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From: jrhana7/18/2009 9:47:32 AM
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Westmoreland Landowners Sue Over Marcellus Shale Leases

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Saturday, July 18, 2009 7:52 AM
Symbols: REXX

(Source: Tribune-Review)trackingBy Paul Peirce, Tribune-Review, Greensburg, Pa.

Jul. 18--Ten Westmoreland County landowners claim in eight civil lawsuits that they are owed millions of dollars by a State College-based energy company that agreed to lease their properties to tap into the natural gas-rich Marcellus Shale seam, only to back out of the contracts when energy prices plummeted.

The complaints, filed since November, allege that reneging on the natural gas drilling leases cost them amounts ranging from $35,000 to $641,950 during the last year.

The most recent filing was a class-action lawsuit on July 10 against Rex Energy Corp. in Westmoreland County Common Pleas Court. Three property owners in Derry and Ligonier townships claim they never received payments ranging from $35,000 to $38,750 within the 90-day period they had agreed to when they signed separate agreements in August.

Those involved in the class-action suit are Clyde and Janell Snyder of Greensburg, who own 15 acres in Derry Township; William Snyder of 661 Matson Road, Ligonier Township, who has 14 acres spanning Derry and Ligonier townships; and Ray and Sandra White of 711 Matson Road.

The landowners' attorney, David A. Borkovic of Sewickley, said he believes Rex Energy embarked on a program to aggressively acquire "significant" gas acreage throughout central Westmoreland County beginning in late 2007 through the summer of 2008 "to make itself more attractive to investors, stock analysts and potential strategic partners."

As part of the plan, according to co-counsel James S. Lederach of Scottdale, Rex used employees from Duncan Land & Energy of Pittsburgh, who were working in Westmoreland to pursue the local agreements. Duncan Land is not a defendant in the lawsuit.

The lawyers said Rex went so far as to hold "town meetings" using Duncan Land employees who wore Rex Energy-labeled clothing and distributed Rex business cards.

"By the end of 2008, Rex Energy controlled 88,000 acres or more of Marcellus Shale gas leases in Pennsylvania," the lawsuit states.

"These leases were approved on properties as small as an acre," Borkovic said.

"We're alleging Rex sent these representatives, land agents, out into the communities to sign the agreements, then refused to pay on those agreements," he said.

"Defendants' landmen told plaintiffs and those similarly situated they would be paid the money under the leases within 60 to 90 days," the lawsuit states.

Lederach has been the attorney on seven previous lawsuits claiming breach of contract. Those plaintiffs are:

--Kim and Dianne Miller of 275 Wolf's Lake Road, New Alexandria, owners of 257 acres in Ligonier Township, claim they were promised $641,950; --Bethlen Home in Ligonier Township, involving about 200 acres of its property, claims it is owed $479,000;

--Karen and John Novak claim they were promised $269,000 from the rights on a 108-acre property in Mt. Pleasant Township;

--Hilary and Sue Hoffer of 1605 E. Laurel Circle, Mt. Pleasant Township, claim they are owed $121,000 for the drilling rights on 48 acres they own in Mt. Pleasant Township;

--The Stonewood Family Partnership in Greensburg claims it was promised $120,500 for the drilling rights on 48 acres it owns in Unity;

--Bonita Shawley of 143 Shawley Lane, Unity, claims she is owed $261,875 for 105 acres in Unity;

--Robert and Judy Shrum of 248 Road's End Farm, Latrobe, claim they are owed $127,000 for drilling rights on 51 acres they own in Unity.

According to court documents, the Millers have reached an out-of-court settlement on their lawsuit against Rex. Lederach declined to disclose the amount, which was not disclosed in court papers.

Greensburg attorney George N. Stewart is the attorney of record for Rex on lawsuits. He could not be reached for comment Friday.

However, in answers to several of the lawsuits, Rex claims the lawsuits should be dismissed because the contracts were never finalized. Those documents claim no Rex officials ever signed the leases.

For example, in its answer to the Bethlen Home claim, Stewart argued, "It is further denied that Rex at any time executed the said 'Oil and Gas Lease' and it is further averred that the copy which (Bethlen) has attached as Exhibit A specifically has no signature by Rex Energy on the signature line specifically required and appearing on said document."

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To see more of the Tribune-Review or to subscribe to the newspaper, go to pittsburghlive.com.

Copyright (c) 2009, Tribune-Review, Greensburg, Pa.

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