Growth of Energy Practice

The Energy Practice Group of Lawrence D. Brudy & Associates, Inc. provide a multi-disciplinary approach for the firm’s expanding client base. The abstractors, attorneys, paralegals and legal assistants’ research, compile and issue legal opinions for gas exploration/development companies, realtors, buyers, sellers and lessors of land in Pennsylvania and West Virginia as to the marketability of the oil, gas, coal and other mineral interests.  These certifications as to the legal status of ownership provide the client with a chain of title back to or before 1859, as to surface and subsurface ownership.  The opinions include all deeds of conveyance, oil & gas leases, rights of ways, easements, mortgages, estates and tax status. (coal ownership/leasing also when requested)  The opinions are presented in full color, bound, on compact disc and can be delivered electronically.  The curative requirements and an “action letter” provide the client with the recommendations prior to the client leasing, listing for sale, purchasing, unitizing and/or drilling.  Litigation as a curative is available from the firm’s attorneys.

The firm in addition to providing legal services and title insurance in Pennsylvania, the firm now provides legal services in West Virginia and title insurance in Ohio.

• Oil & gas valuations are prepared by the firm’s attorneys and Certified Public Accountants.  The valuations provide a value for producing or prospective production for unitized acreage for calculation of transfer tax on subsurface conveyances estate planning for wealth preservation, maintenance of non-profit organization status and the retention or conveyance of one of the estates in the land.

• Lease Negotiation for landowners provided by the firm’s attorneys includes a drafted set of addendums to the oil & gas lease to ensure to landowners that their concerns for the protection of their land are memorialized.  Lease negotiation includes but is not limited to access of surface and certain depths of subsurface strata; Unitization; storage; location of pipelines;  bonus and royalty payments.

•The firm’s Certified Public Accountants counsel individuals, small businesses, family limited partnerships, trusts and corporations for operating advice, tax planning and preparation of tax returns.

Lawrence D. Brudy & Associates, Inc. renews office lease in Wexford PA.  Acknowledging the continued growth of the oil & gas industry, the firm has renewed its office lease, upgraded the technology resources and expanded the professional staff to confidently meet client needs from around the country.

You may have noticed this on our new publications:

It is a Quick Response (QR) Code.  If you have a smart phone, you probably have or can download an app that will read these codes in a similar way as the grocery store reads a UPC code.

When the phone “reads” the code, it will send you directly to the firm website.

Energy

Oil & Gas Lease Negotiations

Oil and Gas Lease Negotiations generally begin with the landowner being contacted by a “landman,” – an agent representing a gas exploration / development company, and presenting a lease. There are multiple paragraphs and clauses embodied within the lease, this article’s focus will be limited to the forms and types of payments to the landowner.  Landowners are referred to as the “Lessor” and is the party who owns the mineral interests.  The gas / development company is referred to as the “Lessee”, the party that is leasing the interests and responsible for the development of the land.  Development includes but is not limited to exploring, drilling, extracting, conducting seismic and installing production equipment such as compressing, gathering, treating, dehydrating and separating stations.

The standard boiler plate lease agreements typically contain provisions for Lessor payments all of which are negotiable.

Paid-Up Front Lease Bonuses

Negotiated by the landman and landowner or their Attorney with specific reference to the Marcellus Shale Formation, bonus payments vary from county to county in Pennsylvania and depend upon the shale thickness of the area, well production, and competition for the mineral interests.  Lease bonus payments are a dollar amount per acre multiplied by the number of years for the lease.  For example, a five (5) year “paid up” lease at $100.00 / acre / year for 100 acres would calculate as follows: $100.00 / acre x 5 year term x 100 acres = $50,000.00 paid upfront bonus payment.

Delay Rental Payments

Payments made on an annual basis calculated on dollar amount / acre x the number of acres.  For example, leasing of 100 acres at $100.00 / acre for a five (5) year term.  $100.00 x 100 acres x 1 year = $10,000.00 annual payment.  Unlike the Paid-Upfront Lease Bonus, if a well is drilled or the lands are unitized and the property owner begins receiving royalty payments before the expiration of the lease primary term (i.e. 5 years) no other delay rental payments are required as the royalty compensation will maintain the lease most often referred to as being “held by production” (HBP).

