 2025).
Ohio App. Ct. Denies Reconsideration Bid in Dispute over Royalty Interest. A court of appeals in Ohio denied a bid to reconsider its decision that a deed conveying a royalty interest on production “from future wells drilled on these premises” includes a horizontal well traversing beneath the surface qualifies as a well drilled “on the premises” for purposes of the royalty deed. Mineral Development, Inc. v. SWN Production (Ohio), LLC, --- N.E.3d ----, No. 24 MO 0013, 2025 WL 798618 (Ohio Ct. App. March 13, 2025).
Ohio App. Ct. Rejects Appeal Challenging Ohio O+G Agency’s Leasing Decisions. A court of appeals in Ohio upheld the dismissal of an appeal from a decision of the Ohio Oil and Gas Land Commission to approve nine nominations of land owned or controlled by a state agency for the purpose of natural gas development, holding that the agency’s decision is not subject to appeal and the environmental groups challenging the decision lacked standing anyway. Save Ohio Parks v. Oil & Gas Land Management Commission, --- N.E.2d ----, No. 24AP-206, 2025 WL 800470 (Ohio Ct. App. March 13, 2025).
MVP’s Claims against Protesters may Proceed. A federal court in West Virginia held that Mountain Valley Pipeline LLC can proceed with trespass and tortious interference claims against a protester who chained himself to pipeline equipment, but the company failed to allege sufficient facts to state a claim for conspiracy. Mountain Valley Pipeline, LLC v. Wagner, --- F. Supp. 3d ----, No. 2:24-CV-12, 2025 WL 685225 (N.D.W. Va. Mar. 3, 2025).
Pa. Super. Ct. Rejects Bid to Arbitrate PSA Dispute. The Superior Court of Pennsylvania rejected renewed bids by the operator of a unit to arbitrate the non-operator’s claim for a refund of well-participation costs, holding that (a) per the court’s previous holding, the PSA spells out well-election rights and procedures but does not contain an arbitration clause; (b) the well-election procedure is at issue in this case; and (c) the related JOA between the parties that contains an arbitration provision does not apply despite the non-operator’s election to participate and despite language that the JOA applies to all disputes between the parties. Kriebel Minerals, Inc. v. EQT Production Co., --- A.3d ----, No. 352 WDA 2024, 2025 WL 817783 (Pa. Super. Ct. Mar. 14, 2025).
MVP Case Against Protesters Survives Motion to Dismiss. In another case in which Mountain Valley Pipeline sued protesters interfering with construction work on a pipeline, a federal court in Virginia denied a motion to dismiss claims for interfering with the company’s easement and also dismissed civil conspiracy claims. Mountain Valley Pipeline v. Ffitch, --- F. Supp. 3d ----, No. 7:24CV00254, 2025 WL 837337 (W.D. Va. Mar. 17, 2025).
WV Fed. Ct. Dismisses Flat-Rate Royalty Lease Claims. A federal court in West Virginia dismissed two of three counts from a class of landowners claiming that their lessee violated a flat-rate royalty statute in the Mountain State by taking deductions for post-production costs, utilizing a weighted average sales price (“WASP”), and failing to market hydrocarbons produced from the wells at reasonable prices, holding that an amendment to the flat-rate royalty statute requiring a production-based royalty and restricting post-production cost-sharing did not apply to the leases in the case. Wright v. Antero Resources Corp., --- F. Supp. 3d ----, No. 1:20-CV-222, 2025 WL 837328 (N.D.W. Va. Mar. 17, 2025).
NY Fed. Ct. Dismisses Challenge to NY NatGas Ban. In a case involving a challenge to a NYC ordinance generally prohibiting the use of fossil fuels such as natural gas and heating fuel in newly constructed residential buildings in the city, a federal court in New York dismissed a challenge to that local ordinance, holding that the Energy Policy Conservation Act (“EPCA”) did not preempt the local ordinance and declining to follow the Ninth Circuit’s contrary decision in California Rest. Ass’n v. City of Berkeley, 89 F.4th 1094 (9th Cir. 2024). Association of Contracting Plumbers of the City of NY v. City of New York, --- F. Supp. 3d ----, No. 23-CV-11292 (RA), 2025 WL 843619 (S.D.N.Y. Mar. 18, 2025).
Va. App. Ct. Upholds Tax on O+G Infrastructure. A court of appeals in Virginia upheld real estate taxes assessed on physical structures built to produce natural gas but not the gas reserves themselves, holding that the county assessors properly used a valuation approach to determine the property’s value even though it resulted in a higher tax burden than the company’s evaluation would have yielded. EQT Production Co. v. County of Wise, --- S.E. ----, No. 0155-24-3, 2025 WL 836397 (Va. Ct. App. Mar. 18, 2025).
