Mediation and the Collaborative Method is a perfect combination in some situations.

Let me say at the outset that I am a huge fan of the Collaborative Method of dispute resolution, especially in the family law context where I see it most often employed. I am a firm believer in maintaining some control over the resolution of one’s case rather than to permit something as important as child custody, child support, spousal support, and the distribution of marital property to be decided, in most cases, by a hearing officer and rubber stamped by a judge.

One aspect of the Collaborative Method that I see as a potential barrier to complete dispute resolution rests on the foundational tenet of the Collaborative Method that once a dispute reaches an unresolvable impasse, the case must proceed to court with new counsel. The withdrawal of counsel after expending time and effort in a case creates undue stress on the litigants when faced with the prospect of having to engage replacement counsel not to mention the waste of attorneys’ fees incurred thus far only to have to begin anew.

I only started to think about this situation recently when a friend of mine voluntarily entered into the collaborative process in a high net worth equitable distribution case. Whenever the negotiations over distribution intensified, opposing counsel used the threat of protracted public litigation resulting from the termination of the collaborative process as a way to attempt to compel him to accede to her demands. Needless to say, the threats did not work and case was ultimately resolved privately.

But, what if the case did not resolve? I submit that at this point the use of a mediator would have been helpful the pull the parties back into the collaborative process. I understand that family law issues more than any other have a tendency to be more personal and emotional than other types of litigation. In many instances, in my experience, counsel for the respective parties have a tendency to become personally invested in their clients’ outcome as well. This entrenchment in the respective positions may impede the rational and objective handling of the case.

The role of a mediator in such a situation will serve as a “time out” permitting the parties and counsel to take a step back, take a deep breath, and look at the case more objectively. In these instances, the mediator would point out the objective strengths and weaknesses of the respective positions. In using the common sense approach, decisions based on emotion and ego will be eliminated and each party will focus on the purely objective aspects of the case, get back on track and move towards resolution. Most importantly, the parties retain control over their case.

If you are involved in a collaboration case that appears to be reaching impasse, call me to discuss how mediation may save your case before you opt out of the process and withdraw as counsel.

Uncertain Times for Landowners

An atmosphere of uncertainty has landowners wondering what the future holds for the leasing and development of their mineral interests. We have received calls from many landowners hoping that we could shed some light on what may happen next in the oil and gas industry. Unfortunately, we are not privy to the boardrooms of the oil and gas producers making the decisions on how they intend to develop the oil and gas resources which they control.

In some cases, we have assisted landowners in obtaining releases from leases that have expired without the commencement of production activities. Unfortunately, many landowners discovered that their land was unitized by their lessee with minimal production commencement activity conducted for the sole purpose of holding the lease. We have heard stories of oil and gas producers cutting a road, surveying a site and begin to prepare a pad in order to proceed into the secondary term of the lease, which means that the lease will remain in full force and effect until production activities have ceased.

Uncertain times brings out the worst in human nature, and this general rule seems to apply universally in the oil and gas industry. Knowing that many landowners are anxious to realize revenue from the extraction of their oil and gas, there have emerged numerous firms who are now approaching landowners to purchase either all or a portion of their minerals. Also emerging from their underground burrows are the lease flippers, independent leasing agents, and speculators who are more than eager to again prey on unsuspecting landowners.

Landowners need to realize that there are many negative consequences that can affect their land forever by deeding away any part of their mineral rights or by entering into a bad lease. If you have been approached by any firm interested in purchasing or leasing your mineral rights, you should call or email us first before you sign anything. Our reasonable fee to review the offer made to you as well as to discuss the effect of selling or leasing your minerals will enable you to make an informed decision. We will most likely be able to negotiate a transaction that will enable you to realize a financial benefit without destroying your land and your legacy.

“I signed a lease five years ago. Now what?”

Many landowners signed an oil and gas lease during the “boom” years from 2009-2012 and received a hefty bonus payment at the time of the signing.

Now that time has passed and nothing more has happened on their land, these same folks are wondering what happens next. The answer depends on several factors.

The first step that must be taken is to determine if production operations have commenced. Under most leases if production operations have commenced during the primary term of the lease, the lease will transition into the secondary term, the length of which will be governed by the life of the well. The term “production operation” is usually defined in the lease and must be carefully scrutinized. We have seen surveying and staking defined as production operations in some leases, which may have the effect of extending the lease into the secondary term once accomplished.

