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By DAN MCGRAW
Fort Worth Weekly
In August 2008, the Southwest Fort Worth Alliance, a collection of homeowners associations representing about 25,000 property owners, approved a natural gas leasing deal with Vantage Energy that provided for bonuses of $27,500 per acre and a royalty rate of 23 percent. For residents, it read like the sweetest deal ever in the Barnett Shale.
Homeowners were told that they'd get their money after a fairly simple process: Property titles would be verified by Vantage's leasing agent, The Caffey Group; homeowners would fill out a tax form and sent it in to Caffey; they would go to a signing party and sign the leases; and bonus checks would be sent to their banks in a draft form that would be converted to cash within 30 business days.
Petroff: "You can't nullify a contract just because gas prices went down." Anna Routh
David and Joyce Richey did all those things. They signed their lease on Sept. 13 of that year. Their bonus was calculated at $8,800 for their quarter-acre property, and a draft for that amount was sent to their bank on Sept. 16. They then waited for the check to clear. On Nov. 6, however, the draft was returned unpaid. And now the Richeys are part of a lawsuit against Vantage and Caffey alleging breach of contract, fraud, antitrust violations, and deceptive trade practices toward themselves and other property owners.
When Fort Worth Weekly first reported on the gas suits ("Worth the Paper They're Written On," Oct. 7, 2009), only two such cases had been filed, both small suits over unpaid bonuses in Arlington.
Since then, the North Texas Lease Litigation Group, a consortium of three Dallas law firms, has filed 17 additional lease suits, most of them involving small groups of homeowners. They have more than 100 clients in all and expect that number to triple in the next few months. Another hundred lawsuits are in the works, and Kip Petroff, lead plaintiffs' attorney in the cases, said more than a thousand Tarrant County residents have contacted the consortium.
The suits thus far center on deals that were negotiated by SFWA with Vantage and by South East Arlington Communities of Texas in April 2008 with XTO Energy. In mid-October of that year, the drilling companies - XTO, Vantage, Chesapeake, and others - pulled their offers off the table for property owners who hadn't signed. By March 2009, they were back in those neighborhoods, but by then offering deals with zero bonuses.
Petroff contends that the drillers didn't like the record levels that bonus offers had reached and, in violation of antitrust law, teamed up to drive prices down. A hearing on May 6 in a Tarrant County district court will determine if the plaintiffs have legal grounds to sue over antitrust issues.
"The companies acted together at the same time, and we have some interesting evidence that we can't share at this time saying they did," Petroff said. "The competition was fierce in 2008, and the prices went sky-high. But then [the drilling companies] looked at each other and said it doesn't make sense to pay that kind of money.
"But they had binding contracts in place, and you can't nullify a contract just because gas prices went down," he said.
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Source: Fort Worth Weekly |
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By Brenda Sapino Jeffreys
Texas Lawyer
 Drilling for natural gas in the Barnett Shale has been an economic boon to North Texas since production began in 2001, but hundreds of disgruntled property owners are lining up to sue drilling companies over terms of mineral leases.
Dallas plaintiffs lawyer Kip Petroff says his firm and two others represent close to 1,000 clients who own land in parts of Fort Worth and Arlington and who have a beef with the drilling companies. Dallas firms Petroff & Associates, Mathis & Donheiser, and Riddle & Williams formed the North Texas Lease Litigation Group this year to represent the property owners in litigation against the drilling companies and their agents.
On Nov. 17, seven clients who live in Arlington and Grand Prairie filed a petition in state district court in Tarrant County alleging XTO Energy Inc. of Fort Worth; Permian Land Co., a division of Oklahoma-based Devonian Enterprises Inc.; and Fred W. Jones, owner of Devonian, conspired to reduce bonus and royalty payments in mineral lease agreements for property in the Barnett Shale.
They allege the object of the conspiracy is to "prevent the natural market forces which had been setting prices for the bonus and royalty payments from continuing, and instead substituting an artificially low price for bonus and royalty payments, thereby increasing the profits each participant would receive at the expense and injury of individual landowners."
The plaintiffs in Omar "Lee" Garza, et al. v. XTO Energy Inc., et al. also bring a breach of contract cause of action against XTO, and fraud, negligent misrepresentation, fraud in connection with the sale of real estate, and violation of the Texas Free Enterprise and Antitrust Act of 1983 causes of action against the defendants.
Garza is the third suit filed by clients of the North Texas Lease Litigation Group - property owners represented by the group filed two others in August - but Petroff says the lawyers expect to file petitions in Tarrant County on behalf of many more property owners in the Barnett Shale who wanted to sign lease agreements with drilling companies in 2008 but did not sign on the dotted line before the companies allegedly changed the terms of the lease agreements in October 2008 to offer less money to the landowners.
"We are saying a deal is a deal," Petroff says.
In many cases, he notes, groups of homeowner associations negotiated lease terms, and property owners were invited to "signing parties" at churches or civic centers, but not all had opportunity to sign leases.
