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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Not familiar with those. Where can I find more information?

Just google McNamara  CHK Law suit-same for Macdonald

Dr. Maxwell,

Here is an excellent review of the PA Supreme Court Kilmer v Elexco decision:

http://www.duqlawblogs.org/blj/wp-content/uploads/2012/05/hantz.pdf

Justice Baer's opinion in this case is the principle hammer the O&G company lawyers use in cases like yours.

As Joe Fabeetz said, "At the wellhead" is the language that weakens your position.

Look on page 284. Read the following: "Second, Justice Baer noted...

The established principal of being able to take royalties "in kind" when followed to the conclusion that you cannot sell the gas as it come out of the ground also makes the case for the O&G company to deduct costs to make the product marketable.  In other words, because of the words "at the well head" the company could offer you your royalty percentage as a percentage of the gas coming out of the well.  Then what would you do.

As a fellow landowner and XTO and Rex lease holder in Butler County, PA I'm not only sympathetic to your cause, I'm somewhat (different wording) in the same position.

Good luck!

Phil

 

Phillip - Excellent answer and thank you for citing the Kilmer case.
Larry - I hope you choose to reach a settlement with Anadarko rather than challenging this in court. And I hope all the attorneys out there who profess to understand this and a few other principles read the Kilmer case BEFORE they represent a client who wishes to sign a mineral lease.

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