The Oil and Gas Addendum

An Oil and Gas Blog for Landowners. The law of oil and gas here in Pennsylvania and throughout the Marcellus Shale region is complex and continues to evolve and change. If you own oil and gas rights, keeping up to date on these changes and trends is critical. The Oil and Gas Addendum is your resource for timely and informational articles on the latest developments in oil and gas law. Our oil and gas practice here at Houston Harbaugh is dedicated to protecting the interests of landowners and royalty owners. From new lease negotiations, to title disputes, to royalty litigation, we can help. We know oil and gas.

Articles posted in Royalties and Post-Production Costs

Sixth Circuit Rules That Driller Must Establish Marketability of Each Gas Product Under Market Enhancement Clause

By Robert J. Burnett on May 29, 2025

Let’s assume you own 105 acres in Greene County, Pennsylvania. In 2020, you signed an oil and gas lease with ABC Exploration. During the negotiations, you agreed that...

Ohio Appeals Court Rules that Horizontal Shale Well Was “On” the Leased Premises

By Robert J. Burnett on February 26, 2025

Let’s assume you own a 175 acre farm in Washington County. Your grandfather acquired the farm back in 1948 from Farmer Brown (the “1948 Deed”). Your grandfather always...

Pennsylvania Superior Court Reaffirms the Dunham Rule

By Robert J. Burnett on January 14, 2025

Let’s assume you inherited a 150 acre farm in Lycoming County that has been owned by your family since 1909. In 2020, you are approached by ABC Drilling...

Ohio Court of Appeal Addresses Whether Gathering and Transportation Are Separate and Distinct Post-Production Activities

By Robert J. Burnett on December 19, 2024

As we approach the 20th anniversary of the Marcellus Shale play, one issue remains constant: the ongoing debate over the deduction of post-production costs. Landowners all across Pennsylvania...

Texas Appellate Court Rules That ‘Free of Cost’ Clause In 1960 Deed Prohibits The Deduction of Post-Production Costs

By Robert J. Burnett on December 5, 2024

Let’s assume you own a 135 acre farm in Tioga County, Pennsylvania. In 2020, you negotiate a new oil and gas lease with XYZ Drilling Company. During the...

Federal District Court Sends Pennsylvania Royalty Dispute To Trial

By Brendan A. O'Donnell on November 12, 2024

Middle District of Pennsylvania Determines that Meaning of Oil and Gas Lease “Marketing” Language Cannot Be Determined as a Matter of Law in Chambers v. Equinor USA Onshore...

Texas Supreme Court Addresses Fuel Gas Question

By Robert J. Burnett on June 3, 2024

Many oil and gas leases across Pennsylvania allow the driller to divert and use volumes of raw gas to power and fuel production operations both on and off...

Types of Costs: Production Costs v. Post-Production Costs

By Brendan A. O'Donnell on April 23, 2024

Different types of “costs” may be charged against oil and gas royalty owners. Brendan A. O’Donnell discusses differences between “production” costs and “post-production” costs.

Texas Supreme Court to Address the Obligation to Calculate Royalty on Gas Used to Fuel Off-Lease Operations

By Robert J. Burnett on April 15, 2024

Let’s assume you own 165 acres in Tioga County. In 2019, you sign a new oil and gas lease with ABC Drilling. You negotiate an 18% net royalty. ...

The Neale Rule – Who Really Owns the Oil and Gas Under Railroads?

By Robert J. Burnett on March 20, 2024

Since the early 1900’s, your family has owned a 105 acre farm in Greene County, Pennsylvania. In 2024, you and your siblings sign an oil and gas lease...

West Virginia Appellate Court Rules That Estate Misconception Theory Did Not Apply To 1902 Deed

By Robert J. Burnett on January 31, 2024

The calculation of production royalties and the deduction of post-production costs remains a troubling issue for Pennsylvania landowners. But there is another frustrating and often confusing royalty-related issue...

Federal District Court in Texas Issues Mixed Ruling for Landowners in Royalty Dispute

By Robert J. Burnett on October 25, 2023

The processing of natural gas requires a constant and reliable energy source. Critical operations such as compression, separation and dehydration cannot be conducted unless the driller has “fuel”...