"The deal was made with the homeowners' alliance. The people never got the chance to sign, and the deal was pulled out from under them," he alleges.
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Source: Texas Lawyer |
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By DAN MCGRAW
Fort Worth Weekly
A little more than a year ago, the Barnett Shale gravy train was shooting through North Texas at blinding speeds. Even while some residents were accusing the city council of surrendering Fort Worth's future and environment to the gas drillers, thousands of property owners were getting on board with companies like Chesapeake and XTO as fast as they could, eager to get their fair share of the loot. Read The Full Article Here
 Natural gas prices were at record-high levels, and property owners who had waited out the negotiating process were reaping big rewards. Neighborhood groups banded together to negotiate better deals with the powerful companies than individual property owners could have gotten. Waiting for the bonuses and royalty rates to go higher seemed like a good strategy.
In April 2008, the Southeast Arlington Communities of Texas (SEACTX) negotiated a deal with XTO Energy that would bring in bonus money of $26,517 per acre and a royalty rate of 26.5 percent - among the highest in the Barnett Shale play. When leaders of SEACTX, representing about 7,000 property owners with about 5,000 acres, did the math, they figured that more than $100 million in upfront bonuses would be coming into their community of mostly modest to middle-class neighborhoods.
Four months later, the Southwest Fort Worth Alliance (SFWA) made a similar deal with Vantage Energy. The bonus was set at $27,000 an acre and the royalty rate at 23 percent. SWFA figured that more than $200 million in bonus money would soon be in the hands of the 25,000 property owners the consortium represents.
Well, that was then and this is now, when natural gas prices have fallen to less than half what they were in early 2008. And as anyone who has been following the Barnett Shale saga knows, drilling companies pulled out of those deals and others in mid-October of last year. Some property owners, whose bonus checks were processed prior to the cancellation, got paid. Tolli Thomas, a spokeswoman for SWFA, estimated that 4,000 to 5,000 people in her area got the money promised to them - and the other 20,000 or so did not.
The gas drillers blamed market forces for the cancellations. Gas prices had fallen significantly throughout the summer, and the big deals didn't make economic sense anymore, they said. Gas company officials also contend that the deals they'd made with neighborhood alliances weren't binding after all - that only contracts with individual property owners, who had filled out the proper paperwork, were enforceable. In fact, in at least two cases, companies are alleging that even those contracts were not enforceable until property owners got their checks.
So what does make a binding contract with a gas company? Can the drillers really ignore the promises they made, verbally and on paper, to neighborhood groups and, in some cases, to property owners? Are market fluctuations really a valid legal reason for backing away from signed contracts? Or were market fluctuations truly the reason for the widespread abandonment of those contracts? Thomas and others are now questioning that.
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Source: www.fwweekly.com |
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Friday, September 11, 2009
Dallas lawyers form coalition to sue Barnett Shale producers
By Jim Magill
Platts.com Gas Daily
Three Dallas law firms have formed a coalition to sue Barnett Shale gas producers whom they claim backed out of deals to pay top dollar for lease contracts after gas prices tanked late last year.
The North Texas Lease Litigation Group is meeting with associations representing homeowners in suburban communities in the North Texas cities of Fort Worth and Arlington, hoping to convince residents to sue gas companies that abruptly withdrew promised gas leases.
Last month attorneys for the three firms - Petroff & Associates, Riddle & Williams and Mathis & Donheiser - filed suit in 160th District Court of Dallas County on behalf of Tarrant County and other similarly situated homeowners against 21 exploration companies and individuals.
The plaintiffs' attorneys allege that the companies engaged in fraud and conspiracy by failing to pay promised bonuses to the homeowners negotiating in good faith for gas leases. In particular, the suit claims that Fort Worth-based XTO Energy last October withdrew offered contracts, negotiated with the South East Arlington Coalition of Texas, in which each property owner was promised a bonus payment of $26,517 per net mineral acre.
According to the suit, the defendants withdrew the lease from consideration in mid-October of last year, after paying the plaintiffs about $5,000 in initial payments.
A spokesperson for XTO did not return Platts' call for comment by press time.
Kip Petroff, an attorney for the NTLLG, told Platts Wednesday that he believes the gas companies, representing the bulk of the big players in the Barnett Shale of North Texas, acted in concert to withdraw promised lease contracts at the same time in violation of Texas Free Enterprise and Antitrust Act.
"The companies all pulled the plug pretty much at the same time, which in itself looks anti-competitive," he said. "We believe they got together and said, 'If we all pull the plug at the same time, then nobody's going to be paying too much.' "
E&P companies have said they withdrew their offers of generous bonus payments after seeing gas prices begin to plummet last fall.
Petroff said the typical bonus payment being offered by gas firms to surface property owners is "four cents on the dollar a year from what it was a year ago."
Typically, the homeowners association negotiates contracts, which the individual homeowners then would sign. The process can take time, especially for larger communities, some of which can include as many as 6,000 homeowners. "Not everyone can sign on day one," Petroff said.
