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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Permalink Reply by Bluflame on February 12, 2016 at 10:44am

Thanks Ron,

  Good info. But this is Ohio, WVA & PA. The laws and legal precedents (if there are any) may be very different

BluFlame

Permalink Reply by jerry lee nichols on February 12, 2016 at 10:46am

yes as a matter of fact I did read your info that was previously printed, but unless its filed in federal court an Ohio case would be much different, or so I would think.

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