Can Cryptocurrency Mining Maintain an Oil and Gas Lease Beyond Primary Term?

By Brendan A. O'Donnell on September 27, 2023

The recently filed Hobe Minerals Limited Liability Company v. Bonanza Creek Energy Operating Company, LLC, et al lawsuit in a Colorado trial court challenges whether intermittent cryptocurrency mining...

Federal Court In Ohio Rules That Driller Must Establish Marketability of Each Gas Product Under Market Enhancement Clause

By Robert J. Burnett on September 25, 2023

Let’s assume you own 95 acres in Greene County, Pennsylvania. In 2019, you signed an oil and gas lease with ABC Exploration. During the negotiations, you agreed that...

Texas Supreme Court Rules That 1924 Deed Conveyed One Half Of The Oil and Gas Estate

By Robert J. Burnett on May 17, 2023

The calculation of production royalties and the deduction of post-production costs remains a controversial topic here in Pennsylvania. As we have written before, there is another frustrating and...

Texas Supreme Court Rules That Post-Sale Costs Must be Added Back to Gross Proceeds Calculation

By Robert J. Burnett on April 27, 2023

Let’s assume you own 185 acres in Washington County. In 2020, you negotiate a new oil and gas lease with ABC Drilling. During the negotiations, you insist on...

Pennsylvania Supreme Court Agrees to Hear Appeal In Royalty Dispute

By Robert J. Burnett, Brendan A. O'Donnell on February 21, 2023

On February 15, 2023, the Pennsylvania Supreme Court agreed to hear the appeal of PennEnergy Resources, LLC in the Dressler Family, LP v. PennEnergy Resources, LLC matter. The...

Can "Free Gas" Clauses Refute the Artificial Wellhead Value Suggested by Drillers?

By Robert J. Burnett, Brendan A. O'Donnell on February 15, 2023

An oil and gas lease with a “free gas” clause may be a valuable tool for landowners to push back against drillers’ inaccurate attempts to value gas at...

Market Enhancement Clauses in Pennsylvania After Dressler Family, LP v. PennEnergy Resources, LLC

By Robert J. Burnett, Brendan A. O'Donnell on October 25, 2022

Many Pennsylvania landowners have leases with “market enhancement” royalty clauses. These clauses typically prohibit the deduction of any post-production costs that are incurred transforming the gas into marketable form....

Is the Value of Your Gas Really Being Enhanced?

By Robert J. Burnett, Brendan A. O'Donnell on July 1, 2022

Let’s assume you own 115 acres in Greene County, Pennsylvania. In 2017, you signed an oil and gas lease with ABC Exploration, Inc. During the negotiations, you agreed...

Pennsylvania Superior Court Rules that Royalty Clause Referencing Both ‘Gross Proceeds’ and ‘At the Well’ Was Ambiguous

By Robert J. Burnett on May 19, 2022

Let’s assume that you own 125 acres in Tioga County. In 2017, you negotiate a new oil and gas lease with XYZ Drilling. During the negotiations, you insist...

Are Your Royalties Going Up In Flames?

By Robert J. Burnett on March 30, 2022

Royalty provisions can differ and often contain different royalty valuation points. But all of those leases are subject to the Pennsylvania Guaranteed Minimum Royalty Act (the “GMRA”), which imposes a minimum royalty on all hydrocarbon production

Texas Supreme Court Issues Troubling Decision in Royalty Dispute

By Robert J. Burnett on March 30, 2022

The practice of deducting post-production costs from landowner royalties remains a controversial and contentious issue here in Pennsylvania. Many landowners sought to insulate their royalties from such deductions by negotiating royalty clauses which require the hydrocarbons to be sold “free of cost in the pipeline.”

Texas Federal Court Rules No Royalty Due on Gas Used to Fuel Off-Lease Operations

By Robert J. Burnett on March 30, 2022

No Royalty Due on Gas Used to Fuel Off-Lease Operations because the gas is never sold or marketed and is instead consumed as fuel during the processing operation

Claim Based On Implied Covenant To Market Gas To Move Forward In Federal Royalty Litigations

By Robert J. Burnett

For many landowners in Pennsylvania, the receipt of the monthly royalty statement is an ongoing source of frustration and anger. In addition to excessive and unreasonable deductions for...

