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 Schnoozie on March 8, 2013 at 8:51am

Thanks Mr. Brink saved everyone a trip over to town.

Permalink Reply by Kevin Senich on March 8, 2013 at 11:34am

Fang:

Normally you are spot on with your comments.  But, I think this is a tighter issue than your above comment would suggest.  I read the LOI carefully and did not find the word "geology" anywhere in it.  If anybody else finds it in there, please let me know.

The problem is the LOI and OOP do not conform, yet they would be considered together for purposes of construing the intent of the parties.  The LOI is clearly and unmistakably talking about title issues, and the kinds of impediments on development associated with environmental or other legal restrictions.  Halcon reserves time "to complete its title, environmental, and other due diligence review of the properties ..."  It goes on to say "(e)xcept for those Properties without Marketable Title or that may be subject to other Defects, as provided for in Section 10 below, payment of the bonus consideration shall occur prior to the expiration of said ninety (90) business days."  (LOI Section 5, Page 3).  Bad geology is not one of those "defects" as defined by Section 10.

Another discrepancy arises between the language of the LOI and the OOP besides "geology".  Both the Vodenichar and the Halcon Form OOP state that Halcon can reject failing "approval of the surface".  While it may not be material in the sense that landowners were rejected for "surface" problems, it tells me that scant effort was spent justifying the LOI with the OOP.  In Halcon's standard OOP, both "geology" and "surface" appear (perhaps with other conditions).  "Geology" was removed for the Vodenichar OOP.  The question is by whom?  To the extent that "geology" does not appear in the LOI, its absence in the Vodenichar OOP might be taken as Halcon's contemporary effort to conform its OOP to the LOI.  But, then Halcon should have taken "surface" out as well.

Frankly, I don't know why Halcon would exclude explicit mention of it conditions for acceptance from the LOI.  But, I am very surprised that the LOI conforms much more closely to the Offer of Lease than I anticipated.  I thought the LOI would surely have the conditions expressed on its face, and not by incorporation by reference of the OOP.

Permalink Reply by Samuel J. Orr on March 8, 2013 at 11:59am

Kevin: It sounds like you are saying that Halcon's position from what you have read recently may be weaker than many of us thought, and that M&P / CX's position may be somewhat stronger?! (Am I getting the drift of your post correctly or not?)

Permalink Reply by Kevin Senich on March 8, 2013 at 12:17pm

Mr. Orr:

Yes, I am.  I am questioning whether Halcon, if they wanted to reserve conditions for acceptance in the OOP, necessarily would have had to have stated those conditions in the LOI.  The LOI is silent as regards conditions (other than the title defects, etc.)

What do you think where, as here, you have a nine page Letter of Intent with no mention of "geology" as a condition for acceptance of a lease, yet some 1,300 landowners were rejected ostensibly for just that reason?

I also read the confidentiality clause, Section 18. It is very clear that the landowners were supposed to have had the LOI, and were to have been bound by its confidentiality provision.

 

 

 

 

Permalink Reply by Samuel J. Orr on March 8, 2013 at 12:24pm

Kevin: Thanks for the clarification. From the landowners standpoint, it is better if Halcon turns out to be the villain or at least the major villain because it has deeper pockets  than M&P / CX. That being said, I still believe that M&P is not at least somewhat responsible for the current mess!

015334grltd9mPermalink Reply by 015334grltd9m on March 8, 2013 at 12:39pm

Be careful biting the hand that feeds you.

 

Sam, I will wager dinner that Halcon has no problem, these energy boys have been in this business for a long time and they know exactly what they are doing..............IMHO.

Permalink Reply by James Brink, Esq. on March 8, 2013 at 2:51pm

Good point, Ron.  I have been around the Western PA, Ohio and West Virginia patch for a long time and I can tell you that the influx of the companies from Texas and Oklahoma infected our region with their brand of business practices.  I agree that the money has never been as free flowing in the patch as it is now, but look at the number of lawsuits filed prior to 2000 and look at them now.  Then take a look at who is named as defendants:  Range (Texas), Chesapeake (Oklahoma), SWEPI (Texas), Halcon (Texas) . . . .Do I need to go on?

Permalink Reply by Kevin Senich on March 8, 2013 at 12:59pm

Mr. Orr:

I do believe M&P/CX is more than somewhat responsible for the current mess in this way.  No broker is going to believe a company like Halcon is going to buy mineral rights to 60,000 acres subject only to the condition of good title (and related conditions in the LOI). No producer would do that.

M&P/CX had to have known that, at least in some important ways, the conditions of the OOP did not conform with the language of the LOI.  I figured that out in a half hour this afternoon.

Those conditions, geology, surface, etc. are always in OOPs.  If M&P/CX bargained to have them removed like the LOI suggests, then they should all have been removed.

I just find it hard to believe that Halcon would buy rights under the terms set forth in the LOI only.  "(A)pproval of the surface"?  LOI says it should not be in the OOP.  But, there it is.  If it was taken out like "geology" was supposedly taken out, I have this comical picture in mind of wealthy Texas oilmen leasing the side of a Pennsylvania mountain for $3,850/acre.  (On a 45 degree mountain incline are you drilling horizontally or vertically?)  Guess what?  Halcon did not become Halcon by leasing land they can't drill on.

Permalink Reply by James Brink, Esq. on March 8, 2013 at 3:01pm

Kevin:  Money has a way of creating blindness to glaring facts.  The LOI was obviously written by a lawyer, and a smart one at that.  There were built in escape clauses that even Ray Charles could see.  But the prospect of earning fees nearing $18 million created, in my opinion, a gold fever atmosphere that may have been responsible for overlooking these shortfalls.  More important, none of the landowners I have spoken with recall ever having been told that such escape contingencies existed.  Why?  Who knows?  Maybe there is a possibility that M&P did not understand the terms of the agreement well enough to adequately explain them to their clients, but I don't know.  All I do know that there appears to have been a disconnect from the terms of the deal between Halcon/M&P/CX and the terms that were presented to the landowners.  The reality will become readily apparent during discovery.

015334grltd9mPermalink Reply by 015334grltd9m on March 8, 2013 at 3:29pm

Mr. Brink I used to think all defendants were evil until I became one and found it usually was about someone trying to separate me from some money.

Honestly though, I learned long ago to know when I don't know, and this case I do not know.  But I will render my gut feeling because it usually works, many want their pound from Halcon because it is the goose.  But, how can one force a goose if we are trying to kill it?  The goose delivered a ton of gold already, maybe middlemen promised more than the goose was willing to give and the guns should be pointed their way, we still need the goose it has more to give.

Permalink Reply by fracking good on March 9, 2013 at 2:50pm

Do some homework on Halcon, Petrohawk and Floyd Wilson and see what they all about, Halcon bought 81,000 acres in North Dakota, Bakken and Three forks formation for 1.4 billion dollars, half cash half stock in Dec, 2012 just about the time MJG4 were to be paid.

http://www.bloomberg.com/news/2012-10-22/halcon-agrees-to-buy-north...

Halcon doubled available share count and issued more debt to proceed with business

http://finance.yahoo.com/news/halcon-resources-announces-record-dat...

I believe at the time Halcon max out their credit card and could not fund a large portion of the MJG4 contract. since then they have secured more funding but the damage was done and it leaves us in this mess.

Permalink Reply by Schnoozie on March 8, 2013 at 9:08am

I will save you some eye strain.

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