lawsuits — Eagle Ford Shale News — Eagle Ford Shale Play

The Texas Oil & Gas Association (TXOGA) issued an official response to a story reported by KENS Channel 5. You can watch the report in the article Eagle Ford Oil Companies Fight Back - State Revenues Should Be Shared. KENS 5 reported that oil companies were threatening counties with lawsuits and the organization released this response:

Texas Oil & Gas Association Memo Explained Current Law on Counties’ Authority and Roads -- TXOGA Did Not Threaten Lawsuit and Believes Current Law May Need to Change so Counties Receive Necessary Funding
The following can be attributed to Deb Hastings, executive vice president of the Texas Oil & Gas Association (TXOGA):
In April 2012, the Texas Oil & Gas Association prepared a reference memo describing current law with regard to counties’ authority to assess fees or require agreements with oil and gas operators. The Texas Oil & Gas Association has not threatened to sue any county regarding transportation fees.
The roads situation is serious in South Texas and elsewhere where oil and gas development is expanding. Funding is necessary to repair and improve existing roads. The Legislature will determine the source of that funding. A change in law may be required to re-figure how funds are allocated to local municipalities. For example, oil and gas operators paid more than $9 billion in taxes and royalties to the state in fiscal 2011. We need to assess if those funds are getting into the right hands for emerging needs.
The Texas Oil & Gas Association is committed to helping to develop a solution to repair, maintain and strengthen the infrastructure necessary to support the tremendous economic activity that is generating thousands of jobs and billions of dollars in state and local tax revenue.

You can read more about the association at www.txoga.org

Lawsuits over the nature of mineral leasing and the high stakes game of who owns and who leased first is a multi-million dollar issue in South Texas. Everyone sells land and leases minerals happily until acreage prices skyrocket. That's when the lawyers come out. That's when people realize they might have missed something very big. The gravy train of $10,000+ per acre lease bonuses and long lived royalties might have passed right by. Often times, real estate trades for fractions of the dollar before oil or gas is discovered. In a 1-2 year time period in Northern Louisiana, acreage prices in the Haynesville Shale increased from less than $3,000 an acre (that was good) to sell land and mineral rights to simply leasing minerals for as much as $20,000 per acre. Prices have come down, but the boom is much like what we'experiencing in the Eagle Ford.

The dollars involved also increase the likelihood of fraud. There will no doubt be bad apples, but companies do their due diligence on title and many of these issues are resolved before leasing. If you are leasing, always do research to make sure you're working with a reputable party.

A tangle of lawsuits has been filed over the disputed ownership of valuable mineral-rights leases in the booming Eagle Ford Shale in South Texas, including allegations that the Fort Worth office of JPMorgan Chase & Co. wrongfully leased lands in Karnes and DeWitt counties.
In the DeWitt case, Orca Assets of Corpus Christi says it paid $3.2 million for a lease that the bank, acting for Fort Worth-based Red Crest Trust, had already sold to a rival drilling company.
Orca is on the other side of litigation in Karnes County, where it is a co-defendant with Chase and the trust.
Not too long ago, very few would care about those assets. But hydraulic fracturing technology has made Eagle Ford a hot drilling area. The San Antonio Express-News reported that mineral leases that fetched just a couple of hundred dollars less than a decade ago are now commanding $10,000 and more.