WOW! OIL-GAS INDUSTRY "CLARIFYING" ROYALTY PROBLEMS - "Corrective" Legislation Being Introduced

(02/13/2007)

The "Little Guy" Getting Smaller, Smaller, Smaller?

OPINION AND COMMENT By Bob Weaver

West Virginia's oil and natural gas industry was working yesterday on new legislation "clarifying" state laws that govern royalty payments.

Chesapeake Energy spokesman Scott Rotruck said lawyers were going over the proposed legislation.

The legislation will be introduced this week, the last week it is allowed.

The "corrective" legislation comes about 16 days after a Roane County jury returned a $404.3 million verdict (including punitive damages) against Chesapeake Energy in a case involving the way the industry calculates royalty payments.

The jury found that Chesapeake "ripped-off" $134 million from royalty owners, using information from company own records as evidence.

The issue is related to how the industry has decided ("Everybody is doing it") to deduct producer expenses from what royalty owners have been paid.

Gov. Joe Manchin told the oil and gas producers winter meeting that his administration is working with the Legislature and the oil and gas industry to "clarify state laws."

Clarity will not likely help the little guy.

Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association, said this morning, "I believe the bill is in its final form as the industry wants it."

Now we will proceed to bill drafting and get it introduced as soon as possible. It should be dropped in the hopper today, as soon as we find some sponsors" Demarco said.

The Legislature has a long history of helping extractors, so it stands to reason, they will again.

A few years ago, the Legislature said it was time to help little guys with timber lots by giving them a tax break to improve their timber stand. The Managed Timberlands Bill gave a 60%+ tax break to large timber corporations.

It would be safe to say the oil-gas folks bill will not afflict the comfortable by benefiting tens of thousands of royalty holders.


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