Flat Rate Leases-Tawney Decision

First, we have an excellent lawyer, but I wanted a little outside information. In the "famous" Tawney case, the circuit judge ruled in a motion for summary judgment, that flat rate leases were void based on WV law/public policy etc. Unfortunately, the parties reached an agreement on that issue and the decision was never appealed to a higher court.

We have a few hundred acres in Wetzel held by very old leases where we are only getting $50 dollars per well per year (flat rate lease). Obviously a VERY bad deal. We are now trying to lease all our Wetzel interests to another company. Does anyone know or have you heard of what other people are doing with these type of leases. Has anyone heard about any class action suits? It will be very expensive for us to sue and try and break these leases. On the other hand, getting 500 or so acres "freed up" in Wetzel could be worth a good bit of money.  

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Permalink Reply by Gunner Ostergard on December 5, 2011 at 11:21am

Most leases have something that states this lease will stay in affect while gas is produced in paying quantities.  Just because they are sending you a check for $50 does not guarantee that it is producing,  even if they tell you to your face that it is producing it may not be.  The only way to make sure it to have it inspected by an independent well expert.  You are right ,  it could be worth a fortune.

Permalink Reply by Philip Brutz on December 5, 2011 at 11:48am

You could try this Law firm:

http://nenaturalresources.com/index.html

If they can get you out of your old lease they will charge you 15% of your new signing bonus.  If they can't  get you out you owe nothing.  I have not dealt with them personally.

Permalink Reply by Jim White on December 5, 2011 at 4:10pm

Thanks, both of you. I contacted the company on your link and am waiting for a reply. I believe they only do work in Penn and Ohio, but not certain. The production figures that I get from the "lookup engines" show that there is some production, but not a lot. We'll see. The lawyer told me that to contest the issue legally under the Tawney motion would cost a fortune in legal fees, with not only the defendants in the suit, but all the "friends of the court" involved. We will work on other ways to find production values, if any. None of us are in the area anymore, but might be worth a trip and stay, if I could find out what to look for......will be checking on that. Maybe at this site!!...........:))

Permalink Reply by Nancy Mosley on December 5, 2011 at 5:36pm

Do you know the surface owner/owners? I believe there is a ticket put on the well each month by the producer and something by the purchaser, or at least there are 2 meters on each well so the producer and the purchaser (such as Dominion) each has its own meter. If you were there you could look at it (I think).

Royalty owners don't have the right to get information from the purchaser. They can get the amount ($) reported to the state property tax division, by API number. Of course there is a delay. The amount for a flat rate well is probably the flat rate.

The law should be changed so that the royalty owner has the right to have the information from the pipeline purchaser and not have to depend on what the producer reports to the state office of oil and gas, which gets reported a year or so later.

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