Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in Supreme Court of Appeals of West Virginia
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In this ongoing Marcellus shale litigation arising that arose from claims asserted by Plaintiffs - surface owners of several tracts of land - the Supreme Court affirmed the order of the Mass Litigation Panel (MLP) granting summary judgment in favor of Defendants - the leaseholder of the gas and oil estates and the company who was conducting the drilling - holding that there were no genuine issues of material fact precluding summary judgment. Plaintiffs alleged that their use and enjoyment of their land was being improperly and substantially burdened by horizontal wells being used to develop the Marcellus shale underlying their properties even where the wells were not physically located on Plaintiffs' properties. In granting summary judgment for Defendants the MLP concluded that the effects on the surface owners resulting from the horizontal drilling were within the implied rights to use the surface granted by virtue of the relevant severance deeds and did not impose a substantial burden on the surface owners. The Supreme Court affirmed, holding that Plaintiffs failed to establish the existence of a genuine issue of material fact as to whether the effects on their surface estates were reasonably necessary to develop the mineral estate or whether they were being substantially burdened by Defendants' activities. View "Andrews v. Antero Resources Corp." on Justia Law

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In these consolidated appeals from the business court's orders reversing various Boards of Assessment Appeals and rejecting the West Virginia State Tax Department's valuation of Respondents' gas wells for ad valorem tax purposes the Supreme Court affirmed in part and reversed in part the business court's judgment, holding that the business court erred in two respects. Specifically, the Court held that the business court (1) did not err in concluding that the Tax Department violated the applicable regulations by improperly imposing a cap on Respondents' operating expense deductions; (2) erred in rejecting the Tax Department's interpretation of the applicable regulations concerning the inclusion of post-production expenses in the calculation of the annual industry average operating expenses; and (3) erred in crafting relief permitting an unlimited percentage deduction for operating expenses in lieu of a monetary average. View "Steager v. Consol Energy, Inc." on Justia Law

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The Supreme Court affirmed the circuit court's order granting partial summary judgment, finding that Defendant trespassed on Plaintiffs' surface lands to the extent it was drilling for and removing minerals from neighboring properties and awarding Plaintiffs $190,000 in damages, holding that the partial summary judgment order and judgment order were supported by the record. The circuit court found that Defendant trespassed to the extent it used Plaintiffs' surface tracts to conduct operations under neighboring mineral estates. The Supreme Court affirmed, holding (1) a mineral owner or lessee does not have the right to use the surface to benefit mining or drilling operations on other lands in the absence of an express agreement with the surface owner permitting those operations; and (2) the circuit court correctly found that Defendant trespassed on Plaintiffs' surface lands to the extent it used those lands to extract minerals from neighboring properties. View "EQT Production Co. v. Crowder" on Justia Law

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The Supreme Court affirmed the order of the circuit court affirming the determination of the Board of Equalization and Review that Petitioners Murray Energy Corporation and Consolidation Coal Company's coal interests were properly valued and assessed by Defendants, holding that the circuit court properly concluded that the method of valuing coal properties violated neither the statutory requirement of assessment at "true and actual value" nor the constitutional equality requirements of the West Virginia Constitution and the equal protection provisions of the United States and West Virginia Constitutions. Specifically, the Court held (1) the methodology of valuing Petitioners' coal properties for ad valorem tax valuation purposes, as set forth in West Virginia Code of State Rules 110-1I-1 et seq., does not violate the requirement set forth in W. Va. Code 11-6K-1(a) that natural resources property be assessed based upon its "true and actual value"; and (2) the valuation methodology contained in the Code of State Rules does not violate the equality provision of W. Va. Const. art. X, 1 or the equal protection provisions of the United States and West Virginia Constitutions. View "Murray Energy Corp. v. Steager" on Justia Law

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The Supreme Court affirmed the judgment of the circuit court granting summary judgment against Petitioners in their action against Respondents based upon a coal lease agreement between the parties and granting summary judgment against Respondents’ counterclaim, holding that there was no error to the dismissal of the parties’ respective claims. In granting summary judgment against Petitioners, the circuit court concluded that Respondents had no obligation to diligently mine coal and did not have to make royalty payments based upon comparable sales by other mining companies. The circuit court also granted summary judgment against Respondents’ counterclaim seeking damages for Petitioners’ refusal to consent to an assignment or sublease of the coal lease and for alleged tortious interference with an asset agreement Respondents had with another company. The Supreme Court affirmed, holding that there was no error in the circuit court’s judgment. View "Bruce McDonald Holding Co. v. Addington Inc." on Justia Law

