Property owners sue to cancel gas-lease terms
Plaintiffs argue deals fail to comply with minimum royalty lawBy R.A. WALKER - rwalker@sungazette.com
About 135 local property owners are asking a federal judge to declare leases for oil and natural gas rights on their properties "invalid and void" for allegedly not complying with the commonwealth's minimum royalty law.
The lawsuit filed last week in U.S. Middle District Court lists plaintiffs with addresses spread from Forksville to Jersey Shore and Cogan Station to Bloomsburg.
The defendants are divided into two categories, identified as "leeses" and as "overriding royalty interest holders."
The "leeses" list includes Kentucky-based Keaton Group and the Texas-based Chief Oil and Gas, Radler 2000 Limited Partnership, MK Resource Partners and eCORP Resource Partners.
The "overriding royalty interest holders" include Denpeer Energy and Xyr Oil and Gas, Giana Resources, Beach Petroleum and Source Oil and Gas, all of Texas, and Craig Ian Burton of West Perth, Australia.
The lawsuit was filed on behalf of people owning about 18,200 acres of land in Lycoming and Sullivan counties situated over the sedimentary rock formation known as the Marcellus Shale and "believed to contain large amounts of mostly untapped natural gas reserves."
The leases in dispute were signed between April 2005 and Match 2006 with defendant Keeton Group Inc., identified as a limited liability company acting as "the land agent for one or all (of) the defendants."
The lawsuit describes the leases as having identical provisions setting royalties at one-eighth "of the revenue realized" with taxes, assessments and adjustments on production subtracted, but claims they should be voided by the court because of language violating the royalty law. The law specifies such leases should guarantee "at least one-eighth of all ... natural gas ... removed or recovered" from a property.
The complaint also claims the leases violate the law by including deductions suggesting property owners "are not guaranteed at least a one-eighth royalty."
The case has been assigned to U.S. District Senior Judge James F. McClure Jr.
Among the plaintiffs are the Roaring Run Rod and Gun Club, Tublick Run Camp and Highland Lake Manor.








