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 Oliver Perry on March 1, 2013 at 1:35am

Steven,

I have attached the requested agreement.

Attachments:
Permalink Reply by ShaleAdvice (Steven C. Townsend) on March 1, 2013 at 1:51am

Devin,

Just for clarification, the agreement will be extended 6 months, not 4 if it is not terminated 30 days prior to the expiration.  However, the agreement is to engage attorneys as well as CX, which makes it a quasi legal agreement.  A client may terminate the services of an attorney at any time.  I had several former CX/MP clients that were still technically bound by the agreement and they were able to terminate the agreement with a simple letter.  Due to the litigation and allegations of double-dipping I believe that the landowner is in a superior position regarding the marketing document.  I am not advising those who are contractually obligated by this agreement to ignore their responsibilities, but I do believe the nature of the agreement will allow landowners to terminate the agreement at any time.  Contracts are always open for interpretation, but as you know the drafter bears a heavy burden.  I am not soliciting anyone to breach their agreement, I am merely providing my interpretation of the agreement. 

Permalink Reply by Deven Dittrich on March 1, 2013 at 3:33am

Steven:  Thanks for the correction.  I don't have the document in front of me but was working from memory based on the letter I wrote a couple of weeks ago.  I didn't open Oliver's attached document but I wonder if it could be different from the one I signed in January 2012...?

Permalink Reply by ShaleAdvice (Steven C. Townsend) on March 1, 2013 at 3:45am

I doubt it is different, but the way documents were shifted around and modified it may be.

Permalink Reply by JohnL on March 1, 2013 at 12:08pm
Devin- I believe the original MtJ groups were 4 month extentions up until MtJ4 when it was changed to 6 month terms and renewals.
Permalink Reply by Mark McGrail on March 2, 2013 at 5:07am

According to the answer made by Halcon, M&P/CX did not use the lease forms provided by Halcon. Instead M&P/CX used lease forms they created. So as I read this, one of the contentions made by Halcon is that as part of their due diligence they had to decide if the signed lease forms met all the parameters of their needs. They had no obligation to accept any or all the signed leases presented by M&P/CX. Therefore, they were within their rights to pick and choose leases they would accept.

Someone may argue that if they accepted one signed lease they should have accepted them all, no matter which set of forms were used. Again, from the way i read this, Halcon is saying they do have the right to accept or reject the signed forms based on the parameters of their needs which they originally provided to M&P/CX.By not using the lease forms provided by Halcon M&P/CX  may have gone outside those parameters.

Just the way I read their answer.

Permalink Reply by Kevin Senich on March 2, 2013 at 9:41am

Mark:

I believe the Answer, Paragraph 19(a) refers to the changes M&P/CX allegedly made to the Order of Payment (OOP).  A major point of contention in the lawsuit concerns whether the landowners signed the Halcon OOP, or the M&P/CX OOP as evidenced by the Vodenichar Exhibit 2 example.  The difference is these two OOPs is that the Halcon form had the additional word "geology" in the first line. 

I think the lease forms were the ones prepared by Halcon.  Other than the OOP, I do not know of any other disparity claimed by Halcon between their forms and the ones signed by the landowners.

This is why I questioned how many of these leases were rejected because of "geology".  What was it that Halcon found out about this "geology" after it entered into the deal with the MJLG4 that it did not know, or could not have known, before?

 

Permalink Reply by Mark McGrail on March 2, 2013 at 10:38am

Kevin,

I don't believe that they "found out" anything about the geology after. I think it's more a matter of them evaluating the location of any property with regard to the geology they had in hand. Once that part of the "due diligence" was performed they rejected properties that didn't fall into an area where Halcon felt the geology offered the greatest potential.

Another issue; this action by Halcon is common and almost standard operating procedure within the industry. Many companies will set up an area of interest, AOI, when they begin leasing. It is not uncommon for the boundaries to shift as leasing progresses. For example CHK leased heavily in Mahoning County only to reject many of the leases, even though the leases were taken with their AOI.

