Beck Energy Appeals Court Decision
I talked to the Monroe County Court today and found out by pure accident that Beck Energy appealed their case just today. For those that don't know, the case was moved to Washington County Court by the Ohio Supreme Court. The decision came down that Beck Energy leases were "not in the Public Interest" in the state of Ohio. In other words Beck lost and the landowners won. Now the appeal process has begun. My lease with Beck hangs in the balance as do 270+ Monroe County landowners just like me!
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Permalink Reply by Olive Sue on
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Having read the 29 pages of this judges ruling it seems that his decision was not made on just his "bias" but having access to numerous other cases. It would seem the lease was written with intent to control everything to the lessees benefit. And with as much info as is now available no one should be signing a lease that is not a fair contract, however it continues to be happening and lessors have signed away the future. Bonus money has become the god of control. Don"t think you will change many minds because when one tries to explain the pitfalls many think you are getting something from it. Signing of leases really are happening much like lives are being lived "in the moment". To say we are spending our childrens inheritance is a misstatement, some will have spent all future generations inheritance. I hope this case will eliminate one travesty but not create another. Would it be nice if everyone and every company operated without reproach?
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Permalink Reply by John OBrien, landowner advocate on
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I have my copy and had it before I posted the first time. You answer your own question by asking what difference it makes if a well was drilled or not. If indeed Beck had drilled on these leases, he would thereby have "acted in the public interest of the State of Ohio". There were actually three different reasons given by Judge Lane, all stating that what Beck was doing was not in the interest of the public of the state of Ohio BECAUSE he did not produce or even attempt to produce oil or gas on the lease. Get it? Of course none of it means anything untill the now recorded appeal is decided on and that will take months. As I read the decision the boilerplate Beck wrote into these leases will be his own downfall since it will always be considered "against the public interest of the State of Ohio. Now if you want some real gossip thrown in you can believe me when I say that when Becks landman came to my farm he promissed me verbally that my ground would never be considered for any well deeper than 3000', because Beck didn't have the resourses to do so (by the way the landman was James Beck). In this statement he was insinuating that the lease we were signing was only for shallow wells, not any deeper. So basically Becks representitive lied to my wife and I at our kitchen table (surprise surprise) and then on top of that James was his own Notary Public verifying the signing of the lease. We never even got to show it to anyone. He sucked us right in by promising a well "soon". We had asked for a five year term max on the lease, but he convinced us that "what makes the difference we will drill within the year, so why worry about whether the lease language read five, or ten. Anyway my wife and I felt completely suckered, and still do. The only thing I can be thankful for is paragraph 20, which I had added stating that I had to agree to the actuall location of the well on my property. I have spoken with Raymond Beck on several occasions trying to reason with him. He told me not to worry he would come and drill a well on me before my lease was up. I told him flat out, read paragraph 20 Ray, there is not one square foot of my property that I will agree to a well sight on. I may get screwed once by him, but not again thanks.
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Permalink Reply by John OBrien, landowner advocate on
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Whether or not Beck type leases are "legal", anyone who is a moral person would agree that Raymond Beck has no morals. Ray received somewhere around $3900/acre for every acre he "stole" from over 270+ Monroe County landowners THAT IS OVER 80 MILLION DOLLARS with the swoop of a pen. Then to add insult to injury he kept 6.25% of your future royalties to boot. What a nice guy huh.
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Permalink Reply by Judy Walter on
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John, I certainly hope some good comes out of this case. I believe you are justified feeling ripped off. I also believe the earlier leases (1980's, 1990's) should not include the deep rights as technology was not available to extract O&G at those depths, let alone horizontally. But I am just another landowner who signed one of those very early leases with a minute amount of protection. Hopefully, something bigger will come out of this for new leases and better protection for those property owners who sign them.
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Permalink Reply by Steven A Joliat on
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I am sympathetic to the lessors who hold leases by Beck, and I'd like to see the court decision upheld on appeal. The leases certainly appear to be very poor with respect to describing what they actually do that impacts a landowner, and the landowners' legal counsel has provided what seems to me to be a very compelling argument. I would also like to point out that currently available technology has never been a consideration in leasing with respect to the exclusion of certain formations from the lease. Though I am not a legal professional, it has been my experience that mineral leases traditionally have been understood, at least from the lessees' perspective, to include rights to everything from the surface to basement rock, or even the center of the earth unless the other minerals, formations, etc are specifically excluded in the language of the lease. This is a point that many landowners are unaware of and a good reason to always consult an experienced Oil and Gas attorney when negotiating a lease for any mineral interest. Be very careful at the start, the only party who always looks out for your best interest is you.
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Good question, Joe. I have a couple more questions. If Beck Energy sold the deep rights to XTO, wouldn't that be null and void? Does Monroe County recorder's office show bill of sale and conveyance on these rights? And did the attorneys for XTO scrutinize these leases? Okay, I have three questions!!!
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This is becoming more interesting for the landowners, and not just in Monroe. I believe we are just at the tip of an iceberg. If XTO is following this, they had better prepare for anything to happen.
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Permalink Reply by John OBrien, landowner advocate on
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Judy, Yes to the first question I would think! Yes for sure on the bill of sale, I have a copy! Real good question that third one, you would think that their people would have looked more closely, unless they new it all along but were hoping to slip it through or just to delay the progression of lease buying in the area to give them more time!
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Whatever you do, John, please make sure to post what happens with this appeal. I have more than an average interest in the results.
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Permalink Reply by Jim Litwinowicz on
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I've been following this thread for some time and i find it very troubling. How does a judge get off ruling that a contract is void because it against "the public interest"? Can he then void a union contract and cut wages in half because its in the "public's interest"? Or break that contract and double the wages because its in the "public's interest"? Will some judge then rule that all pistols must be six shot revolvers because its in the "public's interest"? Or even say that no one can own a gun for that vaunted public interest? Where does this stop? Why, it may even get the point that we are forced to buy insurance "for the public interest."
Judges just can't void contracts because of some ephemeral thing like the public's interest. This will be tossed out on appeal because of settled case law. And its possible, even probable, this judge knows that but he/she wanted to look good to his/her neighbors.
It would be great for people to be able to lease these tight shale formations even if other strata are being produced. There may be some argument about intent of the original contract not including shale gas. But settled law has always assumed a lease covers all rights to the "center of the earth" unless there is some clause to limit the lease.
I fear that many people are getting their hopes too high on this ruling. I understand why they are excited about this but I would advise to be very cautious until this goes through the entire appeals process. The odds of this standing are very slim, IMO
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Jim, yes this could conceivably be tossed out. That will be up to the courts. But changes will be made in the future regarding this industry and how leases will be worded.(Probably not in my lifetime.) You have to start somewhere and why not now?
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Permalink Reply by Jim Litwinowicz on
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Not a landman as I don't represent gas companies but landowners. And I never said I was a lawyer and always made it clear I am not one. What I objected to was the use of "public interest" to break a contract. That is a very dangerous path to take. I merely stated my opinion that this will be overturned.
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