On July 9, 2013, Pennsylvania Governor Tom Corbett signed a law giving drillers the ability to pool leased properties into one unit for horizontal wells, as long as the oil and gas contracts in effect do not prohibit these combinations.
This pooling provision was attached to legislation obligating natural gas companies operating in the state to standardize all deductions listed on royalty check payment stubs.
The provision does provide for royalty payments: “In determining the royalty where multiple contiguous leases are developed, in the absence of an agreement by all affected royalty owners, the production shall be allocated to each lease in such proportion as the operator reasonably determines to be attributable to each lease.”
This provision is the basis of a complaint filed by EQT Corporation on July 22, 2013 in the Court of Common Pleas against 69 individuals and one golf course in Allegheny County, who hold old oil and gas contracts without pooling provisions.
EQT, who had been negotiating with landowners in the county for access to their properties, accused them of blocking the company from conducting surveys on their land to determine where to drill for shale gas.
EQT wants a declaration and an injunction that it can access the properties and engage in horizontal drilling on the pooled properties.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