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In this action alleging claims under the West Virginia Surface Coal Mining and Reclamation Act, W. Va. Code 22-31 to 22-3-38, the Supreme Court answered several questions of law certified to it by the federal court. The Court answered, inter alia, that (1) a 1902 deed provision transferring the right to mine coal “without leaving any support for the overlying strata and without liability for any injury which may result to the surface from the breaking of said strata” prohibits a surface owner from pursuing a common law claim for loss of support arising from subsidence caused by the extraction of the coal from below the surface; (2) assuming the surface lands and residence of a landowner have been materially damaged from subsidence that is a natural result of underground mining, the surface owner is limited to the remedies provided for in the West Virginia Code of State Rules 38-2-16.2.c to 38-2-16.2.c.2; and (3) if a surface owner proves that his or her person or property was injured through a coal operator’s violation of a rule, order, or permit, the surface owner can receive monetary compensation for such injury pursuant to W. Va. Code 22-3-25(f). View "McElroy Coal Co. v. Schoene" on Justia Law

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The Supreme Court reversed the circuit court’s order invaliding the arbitration provision at issue in this case involving an oil and gas lease and remanded with directions that the case be dismissed and referred to arbitration. Petitioner and Respondents were parties to an oil and gas lease that included an arbitration provision. Respondents sued Petitioner, seeking to recover payments to which they claimed to be entitled under the lease and various other damages. Petitioner filed a motion to compel arbitration, relying on the arbitration provision in the lease. The circuit court denied Petitioner’s motion to compel arbitration, finding ambiguity in the lease’s arbitration provision. The Supreme Court reversed, holding (1) the circuit court erred in going outside of the provisions in the arbitration clause to find language to create an ambiguity; and (2) the arbitration provision was not ambiguous and therefore should be enforced. View "SWN Production Co. v. Long" on Justia Law

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The 1977 deed at issue in this case was ambiguous and of such doubtful meaning that reasonable minds disagreed as to the deed’s intent, and therefore, the circuit court erred in finding the deed was clear and in finding that the grantors did not convey one-half interest in oil and gas beneath a tract of land in Marshall County to the grantee. In 2013, Plaintiffs filed a complaint against Defendants asserting that, in the 1977 deed, Plaintiffs retained ownership of the one-half undivided interest in the oil and gas and, therefore, Defendants trespassed on their oil and gas interest and engaged in conversion. Plaintiffs then amended the complaint to request a declaratory judgment interpreting the 1977 deed. The circuit court determined that the deed was clear and unambiguous and declared that Plaintiffs kept for themselves the one-half interest in the oil and gas. The Supreme Court reversed, holding that the circuit court erred in finding that the 1977 deed was unambiguous and in granting a declaratory judgment in favor of Plaintiffs. View "Gastar Exploration Inc. v. Rine" on Justia Law

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Where a lessee designates tracts of land for pooling regarding horizontal drilling and production of oil and gas from the Marcellus Shale Formation, which includes nonparticipating royalty interests (NPRI), consent or ratification by the holders of the nonparticipating royalty interests is not required where the holders of the NPRIs have conveyed the oil and gas in place and the executive leasing rights thereto to the lessor. At issue was a voluntary pooling and unionization lease provision regarding horizontal drilling and production of oil and gas from the Marcellus Shale Formation. PPG Industries, Inc., the lessor, and Gastar Exploration USA, Inc., the lessee, signed a lease under which 700 acres were designated by Gastar as the Wayne/Lily Unit for purposes of pooling the oil and gas interests held by various individuals and entities. PPG and Gastar challenged the circuit court’s entry of partial summary judgment in favor of Plaintiffs, who collectively held a nonparticipating royalty interest in the oil and gas underlying a parcel included within the Wayne/Lily Unit. The Supreme Court reversed, holding that the circuit court erred in ruling that the validity of the pooling provision in the PPG-Gastar lease and the designated Wayne/Lily Unit were void until such time as pooling was consented to and ratified by Plaintiffs. View "Gastar Exploration Inc. v. Contraguerro" on Justia Law

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Both the legislative intent and language utilized in W. Va. Code 22-6-8 permits allocation or deduction of reasonable post-production expenses actually incurred by the lessee of an oil and/or gas lease and, more specifically, permits use of the “net-back” or “work-back” method of royalty calculation. Here the Supreme Court answered certified questions presented by the United States District Court for the Northern District of West Virginia regarding whether the Supreme Court’s decision in Tawney v. Columbia Natural Resources, LLC, 633 S.E.2d 22 (2006), has any effect upon whether a lessee subject to section 22-6-8 may deduct post-production expenses from the lessor’s royalty. Upon rehearing, the court concluded that royalty payments pursuant to an oil or gas lease governed by the statute may be subject to pro-rata deduction or allocation of all reasonable post-production expenses incurred by the lessee, and therefore, an oil or gas lessee may utilize the “net-back” or “work-back” method to calculate royalties owed to a lessor pursuant to a lease governed by section 22-6-8(e). View "Leggett v. EQT Production Co." on Justia Law