Royally Fracking Ripped Off: "Drilling is Just the Beginning"Submitted by barracuda_trader on Wed, 04/30/2014 - 23:03
Around the country, landowners are suing Chesapeake and other drillers for massive deductions from royalty checks.
Pennsylvanians are also discovering an entirely new issue, one that has little to do with royalties but a lot to do with gas companies and their leases: Drilling companies are taking loans out against their properties.
McFarland said that oil and gas companies have taken out lines of credit against the value of the mineral rights on properties they have under long-term lease. “Oil and gas companies do that all the time to give themselves enough cash to drill, but here in Texas, the lien only attaches to the oil or gas company’s mineral interests — it doesn’t affect the surface owner at all,” he said.Gary Miller, of Ohioville in south-west Pennsylvania, went to his credit union in October 2013 to take a loan out on his 12-acre property. “I filed for a mortgage, and not long afterward I got a call to come into the credit union to take a look at something,” he said.When he went in, he was told that a title search had discovered a lien on his property. “I couldn’t believe it. I looked, and sure enough, there was a lien on my house for $500,000. Then they told me to take a second look: It turned out it wasn’t for a half a million dollars, it was for half a billion dollars. Can you imagine? I had a $500 million lien on my house!”
The state Public Utility Commission uses an industry law firm for advice on oil and gas zoning ordinances.
Over the past two years Pennsylvania has employed a Harrisburg law firm with ties to the oil and gas industry for advice on zoning rules directed at that very same industry.
The law firm of McNees, Wallace and Nurick is an associate member of the gas industry trade group, the Marcellus Shale Coalition. The firm’s attorneys routinely represent energy companies before the state Public Utility Commission (PUC).