Royalty Payments with E&P Bankruptcy (Ohio Law)

    The prospect of bankruptcy looms for many Ohio Utica E&P's if Oil & NG wellhead prices endure at the current low price levels. Some defaults could occur sooner rather than later.

     Rumors abound that royalties on producing Ohio wells become embroiled in the bankruptcy proceedings as a preferential creditor item. Translated, royalties currently flowing to landowners theoretically flow to E&P creditors via court order in such a case.

     I am hoping someone with a legal O&G background can shed some light on this question. Somewhere in Ohio in times prior to the shale evolution, there must be some legal precedent for this issue. In some leases, the lease document becomes void upon bankruptcy. How does this situation factor into the equation?

     If royalty payments in fact flow to creditors upon bankruptcy of E&P's, WW III will ensue with landowners!

    

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0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 11, 2016 at 2:03pm

Will the Creditors get my $14 per month per acre Bogus/Rationed Royalty or the 17.5% Gross Royalty actually due?

I'm betting my producer will figure out a way to send the stolen royalties to their Executives and send my current bogus/rationed royalty to the creditors, since no one is watching, who cares.

Our society has allowed dirty dealings by the O&G companies to US landowners for for so long that it has become a way of life in the US.

Just like at Outback, No Rules, Just Right. I hear that's the way it is at Outback, my monthly royalty will pay for a Taco Bell extravaganza or Kentucky Fried Chicken, but Outback is out of the question.

Permalink Reply by Bluflame on February 11, 2016 at 2:41pm

Ron,

  Have you considered doing an audit on your payments? It's probably an option included in your lease document. Of course, the catch is that it must be done at their offices, likely out of state.

BluFlame

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 12, 2016 at 9:14am

Bluflame,

     We will be doing Discovery to determine how much was stolen from Buck Well 1H and 6H as part of the Hope Christian Fellowship vs Chesapeake Complaint.

We are doing a Class Action Arbitration also, to get past the Arbitration Clause for Chesapeake Appalachia found in ALOV, SURE and other leases.

Audit is an option but Discovery will give the same results.

When this Complaint becomes a Class Action, all Ohioans leased to Chesapeake will be included if they don't want to Opt Out.

Having the RICO clause will make this the premier lawsuit in Ohio against Chesapeake since it allows 3 times the recovery of each landowners losses.

I'm glad I could help by disclosing what Doug and his boys have been up to in Ohio, PA, and WV.

West Virginian's have been considered 2nd class citizens playing "Catch up" with the rest of society, since I was a kid in WV. Maybe that's why this West Virginian is relentless at going after those who steal from WV, PA, and Ohio Citizens. I'm still playing catch up even though I'm way ahead of the rest of you landowners in taking action. No Brag, Just Fact.

Thanks for the suggestion Bluflame. 

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Permalink Reply by Barry D on February 11, 2016 at 4:16pm

Blu,

Good questions.

Hope someone knowledgeable will answer.

Permalink Reply by INVICTUS on February 11, 2016 at 11:08pm

Oil and Gas Forensic audit will cost $500k to $1MM. Done onsite at producer's HQ.

Permalink Reply by bo boboski on February 11, 2016 at 11:16pm

Maybe someone can get a judge in a high court to order one,at the producers expense.

Permalink Reply by INVICTUS on February 11, 2016 at 11:44pm

No. It's fun to think about that but there is no judge who, without enforceable language in the lease to support that proposition, will  (or can) make that happen.

Leaseholder will have to take charge of their own destiny.

Class action attorneys might do this if the payoff is sufficient, most likely O/G producer will settle out of court before allowing a serious look at the accounting books.

Permalink Reply by jnm on February 12, 2016 at 2:19am

Blu asked a very good question but like everything else on this board Ron quickly turns discussion to how bad everyone is getting screwed

Permalink Reply by alexander on February 12, 2016 at 4:47am
Agree. The production numbers from the 3rd Qtr don't look that strong for the infamous Buck 1H either. Not saying he's not getting shorted but low production numbers plus low prices equal small royalties.
0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 12, 2016 at 9:16am

Where Ya Been INVICTUS?

Above are the documents I wanted to send to you.

Permalink Reply by jerry lee nichols on February 12, 2016 at 7:16am

well landowners are also creditors, since they are buying minerals from you just as they are borrowing money or buying from equipment dealers etc. My guess is it depends on who the bankruptcy judge pays first. My only problem is how do you separate a lease which is an asset as opposed to minerals that they have not paid for.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 12, 2016 at 9:23am

This is the 3rd time I've posted this Bankruptcy information from Texas. Take a look now that we are getting closer to Chapter 11:

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Here is an Action Plan from Texas for when your O&G Purchaser  (Producer) files for Chapter 11. It might help you develop an action plan for your state when you stop receiving Royalty checks. The oil and gas will more than likely continue to be taken free.

Texas Land And Mineral Owners Association

WHEN YOUR OIL & GAS PURCHASER GOES BROKE

A Royalty and Mineral Owner’s Perspective and Action Plan for When

You Receive Notice from the United States Bankruptcy Court

 

http://www.tlma.org/resources%20files/When%20Your%20O&G%20Purch...

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