Federal Court in Kentucky Allows Novel Royalty Claim to Move Forward

By Robert J. Burnett on March 20, 2022

Federal Court in Kentucky Allows Novel Royalty Claim to Move Forward

Failure to Tender Production Royalty Did Not Trigger Forfeiture Clause

By Robert J. Burnett

Failure to Tender Production Royalty Did Not Trigger Forfeiture Clause In a typical oil and gas lease, there are three primary sources of compensation to the landowner: the...

Court Rules Severance Tax Does Not Increase Value of Shale Gas, Therefore Not a Deductible Post-Production Cost

By Robert J. Burnett

A landmark decision on the practice of deducting post-production costs was recently issued by the Supreme Court of Kentucky. Specifically, the court held that a lessee could not...

Superior Court Breathes New Life Into Guaranteed Minimum Royalty Act

March 18, 2022

Superior Court Breathes New Life Into Guaranteed Minimum Royalty Act As the debate in Harrisburg heats up this winter regarding the practice of deducting post-production costs from oil...

Landowners May Face Difficult Burden Regarding Intermingled Gas

By Robert J. Burnett

Landowners May Face Difficult Burden Regarding Intermingled Gas A recent opinion issued by the Pennsylvania Superior Court may place a difficult burden on landowners confronted with a subsurface...

Federal District Court In Pennsylvania Allows Royalty Claim To Move Forward

By Robert J. Burnett

Pennsylvania Allows Royalty Claim To Move Forward

Federal District Court In Ohio Rules That Chesapeake Did Not Breach Lease When It Deducted Costs From Royalty

By Robert J. Burnett

In the ongoing royalty dispute in Lutz v. Chesapeake Appalachia, LLC, the federal district court sitting in Akron, Ohio recently ruled that Chesapeake did not breach the parties’...

Sixth Circuit Rules That Driller Must Pay Royalties On Natural Gas Liquids

By Robert J. Burnett on March 17, 2022

Sixth Circuit Rules That Driller Must Pay Royalties On Natural Gas Liquids

Federal District Court in Ohio Rules That Driller Did Not Breach Lease by Deducting Post-Production Costs Incurred by Affiliate

By Robert J. Burnett

Federal District Court in Ohio Rules That Driller Did Not Breach Lease by Deducting Post-Production Costs Incurred by Affiliate

Federal Court in Pittsburgh Questions Applicability of Kilmer Decision

By Robert J. Burnett

In a recent decision, the federal court in Pittsburgh held that the definition of “royalty” adopted by the Pennsylvania Supreme Court in Kilmer v. Elexco Land Services, Inc. was not...

West Virginia Supreme Court to Reconsider Landmark Decision in Leggett v. EQT Production Company

By Robert J. Burnett

In a rather surprising move, the West Virginia Supreme Court has decided to revisit the November 17, 2016 opinion it issued in the Leggett v. EQT Production Company...

West Virginia Federal Court Rules That Lease Did Not Authorize the Deduction of Post-Production Costs

By Robert J. Burnett, Brendan A. O'Donnell

Your family owns a 300 acre farm in Ritchie County, West Virginia. There is a lease from 1978 on the property that has now been incorporated into a...

Tenth Circuit Rules That Obligation To Pay Royalty On Fuel Gas Depends On Lease Language

March 17, 2022

royalty may be due depending on the precise language in the parties’ oil and gas lease.

West Virginia Moves To Prohibit Drillers From Taking Deductions Which Reduce Net Royalty Below 12.5%

By Robert J. Burnett

West Virginia Moves To Prohibit Drillers From Taking Deductions Which Reduce Net Royalty Below 12.5%

Driller Has No Obligation to Pay Royalty on Lost Gas

By Robert J. Burnett

Imagine you own an apple orchard. You sign a contract with XYZ Produce which grants them the exclusive right to harvest your apples. At the end of the...