If production operations have not commenced on the actual lands subject to the lease, the landowner must then determine if their land was pooled with other land to form a drilling or production unit. Most leases permit unitization, or pooling, and once formed drilling operations conducted on any lease in the unit will extend to all leases in the unit.

Most prudent producers will send each landowner participating in the unit a document called a “Declaration of Unit” or some other similar name. This document will identify each lease included in the unit and each participant’s percentage share in the production of the unit. It will also inform each participant how much of their land will be brought into the unit which, in many cases, is less then the entire tract under lease.

Unfortunately, not all producers are prudent. A trip to the county courthouse may be required to see if a unit was formed and a Declaration of Unit was filed.

Absent the commencement of production or a paid extension of a lease, the lease may have lapsed. In our experience, producers generally do not notify landowners that the lease has lapsed. As a matter of fact, in many cases a landowner’s record title may be clouded because the producer filed the lease when it was first signed and never filed a release of the lease when it expired.

A cloud on a landowner’s record title due to an unreleased lease is not catastrophic, but it should nevertheless not be ignored.

We generally advise landowners to request the original lessee/producer to record a release of the lease once it is established that the lease has lapsed. Our experience is that a landowner will most likely be unsuccessful when making this request to the big land grabbers such as Shell/SWEPI and Chevron since they are more or less gone from Western Pennsylvania.

If you believe that your lease has expired, call us and we can discuss your options with you. You may decide to retain us to remove the cloud on your title so that you can have peace of mind. More important, you may want your title to be clear so that you will be leased when active leasing begins again.

Small tract of land? No problem!

Many landowners are being approached by oil and gas producers to sign oil and gas leases for their residential home lot. Why would a producer be interested in a small parcel of land?

The answer is really quite simple. Under current Pennsylvania law, when a producer proposes to drill a 5,000 – 7,000 foot horizontal well a mile under a residential area which is part of a production unit, every individual landowner in the unit must sign a lease. A production unit can contain up to 1,280 acres, although a majority of production units are much smaller in size. Otherwise, a producer may be engaging in an illegal trespass against any unleased landowner and may be exposed to damages resulting from the trespass.

Unfortunately, the benefits for a small landowner are meager. The small landowner’s share of the production unit’s income will be extremely limited since the landowner’s pro rata share in the unit is based on the landowner’s contribution of acreage to the total acreage in the production unit. For example, if a landowner owns .25 acre residential lot and the production unit is 500 acres, the landowner’s proportionate share of the unit is .0005. The landowner’s percentage entitlement to the income from the unit is calculated by multiplying this proportionate share by the production royalty of the unit. Following our example, if the royalty for the unit is 17%, our landowner will receive .0085% of the income from the unit. And this is before deducting for post production costs!

As you can see, the potential to reap significant financial benefits from production royalties for a small landowner is not a good reason to sign a lease.

That is not to say all is lost for the small landowner. Producers generally offer to pay advance delay rentals to landowners as a “bonus” incentive to sign a lease. We have seen these payments range from $300 to $750 for a residential landowner. Remembering that a producer must have every landowner in a residential neighborhood under lease prior to drilling, the landowner may be able to negotiate a higher bonus when signing a lease. Since this will likely be the only real financial benefit realized by the small landowner, every effort should be undertaken to increase the size of the bonus payment.

Even small landowners must be aware that an oil and gas lease may contain terms and conditions that could affect their property. For example, the lease must be carefully reviewed for provisions that may grant a producer access to the surface of your land to lay pipelines, build roads, or construct any other structure which may support the production operation. In order to fully understand this complex document, we are available to review the proposed lease with you. Our fee will be commensurate with the size of your parcel and the potential payment you should receive from the producer.

 

 

What does the “Smart Money” know that we don’t?

I recently had a conversation with a person who was formerly employed by a major pipeline company in Western Pennsylvania but left that job to return to Houston to start a company specializing in developing Marcellus and Utica production prospects in Western Pennsylvania and Ohio. When I expressed some astonishment at his decision, he floored me when he told me that he just closed a $100,000,000.00 funding deal with an investment group from the Northeast.

Just about every day another article appears in one of the many news periodicals I follow about the gas producers ramping up for an impending surge in gas production activities. The active rig count in Pennsylvania is increasing. Gross production figures indicate that shut in wells are coming back online. Shell is building a multi-billion dollar ethane cracker plant in Beaver County, Pennsylvania. Shell also recently announced that it is moving forward on its 94 mile gas pipeline that will transport gas from Houston, Pennsylvania and Scio and Cadiz, Ohio, to its cracker plant. The contract landman companies are quietly running blind ads recruiting the legions of newly minted landmen who will be unleashed on the folks.