WV App. Ct. Says O+G Co-Tenant Ousted Despite Lack of Notice. In a dispute between co-tenants who presumably did not know they all co-owned oil and gas interests in two properties, a court of appeals in West Virginia held that the ousted co-tenant is not entitled to actual notice of the ouster by other co-tenants in possession of the property. The dissenting judge disagreed and stated that the majority’s decision “imperils the titles of thousands of mineral-holding co-tenants in West Virginia” because it improperly allows one co-tenant to oust another co-tenant essentially by accident by merely possessing the disputed co-tenancy property. Antero Res. Corp. v. Pike, --- S.E.2d ----, No. 24-ICA-115, 2025 WL 854787 (W. Va. Ct. App. Mar. 19, 2025).
WV Supremes Tackle Dispute over Injection Well Operation. In a case involving a dispute over the operation of an injection well and alleged contamination, the West Virginia Supreme Court reversed an order vacating a jury verdict in favor of the operator and ruling in favor of the plaintiff, holding that the evidence supported a defense verdict for the operator and further holding that the parties’ oil and gas lease precludes the plaintiff’s unjust enrichment claim. Webb v. N. Hills Grp., Inc., --- S.E.3d ----, No. 22-789, 2025 WL 880227 (W. Va. Mar. 21, 2025).
Pa. Super. Ct. Rejects Arbitration Bid for O+G Lease Dispute. In a case involving disputes over partial lease expiration and underpaid royalties, the Pennsylvania Superior Court held that an addendum to an oil and gas lease providing for resolution of claims in state or federal court trumped an arbitration provision in the base lease, reasoning that the parties expressly stated that the addendum controlled in the event of a conflict between the base lease’s provisions and the addendum. Golden Eagle Resources II, LLC v. EQT Production Co., --- A.3d ----, No. 261 WDA 2024, 2025 WL 874413 (Pa. Super. Ct. Mar. 20, 2025).
Fed. Ct. in PA Scraps Trespass-by-Frac in Briggs 2.0. A federal court in Pennsylvania dismissed claims alleging subsurface trespass by hydraulic fracturing, finding no evidence of actual physical invasion into the subsurface of the plaintiffs’ property; holding that an applicable oil and gas lease precludes trespass claims; and further holding that the rule of capture otherwise precludes claims for damages for drainage. Briggs v. SWN, --- F. Supp. 3d ----, No. 3:21-CV-520, 2025 WL 887779 (M.D. Pa. Mar. 21, 2025).
Ohio Fed. Ct. Says SOL is Limited for O+G Royalty Claims. In a dispute over royalty payments, a federal court in Ohio limited the royalty owners’ claims to any alleged underpayments within the four years preceding the filing date of the action. Senterra Ltd. v. Rice Drilling D, LLC , --- F. Supp. 3d ----, No. 2:24-CV-3181, 2025 WL 896635 (S.D. Ohio Mar. 24, 2025).
Headlines & Holdings - Beyond Appalachia
Fed. Ct. in N.D. Scraps O+G Royalty Class Action. A federal court in North Dakota denied a motion to certify a royalty class action, holding that individualized issues such as “[t]he verification of leases and ownership interests, the determinations of the existence of safe harbor provisions, and the determinations of proper notice regarding title disputes" preclude resolution on a class-wide basis because these are "individual questions that would require every proposed class member to present evidence for every payment that allegedly falls within the class allegations in this case.” Hystad Ceynar Min., LLC v. XTO Energy, Inc., --- F. Supp. 3d ----, No. 1:23-CV-030, 2025 WL 522550 (D.N.D. Feb. 18, 2025).
Colo. Fed. Ct. Says OK to Evidence of O+G Technical Meanings. In a dispute between surface owners and owners of underlying minerals, a federal court in Colorado denied motions to exclude evidence from the mineral owner that supported the technical meanings of terms and phrases frequently used in oil and gas leases such as “unitization,” “allocation,” and “produced from” but gave the surface owners the opportunity to present evidence of a course of dealings between the parties. Box Elder Kids, LLC v. Anadarko, --- F. Supp. 3d ----, No. 20-CV-2352-WJM-TPO, 2025 WL 580739 (D. Colo. Feb. 21, 2025).
Fifth Circuit Confirms Equitable Recoupment Remedy. In a dispute over royalty payments, the Fifth Circuit confirmed a lessee’s self-help remedy of recouping royalties from overpaid landowners by withholding future royalties and held that (a) the lessee in this case overpaid the plaintiffs who were not entitled to the royalties; (b) the overpayment and ensuing recoupment were part of a single transaction; (c) the lessee did not profit from the overpayment; and (d) the plaintiff’s remedy lies with the unjustly enriched royalty owner, not the lessee. DDR Weinert, Ltd. v. Ovintiv USA, Inc., --- F.4th ----, No. 23-50479, 2025 WL 636315 (5th Cir. Feb. 27, 2025).