Legislation Revived to Protect Royalty Owners in Pennsylvania

By Robert J. Burnett

On June 23, 2015, Representatives Garth Everett (R-Lycoming), Sandra Major (R-Susquehanna/Wayne), Matt Baker (R-Bradford/Potter/Tioga), Tina Pickett (R-Bradford/Sullivan/Susquehanna) and Karen Boback (R-Lackawanna/ Luzerne/Wyoming) re-introduced legislation which seeks to clarify...

Is Pa. Becoming a First-Marketable-Product Jurisdiction?

By Robert J. Burnett

Many landowners across Pennsylvania are experiencing sticker shock upon opening their first royalty statement. They have waited months, often years, to receive their first royalty. As they open...

The Difference Between a “Royalty” and a “Royalty Interest” Can Be Confusing and Costly For Landowners

By Robert J. Burnett on March 15, 2022

The calculation of production royalties and the deduction of post-production costs is a hot topic for landowners across Pennsylvania. But there is another frustrating and often confusing royalty-related...

Ohio Supreme Court Declines to Adopt Blanket “At the Well” Rule

By Robert J. Burnett

The question of whether Ohio follows the “at the well” rule or the “marketable product” rule will have to wait for another day. And that might not be...

New Royalty Bill Hb 1708 Will Not Help Pennsylvania Landowners

By Robert J. Burnett

Throughout Pennsylvania, landowners are continuing to experience frustration and anger when they open their royalty statements. The practice of deducting postproduction costs from the gas royalty has become...

Federal District Court in Pittsburgh Rules That 1897 Deed Did Not Grant a Non-Participating Royalty Interest

By Robert J. Burnett on November 18, 2021

When a landowner executes an oil and gas lease, the developmental rights are transferred to the lessee. The lessor’s interest in the transferred developmental rights is known as a “possibility of reverter”. If the oil and gas lease expires, the developmental rights automatically revert back to the lessor-landowner.

The Net-Back Method Does Not Result In Better Pricing to Justify Deductions Under Market Enhancement Clauses

October 16, 2021

Landowners with market enhancement clauses should carefully review their royalty statements and pay particular attention to the commodity prices reported in their statements. If these prices remain below nearby index prices but the gathering and transportation costs remain the same, it is difficult to justify how these movement costs resulted in better pricing.

The New Royalty Bill is Good for Pennsylvania Landowners

By Robert J. Burnett, Brendan A. O'Donnell

On August 5, 2021, Rep. Eric Davanzo (R-Westmorland County) introduced HB 1763. The bill seeks to clarify Pennsylvania oil and gas law by defining the term “royalty”. It...

Is Your Driller Really Enhancing the Value of Your Gas?

By Robert J. Burnett, Brendan A. O'Donnell on August 16, 2021

The driller cannot deduct the cost of dehydrating the raw gas and then moving the gas 165 miles away to a distant buyer unless the final net sales price at that location is better than the price the driller would have received selling the gas locally.

Federal District Court Injects Confusion into Definition of Gross Royalty Under Pennsylvania Law

By Robert J. Burnett on June 18, 2021

Drillers are becoming more creative and aggressive in their effort to avoid lease language that was intended to prohibit or restrict the deduction of post-production costs.

Are February 2021 Production Royalty Payments Leaving you Out in the Cold?

By Brendan A. O'Donnell, Robert J. Burnett on May 15, 2021

Pennsylvania Attorney General announced a settlement that Chesapeake must stop offering leases that contain “market enhancement” clauses or “ready for sale or use” clauses to Pennsylvania landowners.

Is Your Driller Trying to Re-Write History?

By Robert J. Burnett, Brendan A. O'Donnell on March 18, 2021

The driller cannot unilaterally amend or modify the underlying lease by changing the effective date of the pooling instrument. This, in turn, means that the driller cannot go back in time and make retroactive changes to the previously recorded unit declaration. The driller can change or modify the size, shape, and boundary of the unit but those changes can only affect your royalty prospectively.

Texas Supreme Court Rules That Gross Royalty Clause Prohibits Driller From Deducting Post-Production Costs

By Robert J. Burnett on March 16, 2021

Texas Supreme Court Rules That Gross Royalty Clause Prohibits Driller From Deducting Post-Production Costs

Historic Cold May Provide Window Into “Market Enhancement” Under Gas Leases

By Robert J. Burnett, Brendan A. O'Donnell on February 18, 2021

These clauses typically contain language that prohibits a driller from deducting post-production costs unless the driller can demonstrate that the purported costs “enhanced the value” of the gas and enabled the driller to receive a better price for the gas.

