The national rig count posted another gain since our last report as did the Henry Hub spot price while the Brent Crude and West Texas Intermediate benchmarks landed at $50/bbl after a fairly volatile week. In Appalachia, the West Virginia federal court concluded that a holder of an override isn’t “indispensable” to a dispute over the underlying lease for purposes of subject matter jurisdiction. Elsewhere, a TX federal court denied a bid to dismiss securities claims against BP for public statements about the flow rate of the Deepwater Horizon spill that allegedly defrauded the market, and a Montana court upheld a lease-busting attempt based on late pooling. Here’s your week in review:
The Rig Count
- The national rig count is up 6 units to 414. (Source: BakerHughes).
- The rig count in the Marcellus is down at 23. (Source: BakerHughes).
- The rig count in the Utica is up at 12. (Source: BakerHughes).
- Natural gas spot prices at the Henry Hub are up at $2.33/MMBtu as of 6/10/2016. (Source: EIA).
- In the Marcellus and Utica region, spot prices are up but still trail the Henry Hub benchmark as of 6/10/2016. At Dominion South in northwest Pennsylvania, spot prices are up at $1.62/MMBtu as of 6/10/2016. On Transco’s Leidy Line in northern Pennsylvania, spot prices are up at $1.54/MMBtu as of 6/10/2016. (Source: EIA).
- Oil prices are up at $50.54/bbl as of 6/10/2016. (Source: WSJ).
Developments in Appalachia
- WV Federal Court Holds that ORRI Owner not Indispensable in Oil and Gas Lease Dispute. A federal court in West Virginia concluded that a party holding a 50% override and an option to acquire a working and net revenue interest contingent on clear title is not an indispensable party to a dispute over who owns the underlying lease. Trans Energy Inc. v. EQT Production Company, — F. Supp. 3d —-, No. 5:13CV93, 2016 WL 3190248 (N.D.W. Va., June 7, 2016).
Developments Beyond Appalachia
- Court Rejects Osage Producer Association’s Challenge to Feds Permitting Processes for Oil and Gas Operations in Oklahoma. A federal court in Oklahoma rejected “vague” challenges under the Administrative Procedure Act to the government’s slow handling of drilling and workover permits and permit applications issued to or submitted by members of the Osage Producers Association, concluding that the group lacked standing and failed to exhaust available administrative remedies. Osage Producers Association v. Jewell, — F. Supp. 3d —-, No. 15-CV-469-GKF-FHM, 2016 WL 3093938 (N.D. Okla., June 1, 2016).
- Late Pooling Order from Montana Board Dooms Oil and Gas Lease in the Bakken. A federal court in Montana blessed a lease-busting attempt by lessors claiming that the lessee failed to commence operations before the expiration of the lease’s primary term, concluding that (a) although the lessee timely commenced operations on a property within a unit, the Montana Board never issued a pooling designation (nor did the lessee file a pooling declaration) until after the lease already expired and (b) a prior temporary spacing order didn’t suffice to establish the unit. Norther Oil and Gas, Inc. v. Continental Resources, Inc., — F. Supp. 3d —-, No. CV 14-90-BLG-CSO, 2016 WL 3079692 (D. Mont., May 31, 2016).
- TX Federal Court Green Lights Securities Claims against BP for Public Statements about Flow Rate of Deepwater Horizon Spill. A federal court in Texas denied BP’s summary judgment motion in part seeking to avoid claims that it publicly misrepresented estimated flow rates on several occasions and caused the market to believe that the spill wasn’t as bad as projected in violation of Sections 10(b) and 20 of the Securities Exchange Act, concluding that the plaintiffs demonstrated triable issues regarding false statements of certain BP officials’ statements but denying other 10(b) claims for lack of evidence that alleged misstatements caused the plaintiffs’ claimed losses. In re: BP p.l.c. Sec. Litig. (federal securities class action), — F. Supp. 3d —-, No. 4:10-MD-2185, 2016 WL 3090779 (S.D. Tex., May 31, 2016).
- TX Appellate Court Rules on Tricky “Separate vs. Community Property” Issue for Dispute over Mineral Interest. An appellate court in Texas concluded that a Nebraska resident held a 3/8 mineral interest in property situated in Texas presumptively as “separate property” and not “community property” but remanded the matter for evidence tracing the mineral interest to separate funds or community/marital funds. Bauer v. White, — S.W.3d —-, No. 13-16-00054-CV, 2016 WL 3136608 (Tex. App., June 2, 2016).