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.
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Replies to This Discussion
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Permalink Reply by ralph monico on
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Rockjul,
I haven't reviewed the entire lease, but the Order for Payment clause clearly provides the Lessee with the discretion to decide what conditions (through the exercise of its due diligence) it alone determines necessary to trigger its obligation to issue payment. That language is contained in most leases drafted by or on behalf of gas/oil companies.
I also know nothing about any representations made by M&P or CX. I can tell you that I am not aware of any situations in which a gas/oil company has guaranteed that it will lease property before it engages in its due diligence or before a lease or group of leases is provided to it for consideration.
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Permalink Reply by Rockjul on
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Ralph:
boy is hindsight 20/20.It was explained to us that the only way Halcon can get out of one of the leases is if the title had defects and then we would be notified. the due diligence was Halcon seaching titles to make sure they were clean and free of defect and that we owned the mineral rights, not that due diligence was the option to not fund the lease if the geology was not favorable to Halcon. It seems to me that M&P did a fantastic job of not informing the landowners what due diligence in the eys of O & G industry really means. Maybe it was my fault for not taking the lease to another Attorney to look at. I guess I learned another lesson in life.
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Rockjul,
Understood.
The "and any other" language in the clause separates the due diligence deemed necessary condition from the title conditions.
Remember M&P worked for you (your group) and owed you an absolute duty to explain the lease conditions. Were the "guaranteed lease" representations made in writing? Perhaps you can get released from the land group and negotiate your own lease or have one negotiated on your behalf individually.
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Permalink Reply by James Brink, Esq. on -
Good point, Ralph. Let me add another ingredient to this mix. I have read several postings elsewhere in this list serve that notwithstanding the open-ended contingency in the Order of Payment, once the leases were executed and notarized, a Memorandum of Lease would be filed before any payment was made. And when payment was not made, purportedly pursuant to this contingency clause, the memorandum remained of record. Now, a new point for discussion: If the lease was merely an "option to lease" then why were the title clouding memorandums filed? Bear in mind that I am throwing this out based on other postings in GMS and that I have had no personal, first hand observations of this scenario. Maybe someone following these postings have and can share their experiences with us.
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Permalink Reply by Mike Sero on
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Reading this a month later - But Jim, I see this all the time, primary in RACE states. But, if the lease becomes NULL because of no payment, Landowner must send a letter to O&G company requesting lease cancellation because of no payment and or a surrender filed.
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Permalink Reply by Samuel J. Orr on
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To Ralph Monico: I note you are a very recent poster. Are you a landowner, an attorney, a stealth agent for Halcon, a gas professional or what? I am not accusing you of being anything but I have in the past identified people posting to the site who used a pseudonym to conceal their own biases. Again, I appreciate your posts. Shale Advice and Mr. Brink are credible posters and have been active on the website for a long time. If I knew a bit more about you, I might know how much credibility to attach to your postings. Please do not take offense because I mean none.
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Sam,
No offense taken.
I'm a lawyer with a firm in pittsburgh (you can google me), and for what it's worth I'm not posting because I am trying to generate business or cast anyone in a negative light. I'm simply offering comments based on my reading/interpretation of the Order for Payment clause, which has a fairly certain meaning.
My interest in these subjects is because my father and other family members own farms and/or are active farmers (lawrence county) with current lease and pipeline issues (old leases and new leases) and/or have subsurface rights in Mercer County.
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Permalink Reply by Samuel J. Orr on
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Thank you for your response and not taking offense at my questions. Is it true that one who drafts ambiguous language in a legal document will have any such ambiguities construed against him? The language "such other due diligence as the O&G company may in its sole discretion require" has always been problematic. It appears that O&G companies have construed this clause to mean " we can during the due diligence period decline to fund any particular lease for any reason or for no reason!" If that is what the language means, would it not have been clearer to say "During the 90 day so-called due diligence period the O&G company can elect not to fund said lease or lease option for any reason or no reason." I do not think the language that was used would be so construed by any landowner." Indeed, it appears that M&P did not believe that is what the language meant given that they sat in the audience at numerous meetings where they, or their agents, or employees, or those of CX made representations to landowners that if a particular landowner had title, his "lease" would be funded. Additionally M&P claimed and apparently continues to claim that they have some written agreement with Halcon that obligates Halcon to pay all landowners in the Mount Jackson 4 group who have good title to their respective lands. To the extent that this is true, it would seem that the aggrieved landowners might be third party beneficiaries of this agreement. I believe that the aggrieved landowners may have a right to have a copy of this agreement between Halcon & M&P for review by their own attorneys. M&P for some time has been making noises about a class action against Halcon though none has been filed. I hope this information may help you in providing further comments and analysis. ( I believe that M&P announced early on that they had an agreement with Halcon and that they used this agreement to induce landowners to sign with M&P / CX.) I am not sure exactly what the relationship between M&P / CX is but clearly they worked together and had joint meetings promoting landowners to join the Mount Jackson 4 group.
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Sam,
Generally speaking, ambiguities in a contract are construed against the drafter. The question of whether particular language is ambiguous is most often decided by a court. Thereafter, a jury may determine whether to construe the ambiguous language against the draftter (the court would advise "instruct" the jury regarding the application of the law to the particular facts of a case).
Again, my comments weren't intended to cast anyone in any particular light. Rather, I simply commented on what is fairly standard oil/gas company lease language. The question of whether someone is an intended third party beneficiary of a contract is complicated and determined by the language of the contract at issue.
A client always has a right to answers and information from his or her attorney.
I hope all are successful in obtaining leases for their properties.
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Permalink Reply by Samuel J. Orr on
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Amen. So do I but realistically I doubt that will happen! Nevertheless, hope springs eternal!
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Permalink Reply by ShaleAdvice (Steven C. Townsend) on
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Great comments, but I want to address the "due diligence" language. It may be used in a lot of standard oil and gas leases, but it is a unilateral option that is not valid. One party to the contract cannot promise to make good if and only if they decide they want to. On the other hand, if it is merely a condition precedent, then there is a duty to speak if a fiduciary relationship exists. That is, the "agent" or attorney who is presenting the lease or explaining the lease has a legal duty to inform the lessor what that condition precedent is. Otherwise, it makes no sense. Take for example, I agree to rent your apartment (minerals) for 12 months. You cannot rent it to someone else because you have promised it to me. I have an option to pay you in 120 if I feel like it. Regardless of whether I actually moved in, you have suffered damages and entered into an agreement with no consideration. If the lease deal goes bad for lack of title or other ownership issue, then the landowner is fully aware that the lease will not be paid. However, I believe firmly that if the landowner was left with the notion that as long as they owned the minerals they would be paid, then the lessee cannot back out of the deal because they changed their mind.
Regardless of the many interpretations of the language, I believe those who were promised payment and were not paid should stand up. M&P is having an "EXPO" in Beaver County on March 2, 2013 at the Seven Oaks Country Club. This would be a perfect time to ask questions and try to get answers. Here is the tagline:
Marcellus and Utica Shale is the hottest energy topic in PA today and the M&P EXPO seeks to bring industry and public together to educate and network about these important issues.
Lots of great topics, speakers and industry leaders.
Lots of great giveaways!!!
Bring your neighbor!
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