Kansas Court Rules that Gas is not Marketable Until it Reaches Interstate Pipeline

By Robert J. Burnett on August 7, 2020

Under most “market enhancement” clauses, the costs associated with moving, processing and transporting the gas should not be deductible. If you have a “market enhancement” clause, you should carefully review and monitor your royalty statements for improper or excessive deductions.

Why Is The Driller Deducting Post-Production Costs My Lease Doesn’t Allow? Kilmer V. Elexco Land Services: A Decade Later

By Robert J. Burnett, Brendan A. O'Donnell on June 15, 2020

Kilmer granted them an automatic and universal right to deduct post-production costs – even when the underlying lease says nothing about deductions.

Oklahoma Federal Court Rules That Driller Must Pay Royalty On Fuel Gas

By Robert J. Burnett

Driller Must Pay Royalty On Fuel Gas

West Virginia Jury Finds That EQT Improperly Calculated Landowners’ Royalty on Shale Gas

By Robert J. Burnett on September 15, 2018

EQT Improperly Calculated Landowners’ Royalty on Shale Gas royalty was artificially reduced by EQT’s practice of “netting out” post-production costs incurred between the wellhead and the downstream point-of-sale

Why the New Minimum Royalty Bill is Constitutional and Good for Pennsylvania

By Robert J. Burnett on June 17, 2017

On February 17, 2017, Rep. Garth Everett (R-Lycoming County) introduced HB 557. The bill seeks to put teeth back into Pennsylvania’s Guaranteed Minimum Royalty Act (“GMRA”) by prohibiting...

About Us

Oil and gas development can present unique and complex issues that can be intimidating and challenging. At Houston Harbaugh, P.C., our oil and gas practice is dedicated to protecting the interests of landowners and royalty owners. From new lease negotiations to title disputes to royalty litigation, we can help. Whether you have two acres in Washington County or 5,000 acres in Lycoming County, our dedication and commitment remains the same.

We Represent Landowners in All Aspects of Oil and Gas Law

The oil and gas attorneys at Houston Harbaugh have broad experience in a wide array of oil and gas matters, and they have made it their mission to protect and preserve the landowner’s interests in matters that include:

New lease negotiations
Pipeline right-of-way negotiations
Surface access agreements
Royalty audits
Tax and estate planning
Lease expiration claims
Curative title litigation
Water contamination claims

Robert Burnett - Practice Chair

Robert’s practice is exclusively devoted to the representation of landowners and royalty owners in oil and gas matters. Robert is the Chair of the Houston Harbaugh’s Oil & Gas Practice Group and represents landowners and royalty owners in a wide array of oil and gas matters throughout the Commonwealth of Pennsylvania. Robert assists landowners and royalty owners in the negotiation of new oil and gas leases as well as modifications to existing leases. Robert also negotiates surface use agreements and pipeline right-of-way agreements on behalf of landowners. Robert also advises and counsels clients on complex lease development and expiration issues, including the impact and effect of delay rental and shut-in clauses, as well as the implied covenants to develop and market oil and gas. Robert also represents landowners and royalty owners in disputes arising out of the calculation of production royalties and the deduction of post-production costs. Robert also assists landowners with oil and gas title issues and develops strategies to resolve and cure such title deficiencies. Robert also advises clients on the interplay between oil and gas leases and solar leases and assists clients throughout Pennsylvania in negotiating solar leases.

Head shot photo of Pittsburgh, Pennsylvania Oil and Gas Lawyer Brendan O'Donnell at Houston Harbaugh

Brendan A. O'Donnell

Brendan O’Donnell is a highly qualified and experienced attorney in the Oil and Gas Law practice. He also practices in our Environmental and Energy Practice. Brendan represents landowners and royalty owners in a wide variety of matters, including litigation and trial work, and in the preparation and negotiation of:

Leases
Pipeline right of way agreements
Surface use agreements
Oil, gas and mineral conveyances