Wash. Fed. Ct. Tosses Challenge to NatGas Ban on Immunity Grounds. In a lawsuit challenging provisions in the state’s energy code discouraging natural gas equipment in new buildings, a federal court in Washington State held that the defendants had immunity from suit because they don’t enforce the code. Rivera v. Anderson, --- F. Supp. 3d ----, No. C24-0677-KKE, 2025 WL 606212 (W.D. Wash. Feb. 25, 2025).
Kan. Fed. Ct. Says Congress Preempted State Consumer Protection Claims Challenging Gas Prices During Winter Storm Uri. A federal court in Kansas rejected claims alleging that gas companies unlawfully increased prices as a result of Winter Storm Uri in violation of the Kansas Consumer Protection Act (“KPCA”), concluding that that plaintiffs’ KCPA claims amount to regulation in the field of gas transportation and sales for resale that Congress intended FERC to occupy and that sales prices in transactions between natural gas suppliers and distributors are wholesale transactions over which FERC maintains exclusive jurisdiction. In re: Winter Storm Uri, --- F. Supp. 3d ----, No. 23-1192-DDC-ADM, 2025 WL 660803 (D. Kan. Feb. 28, 2025).
Tex. Bankruptcy Ct. Rejects Lease-Busting Bid. A bankruptcy court held that various drilling operations conducted on a continuous basis before and after deadlines in the lease were designed to, and being conducted for the purpose of obtaining, initial production from a well such that those leases did not expire by operation of law and therefore may be part of the debtor’s bankruptcy estate. In re: Pearl Resources LLC, --- B.R. ----, No. 20-31585, 2025 WL 670122 (Bankr. S.D. Tex. Feb. 28, 2025).
Tex. App. Ct. Confirms that Damage to Mineral Interests Requires Expert Proof. An appellate court in Texas confirmed that determining the value of mineral interests is not a matter of common knowledge and requires testimony from a qualified expert, rejecting the application of the “Property Owner Rule” (i.e., allowing property owners to testify about their property) because “the valuation of mineral interests involves technical and specialized expertise that requires opinions that are reliable and supported by sufficient data and explanation[.]” Apollo Exploration v. Apache Corp., --- S.W.3d ----, No. 11-19-00183-CV, 2025 WL 714720 (Tex. App. Mar. 6, 2025).
D.C. Circuit Says FERC Gets Another Shot at LNG Project Authorizations. The D.C. Circuit said FERC could fix problems in its reauthorizations for two LNG project that the court previously rejected. City of Port Isabel v. FERC, --- F.4th ----, No. 23-1174, 2025 WL 838540 (D.C. Cir. Mar. 18, 2025).
DC Fed. Ct. Says EPA Withdraw of Grant Money Needs Explanation. A federal court in D.C. granted a bid to enjoy the EPA from terminating $20 billion in grant funding for climate change projects, holding (among other things) that EPA’s unilateral decision to scrap the funding violated the APA as an arbitrary and capricious agency action, but the court stopped short of ordering that the grant money be released. Climate United Fund v. Citibank, N.A., No. 25-CV-698, 2025 WL 842360, at *1 (D.D.C. Mar. 18, 2025).
ND Jury Says Greenpeace on the Hook for $660M in Dakota Access Defamation Suit. A jury returned a verdict for more than $660 million in favor of Dakota Access Pipeline in a defamation suit the company brought against the environmental group. Energy Transfer Equity LP v. Greenpeace International, No. 30-2019-CV-00180 (N.D. Morton County March 19, 2025).
Eighth Circuit Says U.S., not County, owns Mineral Royalty Interests. In a dispute over mineral royalties under lands in North Dakota, the Eighth Circuit concluded that the federal government owns certain non-possessory mineral interests in McKenzie County, holding that (a) the county did not own those mineral rights; and (b) a prior decision that credited the county with interests in other minerals didn’t apply here. McKenzie Cnty., ND v. United States, --- F.4th ----, No. 24-1177, 2025 WL 866056, at *1 (8th Cir. Mar. 20, 2025).
Utah Supremes Kill Kids’ Climate Change Complaint. The Utah Supreme Court dismissed a case involving claims from several young Utahns challenging statutory provisions and government conduct relating to fossil fuel development, holding that the courts lack subject matter jurisdiction over the claims and none of the challenges to state laws, if they prevailed, would address the alleged climate-change injuries. Natalie v. State, --- P.3d ----, No. 20230022, 2025 WL 868649 (Utah March 20, 2025).
Eighth Circuit Says No Attorneys’ Fees for Condemnations under the NGA. In a case involving pipeline condemnations under the Natural Gas Act, the Eighth Circuit vacated an award for attorneys’ fees in favor of the pipeline company and held that (a) attorney fees are typically unavailable when the United States exercises its eminent-domain power, and (b) nothing in the NGA changes that principle when the federal government delegates the power to a private party under the NGA. In re: WBI Energy Transmission, --- F.4th ----, No. 24-1693, 2025 WL 891516 (8th Cir. Mar. 24, 2025).
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