Let Us Take on Anadarko Together

We have a lease, which involves 2 wells in Bradford County. We are looking to see if there are others here who have a lease that states "No Deductions," and who have ended up specifically with Anadarko taking deductions. Cameron at Anadarko Customer Relations told us they do not care what the lease says, it is their practice to take deductions. I spoke with their legal department and they said they can take deductions even though our lease says they cannot. Our only recourse is legal action. I know the people with Rosenbloom or Friendsville leases have that No Deduction clause. Are there any of you on here, or any others with a No Deduction clause and who are having Anadarko take deductions, and have you joined a lawsuit that exists? If not, how can we get others together to take on Anadarko in court?  Anadarko lost a big lawsuit in Texas in June 2015 for doing the same thing.

Chesapeake, StatOil and Mitsui are honoring the No Deductions clause and have been outstanding to deal with. THis issue is for those with Anadarko.

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Permalink Reply by st. croix on September 30, 2015 at 12:35pm
Dr. Maxwell, our family and all of the neighbors that are in a producing unit in Monroe county,Ohio "I know it's no PA" but dealing with stat oil has been miserable I'm glad to hear that they are doing it the correct way for you folks. Good luck to ya!
Permalink Reply by daniel cohen on October 2, 2015 at 6:19am

Dr.Maxwell,

Is your "no deduction" language part of a 'market enhancement' clause? In Bradford County Pa.there are at least 2 major challenges being legally brought against all 4 of the companies you named.You might wish to check out the status of current suits against CHK as well as the others.

A most interesting post. Please keep us informed as you go.

Dr.Cohen

Permalink Reply by Dr. Larry A. Maxwell on October 2, 2015 at 6:39am

No market enhancement clause in the lease

Permalink Reply by Joe Fabeetz on October 2, 2015 at 9:15am
Here is what is likely your problem. Please be aware that I AM NOT an attorney and AM NOT giving you legal advice of any kind whatsoever. "At the wellhead" can be determined to be the value of the product at the point of production. There are no deductions allowed for "production costs". But marketing, gathering and transportation costs are often considered "post-production" and therefore are incurred to make the product "more marketable". Those are indeed allowable in many states and PA is one of them to the best of my knowledge. Google the Joe Drake lease and associated legal issues. Also check on Bass Brothers vs Chesapeake in Texas. (Oklahoma does not allow any post production deductions unless the Lessor agrees to it in the lease, but Texas does). The follow the trail from those two and see where it leads, but I am not optimistic as to your chances for success. Three more thoughts. The Bass Brothers settled and the result was not fully disclosed, which was a disservice to both royalty owners and energy companies. Also, your original lease wording did not protect you adequately and in my opinion your attorney (if you had one originally) did a very poor job on this matter. Having said all that, the wording is indeed a way of obscuring the true meaning and I consider it very misleading, but I suspect that you may not prevail in a legal action. Also, this wording is common practice and Anadarko is only one of many that use this "standard" language. I wish you the best. You are morally right but...
Permalink Reply by Dr. Larry A. Maxwell on October 2, 2015 at 10:01am

You hit on the key words, "morally right."

I have looked at the PA cases and they did not have the "no deductions" clause. Without that clause, they would have their out.

Chesapeake, StatOil and Mitsui abided by this provision. Anadarko realizes they are wrong on this, that is why they asked what settlement we wanted.

The thing that really bothers me is before we received any payments Anadarko warned us how unscrupulous Chesapeake was. They stated, Anadarko is unlike Chesapeake, they follow good "Christian" principles.  Then, the payments come and Chesapeake is outstanding to deal with and Anadarko plays the, lets get all we can from the landowner manipulation. But... then again, that is how too many "Christians" act today (to their shame and to the shame of their God). (And by the way, I am a minister, so that may be why Anadarko told me they were good Christians. I am of tyhe understanding saying such a thing and not abiding by it is , using the name of the Lord Thy God in vain... hmmm... I remember reading that in the 10 commandments)

Permalink Reply by Joe Fabeetz on October 2, 2015 at 8:04pm
I understand your frustration with this. Unfortunately, unless a KNOWLEDGEABLE attorney (who isn't just a bloodsucker such as there are plenty of out there) can tell you otherwise and would take your case on a contingency basis, I think you would do best by trying to effect the settlement with Anadarko. They probably offered it because they don't want the bad publicity that has come to be associated with some other companies as well as the drawn out burden of a lawsuit. Again, though, I AM NOT an attorney and AM NOT offering ANY legal advice, so if there is indeed an attorney who feels differently, go for it.
Permalink Reply by Thomas Lilli on October 2, 2015 at 10:13pm
My opinion regarding legal representation is this, any company, especially publicly traded ones have a fiduciary responsibility to their "shareholders". Their shareholders have sizable investments in those companies for the purpose of sharing in the growth and equity of the company. This is all federally regulated by the way. As a result, decisions and actions of those companies must be justified. They have lawyers who look at these binding contracts to protect the interests of their shareholders. In the case of O&G companies, the mineral owner (that'd be us) is just another line in the business plan. In order to maximize return on investment, companies have to minimize costs. At $43/bbl or less, there is lots of pressure to minimize those costs. Attorneys look for every conceivable way possible to realize those opportunities. It's their responsibility. (This does not make them evil or greedy, it's business, they employ tens of thousands of people who rely on the leaders of these companies to protect their jobs, their pay checks, their bonuses. If you worked for them, you'd want the same).

For landowners to go into a negotiation knowing the other team has a hundred year history of wording legal contracts in their favor is just not logical. its not good business.

Spending as much as five to ten thousand dollars on a mineral lease review or ROW review amortized over the life of the agreement is literally pennies a day or less.
It is money well spent to protect your interests knowing O&G has done the same since the first wells were drilled. (Good book and movie about O&G starring Danial Day Lewis, rent it some time).

So, good representation is just part of fare and equitable negotiations. Companies will respect you more dealing with good and knowledgable representation.

Just my opinion.
Permalink Reply by Joe Fabeetz on October 2, 2015 at 11:15pm
Mr. Lilli ... Great answer. My only complaint is with the "ambulance chasers" who profess to know a lot but have far less expertise than they indicate. Many may indeed know the legalisms but I find that they often fall far short on the business aspects. A good negotiator brought in up front is often more effective before running the result by an attorney for the legal protection. It would be nice if the person were both but in my experience that is rare.
Permalink Reply by Thomas Lilli on October 2, 2015 at 11:22pm
I use a guy with whom I have complete confidence. Pm me me if you want to contact him.
Permalink Reply by Joe Fabeetz on October 3, 2015 at 1:41am
Since I have no dog in this fight I'm bowing out now, but you may want to connect with Dr Maxwell and your trusted associate.
Permalink Reply by Dr. Larry A. Maxwell on October 16, 2015 at 4:52pm

Still waiting to see, is there anyone on here with one of the Rosenbloom or Friendsville leases who has a well which involves Anadarko. We are looking for people in Bradford County, PA. to join us in a lawsuit against Anadarko to stop them from abusing us landowners.

Permalink Reply by daniel cohen on October 17, 2015 at 1:33am

There are currently a few suits involving Anadarko and others. Have you checked McDonald's suit and MacNamara's suit?

Dan

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