However, some area communities had their homeowners sign contracts while the generous bonus terms were still being offered. Jon Wise, president of Stone Meadow Homeowners Association, told Platts that residents in his community received a total of about $1.3 million. "We're ecstatic," he said.
Ed Ireland, executive director Barnett Shale Energy Education Council, told Platts that even after gas prices inevitably rebound from their current lows, surface owners are unlikely to see such generous lease terms again.
"I think that was a one-time event. Those numbers are unprecedented in the history of the industry," he said.
- Jim Magill |
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By Elizabeth Souder/Reporter
www.DallasNews.com
Three Dallas law firms created the North Texas Lease Litigation group to go after natural gas producers who, they say, refuse to pay royalty owners.
The law firms, Petroff & Associates, Riddle & Williams, and Mathis & Donheiser, are already suing some major Barnett Shale producers, including XTO Energy, Chesapeake Exploration Co., Quicksilver Resources, Chief Oil & Gas, Carrizo Oil & Gas, etc. etc. on behalf of some royalty owners. Now, the lawyers are looking for other clients in Tarrant County neighborhoods.
The issue is production companies that have declined to consummate leasing agreements after natural gas prices plummeted. According to the group's web site, some property owners never received their promised bonus payments, even after signing a lease.
Source: www.DallasNews.com
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By JACK Z. SMITH jzsmith@star-telegram.com
www.Star-Telegram.com
In 2008, gas drilling in the Barnett Shale encroached on neighborhoods on the southwest side of Fort Worth. (Photo by: Ralph Lauer / Star-Telegram Archives)
Three Dallas law firms have formed a litigation group and are meeting with Tarrant County residents who could become parties to lawsuits against energy companies involved in leasing properties for Barnett Shale natural gas drilling.
The North Texas Lease Litigation Group said it will hold an information session at tonight's 7:30 meeting of the Meadows of CandleRidge Homeowners Association at the Knights of Columbus Hall, 4500 Columbus Trail in southwest Fort Worth.
The Litigation Group consists of Petroff & Associates, Riddle & Williams and Mathis & Donheiser.
The group says agreements reached between homeowners' association alliances and energy companies are "binding lease agreements" even if individual property owners represented by the associations did not sign lease contracts based on the agreements, Kip Petroff, a Dallas lawyer and a member of the group, said Friday.
"I'm saying that there are thousands of people who are part of these coalitions of homeowners who entered into these binding lease agreements . . . and now they're [energy companies] trying to renege on them," Petroff said.
Agreements cited
As examples, he mentioned agreements that the Southwest Fort Worth Alliance, a group of approximately 25 neighborhood associations, reached for lease bonuses of $27,500 per acre and that the Southeast Arlington Coalition of Texas reached for $26,517 per acre.
Some deals were never implemented because energy companies declined to finalize lease contracts with individual property owners after natural gas prices fell in the latter half of 2008. Leasing and drilling in the Barnett Shale have plunged in the past year.
The litigation group has already sued in 160th State District Court in Dallas on behalf of Willie and Carmen Booth of Arlington, who say they were not paid a $4,932 lease bonus due them as a result of the agreement reached between the Southeast Arlington Coalition and representatives of companies involved in the Barnett drilling boom.
Multiple defendants
Numerous energy-related companies and individuals are named as defendants in the lawsuit, including such well-known Barnett gas exploration and production companies as XTO Energy, Chesapeake Energy and Quicksilver Resources.
Energy and leasing companies that negotiated with alliances of homeowner groups are expected to say in court that they were not bound to pay lease bonus checks unless they entered into binding lease contracts with individual property owners.
XTO, based in Fort Worth and named as a key defendant in the Booth lawsuit, said Friday that it generally does not comment on pending litigation.
Petroff said the litigation group hasn't "yet filed lawsuits in Fort Worth" but "most likely will."
He said some energy companies now offer bonuses of only $1,000 per acre but had offered $26,000-plus per acre.
The litigation group says on its Web site, www.ntxleaselitigation.com, that it is holding information sessions at 4, 5, 6 and 7 p.m. today and on Sept. 15 and Sept. 29 in the Cordovan Business Park, 5850 W. Interstate 20 in Arlington.
Countywide meeting
Petroff said the group plans a countywide meeting for property owners potentially interested in joining lawsuits against energy companies. The tentative date is Nov. 7, but the group hasn't determined a location, Petroff said.
Natural gas prices had soared to more than $13.50 per million British thermal units in July 2008 but since have declined dramatically. In futures trading Friday on the New York Mercantile Exchange, gas for October delivery rose 22 cents to settle at $2.728 after falling to $2.409 earlier in the day.
In the Barnett, leasing has fallen to about one-eighth its peak level. Sixty-six rigs were drilling for gas Friday in the Barnett, according to RigData. The peak was 214 in October.
Source: www.Star-Telegram.com |
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