I think M&P has a tough legal row to hoe.Oil & Gas legal precedence is in Halcon's corner.

Permalink Reply by Kevin Senich on March 3, 2013 at 8:04am

Mark, Fang:

The issue with the lawsuit that troubles me is that it is NOT M&P/CX's case.  It is not even the landowners associations' (MJLG4) case.  It is a subset of the landowners, those rejected by Halcon, who comprise the plaintiff class, some 1,700 parcels according to the Complaint.

This is why I question what M&P/CX was doing at the time of the alleged Halcon breach.  If there really was no "geology" in the uniform Orders of Payment (OOPs), and all members of the landowner group were to have been treated the same, then why did M&P/CX advise the accepted members of the MJLG4 to take bonus money?  Why did M&P/CX not just say, "Hey, time out!  Halcon this is not our deal!?  If Halcon did not have the right to reject leases, M&P/CX could have filed to enforce the contract for all the landowners.  (This is what the plaintiff class is trying to do.  If M&P/CX had done it, then this lawsuit would have been M&P/CX's)  This, of course, presupposes that there was a contract for all.  M&P/CX's conduct argues that there was not.

My heart lies with the rejected landowners, but my head is with Halcon.  My head tells me no developer is going to consider taking on 60,000 acres in one hundred acre parcels with the unknown gamut of title claims on mineral rights on an all or nothing basis.  This is not West Texas where 60,000 acres might be one owner and have a measureable history of production.  Halcon was most likely going to provide itself with business appropriate discretion in accepting or rejecting leases.  Unless the per acre was so low as to justify Halcon's risk, I cannot see Halcon committing itself to the entire 60,000 acres without discretion.

This, of course, begs the question as to what M&P/CX was doing.  Was it representing the landowners' association as a whole, or was it merely presenting Halcon with the option to select what it liked of the 60,000 acres, and to deal with those select landowners through a uniform lease?  

 

Permalink Reply by Kevin Senich on March 4, 2013 at 3:12am

Fang:

I agree, and believe M&P/CX should be happy in these circumstances to release any rejected landowners from their contracts for representation. 

Of course, you are correct as well about the rejected landowners finding lessors.  Ultimately all will do so, if they so desire.  I am thinking the lawsuit is likely an effort to expedite that process.  But, what happens if the rejected landowners do not opt out of the class, and Halcon settles the lawsuit paying the rejected landowners, for example, $1,500/acre,15% and 5 years?  Halcon could buy the parcels as investment properties and resell them.  I trust the federal judge is astute, and won't approve a settlement on behalf of the plaintiff class that is much worse than they can do as individuals.

I wish I were as kind spirited as you about human nature.  Trying "to walk a fine line" is a hopeful way of looking at M&P/CX's apparently complex relationships with MJLG4 and with Halcon.  My problem is, assuming the theory of recovery in the lawsuit is meritorious, I can think of some five million reasons why M&P/CX would not go to bat for all the members of the group at the time Halcon defaulted. 

I hope we get some resolution as regards the merits of the lawsuit.  As we know, most lawsuits are settled, and the right and wrong of the thing left purposely obscure.

Permalink Reply by Kevin Senich on March 4, 2013 at 5:04am

Fang:

We agree that Halcon appears to be in a controlling position in this lawsuit.  They have no reason to settle ... unless, of course, settlement makes busines sense. 

Class actions may or may not be good deals for class members.  If Halcon negotiates a low-ball settlement value for all the rejected parcels, it just might make business sense for Halcon to settle. 

I am just saying the members of the plaintiffs' class better have a good idea what their (individual) properties are worth, and not let any approved settlement short change them.

Permalink Reply by James Brink, Esq. on March 4, 2013 at 8:03am

Fang:  Did you make it to the Expo on Saturday? 

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