Westmoreland County Suit Against Rex Energy, Inc. Settled.

Posted By Cliff Tuttle | July 21, 2011

No. 658

A group of landowners who executed leases with Rex Energy, Inc. have reached a settlement on their claims for bonuses on leases which the driller had obtained but never accepted. Many leases, not just those from Rex, were written in such a way that the lessee could accept or reject the lease after title work had been done.  However, during the panic of 2008 (and perhaps at other times) when developers may have had trouble raising the funds to pay signing bonuses, acceptances were postponed or cancelled. This was sometimes done through side letters, not part of the formal lease.  To the landowners, this acceptance process related to title issues only.  Thus, in the view of landowners, if the title was satisfactory, the lessee was required to accept the lease. From the company’s perspective, the right to accept or reject a lease was unconditional. The settlement agreement, involving 137 leases in Westmoreland County, was approved by Westmoreland County Judge Gary Caruso.

The Pittsburgh Business Times reports that a class action determination would have been before the court had a settlement not been reached. Those who had not signed with other developers could, under the settlement, lease with Rex for a $2,500 per acre bonus and a production royalty of 15%.  Rex issued a press release concerning the settlement in which it made projections of acreage likely to be acquired under the settlement.

On August 16, 2010, this blog reported about a similar case involving Range Resources.

CLT

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CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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