Natural gas spot prices climbed modestly since our last report amidst a rising rig count and fledgling oil prices that dipped below $50/bbl on the West Texas index for the first time this year before inching up at week’s end. Things are relatively quiet in Appalachia but the Texas Supremes weighed in on a case involving a claim that a well failed to produce in “paying quantities” under the familiar Clinton v. Koontz standard and Trump asks SCOTUS to hold off on deciding the prior administration’s “Waters of the United States” rule given his recent executive order that seeks to dial back on that rule. Here’s your week in review:
The Rig Count
- The national rig count is up at 768. (Source: BakerHughes).
- The rig count in the Marcellus is flat at 41. (Source: BakerHughes).
- The rig count in the Utica is up at 22. (Source: BakerHughes).
- The Henry Hub natural gas spot price is up at $2.69/MMBtu as of 3/10/2017. (Source: EIA).
- In the Marcellus and Utica region, spot prices are up as of 3/10/2017. At Dominion South in northwest Pennsylvania, spot prices are up at $2.38/MMBtu. On Transco’s Leidy Line in northern Pennsylvania, spot prices are up at $2.25/MMBtu. (Source: EIA).
- Oil prices are down at $52.27/bbl as of 3/10/2017. (Source: WSJ).
Developments in Appalachia
- WV Plaintiffs Get to Amend Federal Complaint Over Oil and Gas Lease a Fifth Time. A federal judge in West Virginia gave plaintiffs the go-ahead on a fifth amended complaint alleging that their lessees shorted them on royalties and violated pooling clauses by drafting units in bad faith, citing among other things plaintiffs’ diligence in otherwise pursuing their claims, somewhat new allegations to help clarify the case for the court, and no prejudice to the lessees. Stern v. Columbia Gas Transmission, LLC, — F. Supp. —, No. 5:15CV98, 2017 WL 833045 (N.D.W. Va., Mar. 2, 2017).
Developments Beyond Appalachia
- Tracking the Trump Effect on Energy: POTUS asks SCOTUS to Wait on WOTUS. The Trump Administration has asked the Supreme Court of the United States to wait before deciding an appeal from the Sixth Circuit involving jurisdiction over EPA’s rule on “Waters of the United States” based on the President’s recent executive order that signaled an intent to roll back the WOTUS rule of the previous administration’s EPA.
- WY Supremes Say Challenge to Bad 1911 Mineral Tax Assessment Barred by Statute of Limitations. The Supreme Court of Wyoming concluded that a bad tax assessment of minerals in 1911 rendered the resulting tax deed voidable but not void and therefore any challenge to the assessment could be barred by the state’s six-year statute of limitations. Anadarko Land Corp. v. Family Tree Corp., — N.W.3d —, No. S-16-0131, 2017 WL 837236, 2017 WY 24 (Wyo., Mar. 3, 2017).
- TX Supreme Court Rejects Challenge to Top Lease and Upholds Remand on Paying Quantities Question. The Texas Supreme Court rejected a challenge to a top lease based on the rule against perpetuities and agreed with an appellate court that the trial judge improperly instructed the jury on whether a well produced in paying quantities under the Clifton v. Koontz analysis, reasoning that the jury decides whether a well is profitable enough in the secondary term to survive a lease expiration claim and the competing testimony on that issue should be put to the jury. BP America Production Company v. Laddex, Ltd., — S.W.3d —, No. 15-0248, 2017 WL 889920 (Tex., Mar. 3, 2017).
- Oil and Gas Lease Puts Well Operator on the Hook for Oil Spill Cleanup in Louisiana. A court of appeals in Louisiana concluded that the parties to an oil and gas lease agreed that the well operator would “remove any contaminated soil and transport same for disposal of same off of the lands of” the lessor (and therefore breached the agreement when that never happened) and remanded the matter for an actual damages determination. Sweet Lake Land & Oil Co., LLC v. Oleum Operating Co., L.C., — So.3d —, No. 2016-429, 2017 WL 914767 (La. Ct. App., March 8, 2017).
- ND Mineral Lapse Statute Requires Mailing Notice to Recent Record Owner. The Supreme Court of North Dakota concluded that the state’s mineral lapse statute (giving surface owners the opportunity to assume ownership of severed underlying mineral interests after a period of time) requires actual notice by mail to the most recent address of record for a mineral owner if there’s an actual address (or if one can be determined by reasonable inquiry), and the plaintiff’s failure to mail notice to an address of record as of 1968 killed any chances to assume ownership of the underlying mineral rights despite the plaintiff mailing notice to a different but older address of the putative mineral owner. Nelson v. McAlester Fuel Co., — N.W.2d —-, No. 2017 ND 49, 2017 WL 899999 (N.D., March 7, 2017).