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At the Well Weekly (v.9.10.2021)

Oil + Gas Update | CHK Settlement, WV Royalties, Retained Acreage in TX.

Natural gas prices remained solidly above $4/MMBtu as the rig count and oil prices climbed slightly. In pipeline news, Virginia regulators took steps toward approving MVP's project while demonstrations and protests still plague Mariner East in PA. In Appalachia, a TX court gave CHK, the PA Attorney General, and landowners final approval over royalty claims while a local court in West Virginia issued a ruling on statutory provisions governing minimum royalties, post-production costs, and permit applications. In other regions, a Texas appellate court addressed the interplay between the RRC's field rules and a retained-acreage provision.

Rig Counts, Spot Prices + Oil Prices

  • Rigs: National (503); Marcellus (26); Utica/Point Pleasant (12)

  • Brent Crude: $73.76/bbl

  • West Texas Intermediate: $70.64/bbl

  • NYMEX: October 2021 @ $4.914/MMBtu

  • Spot Prices: Henry Hub ($4.78/MMBtu); Tenn. Zone 4 ($4.13/MMBtu); Eastern Gas South (f/k/a Dominion South) ($4.17/MMBtu)

WOPL - Appalachia

  • Mountain Valley Pipeline. The Virginia Environmental Quality Board is taking public comment on stream crossing permits for Mountain Valley Pipeline. Regulators in Virginia also issued a draft water quality certification. In other news, MVP filed a subpoena in federal court last month to try to find out who is behind a Facebook group called Appalachians Against Pipelines, established around the time tree-sitter activists began to block construction of the pipeline project.

  • Mariner East. More than 30 demonstrators challenged county commissioners to put a stop to construction of Sunoco/Energy Transfer Mariner East pipeline construction.

Headlines & Holdings - Appalachia

  • CHK Gets Final Approval of Royalty Settlement. A Texas federal court gave final approval of a $6.25 million settlement of royalty claims by landowners and the Pennsylvania Attorney General and awarded almost $3 million in attorney’s fees and cost for class counsel. In Re: Chesapeake Energy Corp., --- F. Supp. ---, No. CV H-21-1215, 2021 WL 3725983 (S.D. Tex. Aug. 23, 2021).

  • W. Va. Royalty Statute Applies Prospectively Only. A circuit court in West Virginia concluded that the so-called “flat rate lease” provision in West Virginia Code § 22-6-8(e), which requires that any flat-rate leases be converted to one-eighth royalty leases (without deductions) upon application for new drilling permits covering the leased property, does not apply retroactively to oil and gas well permits issued before the May 31, 2018, effective date of the amendment. Williams v. EQT Production Co., No. CC-43-2020-C-23 (Ritchie County Circ. Ct., W. Va., August 27, 2021).

  • Hoboken NJ Climate Change Case Back to State Court. A federal court in New Jersey held that the City of Hoboken’s case against oil and gas companies alleging they “engaged in a decades-long campaign to downplay the effect of fossil fuel usage on climate change” belongs in state court and granted the city’s motion to remand. City of Hoboken v. Exxon Mobil Corp.,--- F. Supp. 3d ---, No. 20-CV-14243, 2021 WL 4077541 (D.N.J. Sept. 8, 2021).

Headlines & Holdings - Beyond Appalachia

  • TX Appellate Court Addresses Interplay Between Retained-Acreage Clause and RRC Rules. A court of appeals in Texas said that Texas Railroad Commission field rules authorized a lessee to retain more acreage than the retained-acreage limitation in the lease. Vermillion FC, LP v. 1776 Energy Partners, LLC, --- S.W.3d ---, 04-20-00089-CV, 2021 WL 3743514 (Tex. App. Aug. 25, 2021).

  • ND Federal Court Applies Exception to Cover O+G Company Ins. Policy. A federal court in North Dakota held that although pollution exclusions applied to bar coverage for bodily injuries associated with a well-site incident, other provisions such as the hostile fire exception restored coverage for the well operator under various insurance policies. Berkley Nat'l Ins. Co., v. XTO Energy, Inc., --- F. Supp. 3d ---, No. 1:18-CV-195, 2021 WL 3781895 (D.N.D. Aug. 25, 2021).

  • States Lack Standing to Challenge Biden Exec. Order on Social Costs of Greenhouse Gases. A Missouri federal court held that states lacked standing to challenge the executive order establishing a workgroup that monetizes the value of changes in greenhouse gas emissions resulting from regulations and other federal agency actions. State of Missouri v. Joseph R. Biden, Jr., --- F. Supp. 3d ---, No. 4:21-CV-00287-AGF, 2021 WL 3885590 (E.D. Mo. Aug. 31, 2021).

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