M&P BEING SUED / CLASS-ACTION SUIT AGAINST HALCON, M&P & CX

 

Hello everyone:

                         I have not posted anything on here before. I have always just read the comments of others. I thought I would just post some thoughts. After being patient for 8 1/2 months I still have no answers like others in the south east Mercer County area. Is Halcon going to be held responsible for their actions? Are they going to be made to pay for the contracts they signed for? How qualified is M&P when it comes to representing the landowners of group 4 against a company like Halcon with deep pockets. Will we get an honest effort from M&P or will they make it as short as possible and except less than what we deserve to mitigate damages on their behalf. I have just read, in detail, the civil suit against M&P by Terra Energy LLC. Now it seems to me that the landowners not only have to worry about being pushed around by an unethical oil & gas Co, but now we have to worry about the real motives of the law firm we have to represent us. Are they going to treat clients like they treated business partners? I think if given a chance M&P will come back to the land owners after any legal actions against Halcon with a bogus report how they couldn't do much and if we continue it will tie up our lands for years, of course due to a half hearted attempt at getting us what we legally are owed.

                        I only have this attitude after listening to M&P for 8 1/2 months tell us how important it is to stick together as a group but they will break up the group at the drop of a hat to sign a little chunk to this O&G Co and another chunk to a different O&G Co. This sticking together only benefitted them by having all of us available to them for whatever size of lease they could get from any other O&G Co. After seeing an E-Mail to Terra Energy Advisors LLC from Jack Polochak describing how maybe Terra Energy should  get some leases signed by an O&G Co that are less than desirable for landowners to make it look like A Co he was partnering up with was successful in the oil and gas leasing business. That just shows me that he will sacrifice his clients profits to improve his and his associates. I think everyone should read the Lawsuit especially the landowners of group 4. Maybe I am seeing this in a sinister way and I am just swayed by how the rest of the world does things these days. Here is the link to the Lawsuit. I would like to know how many other landowners see it the way I do.

MPLawsuit.pdf

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Permalink Reply by Samuel J. Orr on February 24, 2013 at 2:59pm

I think that if the infrastructure was available and you had a well drilled on your property or there was a well drilled on your neighbor's property and your property was in the drilling unit,  you would be pretty happy. When there is demand and wells are producing and gas is being sold the royalties on an average well even at 12.5% should make you happy. I currently have no lease on my property but years ago I did. I think the last lease was with Atlas but it expired. Think I got a bonus of $15 / acre and $2.00/acre per year delay rental. Also it may be that the HBP wells may get preferentially drilled especially if the royalty is only12.5 %. I hope Halcon is forced to pay and they well may  ultimately be forced to do so.. The difficulty I have with M&P is that they said signing with them gave landowners a big advantage because of the large aggregated acreage in Mount Jackson 4. Landowners believed rightfully or wrongfully that any O&G  company had to accept all or none of the acreage in the Mount Jackson 4 group. When push came to shove that was untrue. So some landowners got paid, M&P/CX walked off with $5,000,000, and a bunch of landowners did not get anything. Perhaps M&P was a bit sloppy in their documentation because clearly the lease language has been problematic. Just my thoughts. But I again hope Halcon is forced to pay everybody!

Permalink Reply by Kevin Senich on February 24, 2013 at 4:27pm

My sense is that M&P/CX had a strong track record serving the members of MJLG1,2, and 3.  Did all in those groups get leases and bonus money? If so, something apparently was different with MJLG4.  Perhaps it is time to do some reverse engineering and find out precisely what was different about 4 as opposed to 1, 2, and 3.  Were the documents the previous groups executed the same as those of 4?  If not, in what ways did they differ?  Were the offers from 1, 2, and 3 subject to the same condition precedent -- that all members with good titles had to paid?  Was that condition precedent satisfied by the same confidential LOI?

My sense is that the landowners of the previous groups were not treated disparately as were the landowners in 4.  Why?

If we understand the differences, we may have a much clearer idea of where the blame, if any, lies for the MJLG4 landowners who were rejected.