The Attorneys at Lawrence D. Brudy & Associates, Inc. have successfully negotiated Oil & Gas Lease payment options for landowners involving thousands of acres in Northern and Western Pennsylvania. 

Royalty Percentage Payments

These are the monthly or quarterly payments to the landowner based upon well production and unitization.  Variables such as price / thousand cubic feet of gas, unit size, well production and royalty percentage with / without costs impact the payment.  For example, using the following sample numbers annual royalty payments would be as follows: Royalty interest 15% without costs, $4.00 / thousand cubic feet of gas, 100 acres of landowner property, 640 acre unit size, 2.5 million cubic feet of gas produced / day = annual royalty payment of $85,546.88.  Depending upon how the royalty percentage has been negotiated is determinative along with the other aforementioned variables of the annual payments.

Paid Upfront Lease Bonus, Delay Rental Payments and Royalties may be treated differently for federal income tax purposes and questions should be referred to a tax professional for answers.

Call (724) 935-1400 for engagement information or email Julie L. Morris at This e-mail address is being protected from spambots. You need JavaScript enabled to view it.

Certified Title Opinons/Curatives

The Attorneys, Paralegals, Abstractors, and Legal Assistants of Lawrence D. Brudy & Associates, Inc. invest over 2,000 hours per month abstracting, compiling, interpreting and producing Certified Title Opinions.  Our firm's opinions provided in your or our format come in full color, bound, unbound, on compact disc or transmitted electronically, all from our in-house production department.

Our opinions include the following:

• Detailed Chains of Title including Sheriff, Tax, Foreclosure, adverse, outsales, specific devises from estates, intestate succession, intra-family and arms length conveyances.
• Oil & Gas exceptions, reservations, severances, assignments, leases, surrenders, division / ratificatoin orders, pooling and unitization agreements.
• Coal deeds, agreements, leases and assessments for all veins and seams.
• Rights of Ways and Easements;
• Mortgages, Lines of Credit, Uniform Commercial Code Filings.
• Estates—Life, specific and residual devises, heir identification, payments of inheritance taxes.
• Timber and Spring Agreements.
• Judgments, liens, taxes.
• Clean & Green (Act 319) Conservation Reserve Program, Conservation Reserve Enhancement Program filings.

Subject, Common Grantor and Coal tracts are "deed plotted" in full color when accurate metes and bounds descriptions are provided in the recorded documents.  When declared or prospective units are established, abstracting and review economies of scale can be employed for cost advantages to the client as many current tracts may have historical similarities of ownership of surface and subsurface estates.

Pa. Title Insurance Rates are a fixed fee across the entire Commonwealth of Pennsylvania.  Click here to download the current rate guide.

Mineral Interests

The firm’s attorneys represent clients in all PA counties as to the marketability of oil, gas, coal, clay, limestone, and associated hydrocarbons. Legal services include the negotiation of lease terms, as to the impact (protection) of the surface, crops, timber and water. Bonus payments and royalty percentages that our attorneys negotiate add value to the land.

In addition to providing counsel to real estate brokerages, realtors, buyers and sellers as to the drafting of agreements of sale, we produce certified title opinions back 150 years for the determination on the ownership of subsurface interests, which can and have been used for permitting, financing and marketing of property. Our opinions which include legal recommendations as to business decisions and curative requirements are presented in custom full color, bound, unbound, on compact disc and electronic formats. Our full time staff of professionals spend over 2000 hours each month on behalf of clients involving the determination of ownership of subsurface interests.

The PA Association of Realtors Standard Agreement for the Sale of Real Estate now provides an oil, gas and mineral rights addendum addressing issues of examination, exception and/or reservation of oil and gas interests. Buyers have the option via this addendum to conduct due diligence as to the marketability of subsurface interests. We have developed special deed language for conveyances, exceptions and reservations of these interests and the impact on the surface owner for development.