All of the indicators lead me to believe that Smart Money and the gas producers are becoming more bullish on the Marcellus and Utica gas plays. I can’t tell you what they see, because I don’t know. But I can tell you with absolute certainty that Smart Money doesn’t generally act frivolously. Otherwise, they wouldn’t be Smart Money any more.

What does this mean to the landowners? The answer is quite simple. It is clear that the producers and Smart Money see an opportunity in the near future for an increased demand for gas as prices make production profitable for them. Once the money starts rolling back into Western Pennsylvania and Ohio again, the producers, and the Smart Money financing them, will need land on which they can drill. This means that the producers, most likely through their contract landmen, will be actively leasing land.

Faced with the likelihood that landowners will be relentlessly pursued for their mineral rights, landowners need to be better prepared for this round than they were in the last round. Thankfully, most of the boom opportunists, unqualified lawyers, landowners’ groups and landowners’ “representatives” are gone, at least at the moment. Remember the “experts” who came up from Texas to show the Western Pennsylvania “hillbillies” how they do things in Texas? Thankfully, they are all gone, hopefully for good.

The boom is coming and it’s perfectly fine to follow the Smart Money and the gas producers’ lead as we head into the next surge. Only this time, the landowners need to participate on a level playing field instead of merely donating their land and making Smart Money richer at the expense of the folks.

The only way to protect yourself from falling victim to unscrupulous oil and gas operators is to retain us as your attorneys today. Once you are represented by us, the producers and their landmen will have to go through us to get to you, and I can unconditionally guarantee that we will protect you from these predators.

 

Now is the right time to hire experienced oil and gas attorneys.

Landowners and producers alike have all felt the effects of the current glut of oil and natural gas flooding the market. While low oil prices have been good for anybody driving a motor vehicle, the low natural gas prices have had a significant negative impact on leasing activities.

As a matter of fact, many leases that were signed in 2010-2011 are either expired or will be expiring soon since no production activities have commenced on the leased lands which would extend the lease into the secondary term. More important is the fact that very few leases are being renewed.

Let me explain why now is the time to hire us as your oil and gas attorneys.

Back in 2007 when the last gas bubble led to a decrease in leasing activities a number of unscrupulous lease flippers approached landowners and fraudulently led the landowners to believe that they would be left out of the next boom if they did not immediately sign a lease with them. Unfortunately, many landowners believed these lies and leased their land for as low as $3.00 per acre on an open ended lease with no expiration date.

In 2009-2010 when it was announced that new drilling technology made development of the Marcellus and Utica formations feasible, the flippers who stole the leasing rights from the folks assigned their $3.00 per acre leases to the gas producers for $3,000.00 per acre or more and in many cases retained an overriding royalty as well.

The folks who gave their oil and gas rights away to the flippers received no benefit from this lease flip and, to make matters worse, they are now stuck with bad leases with bad lease terms and a 12.5% royalty.

Unfortunately, history seems to repeat itself, especially when it comes to stealing from the folks. We have been contacted by a number of landowners recently who reported that several large producers and shady contract landman companies have approached them since their leases are about to expire.

The producers and the landmen are using the same line as they used in the past. They are trying to scare landowners into signing low ball leases for fear of missing out on the opportunity to cash in on the next boom.

You should hire us now so that when you are approached by anybody concerning your land and your oil and gas rights, you can simply tell them to call us. You can rest assured that nobody will lie to us like they will lie to you. More important, we will not let anybody take advantage of you or scare you into making a bad decision that will affect you and your future generations.

Our arrangement with landowners is that we only charge 5% of the advance delay rentals. We do not take any percentage of the production royalty from our clients. It will cost you nothing to call us and allow us to represent you in all matters affecting your land and your oil and gas rights.

Welcome

At last, my new website is done after working on the concept for about three years.  I am grateful to John Oppenheimer of 1 Sky Media for being patient with me over the years after we slogged through many concepts until finally producing this finished product.  Thank you, John.

My objective of this website is to give you a sense of who I am and what I can do for you without cluttering the website with information that is not helpful.  I encourage anyone who has any questions to call me so that we can talk more about your case.