Permalink Reply by Samuel J. Orr on February 24, 2013 at 5:48pm

I have no knowledge at all but have been led to believe by various comments in other threads that perhaps the documentation, defective or not, was the same or very similar. Again, without any first-hand knowledge, I have believed from the tenor of multiple other threads that no other O&G company lessor from M&P's prior groups ever invoked any language in the lease to avoid payment. I think someone from CX might have the answer though I am not sure that CX was involved with M&P in the prior M&P projects. Your questions deserve answers but my assumptions would explain why M&P  claimed to be blindsided by Halcon's decision to fund acreage very selectively. Your questions should be easily answered because there must be multiple individuals out there with firsthand knowledge of the facts.

Permalink Reply by Bernie Horabik on February 24, 2013 at 8:57pm

Did I read that correctly? 

Did M&P make a 5 million dollar fee for their legal services? 

Permalink Reply by Samuel J. Orr on February 24, 2013 at 9:20pm

Conservatively Halcon paid $3850 for 20,000 acres in M&P's Mount Jackson 4 group. I believe the 20,000 acres may be on the low side as to acreage involved. M&P's fee was 6%. If 20,000 acres is correct the actual fee was $4,620,000. How they split this with the marketing group CX Energy is unknown to me. I believe that the actual acreage they got paid on may have been as much as 25,000 acres and perhaps even a bit more.

Permalink Reply by JohnL on February 24, 2013 at 10:15pm
Sam- I'm not here supporting M&P in any way, but I look at it this way. If you had a house that was worth $385,000 and you listed it with a realtor to advertise and market for you with the hopes of them selling it for you what percentage would they charge for their services? Probably 6%. That was the logic I used to rationalize their fee. To me it seemed reasonable. I really don't see the difference.

I went to a meeting held by another lawyer group who bragged about a "lower" upfront fee but wanted the landowners to give them 5% of their royalties for "just" the first 5 years and people were signing up with them. I just shook my head and walked out.
Permalink Reply by James Brink, Esq. on February 24, 2013 at 7:19pm

Well, JohnL, you may have the last laugh.  If you signed an old lease, the unitization provision probably limited the size of the unit to 640 acres.  The new leases are up to 1280 acres now.  It is foreseeable that you will be approached in the future for an amendment to your original lease to increase the unit size.  When this happens, the sky could open for you since you can then negotiate a suitable amendment fee.

Permalink Reply by James Brink, Esq. on February 24, 2013 at 7:21pm

You name the place and the time. I love good country breakfasts.

Permalink Reply by JohnL on February 24, 2013 at 7:52pm

Sam/Fang/Kevin,

The difference between the 4 groups was Halcon.  I know for a fact that MtJ3 (SW Mercer Co) was Hilcorp and it's possible Hilcorp may have been involved with all 3 prior to MtJ4. I think what someone needs to produce is the actual LOI from Halcon to the MtJ4 group.I have the MtJ4 Firm Offer agreement that I won't go into here, but it supports the claims made by others on this board that it involved all MtJ4 members.  CX joined up with M&P sometime after MtJ1.  Both were at the meetings I attended in New Castle, PA in Nov 2011 and forward.

James- the maximum size of our drilling unit was 640 acres, actual size was 110 acres (mostly our farm acres).  It's interesting to know that there may be some options, but I won't complain either way. I'm located only a few miles from a new Hilcorp well and 4 TGP gas lines, plus new NiSource lines from the Hilcorp well. I like my odds.

Have you ever come across the shallow well operator transfering the overriding royalty interest to an individual prior to assigning the deep rights to Hilcorp?

Anyone else up for ham and eggs?

jl

Permalink Reply by James Brink, Esq. on February 24, 2013 at 8:03pm

JL:  Not specifically involving Hilcorp, but I have seen the retention of an override as part of the deal.  Some are as high as 5%, but most are between 2 and 3%

Permalink Reply by JohnL on February 24, 2013 at 8:25pm
James, looks like a total of 1%. 1/2% to an individual and 1/2% to an O&G company owned by the same individual. Sounds like it's not that unusual. I'm assuming I'll still receive at least 12% regardless if I'm fortunate enough to be in that position.
Permalink Reply by Rockjul on February 25, 2013 at 6:29pm

 Did anyone get any more information on the case Terra Energy Advisers LLC -vs- M&P? Has there been a response to the Plaintiffs complaint by M&P? Maybe this takes longer than what I thought.

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