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March 8, 2014

Judge: Drilling suit has enough details

MERCER COUNTY — A Mercer County judge said recently that the claims against an oil and gas drilling company filed by Mercer County landowners can move forward.

Common Pleas Court Judge Daniel P. Wallace noted it still is early and things could change as more information is developed, but he turned aside Halcon Energy Properties’ claims that the suit was legally insufficient to support two counts, and that one count was duplicative of another.

The suit initially was filed Nov. 6, 2012, and pits Jeffry S. Vodenichar of Butler, David M. King Jr. and Leigh V. King of Sandy Lake and Joseph B. and Lauren E. Davis of Stoneboro, all of whom own land in New Vernon Township; Grove City Country Club of Pine Township and Richard Broadhead of Polk, who owns land in Sandy Lake Township, against Halcon and Morascyzk and Polochak, Bridgeville; and Co-eXprise Inc., Wexford.

M&P and Co-eXprise marketed the landowners’ interests to oil and gas companies in return for a fee from the bonuses paid to property owners.

The suit, which seeks class-action status, alleges Halcon entered into contracts to lease up to 60,000 acres of oil and gas rights in Mercer County, the so-called “Mt. Jackson 4 – Stoneboro Group,” agreeing to pay $3,850 an acre and a royalty of 18.5 percent on the fossil fuels pulled from wells.

As part of the agreement with landowners, Halcon had no discretionary right to refuse to lease unless there was a problem with the property’s title or specified “other defect,” the suit said.

According to the plaintiffs, Halcon rejected a large number of leases without specifying reasons and, in many cases, without even doing title searches.

Halcon has flatly rejected the argument, saying it had “the absolute right to refuse to lease the plaintiffs’ properties.”

Halcon also has charged M&P and Co-eXprise with fraud for allegedly modifying contract documents and misleading landowners.

M&P and Co-eXprise agreed with the landowners that Halcon improperly reneged on the contracts, but maintained they did nothing wrong.

In its preliminary objections to the suit, Halcon alleged a count for declaratory relief duplicated a count of breach of contract, but Wallace said he found the two separate counts to be proper.

Halcon also argued that a count of intentional interference with contractual relations does not have enough specifics to pass muster.

Wallace ruled that the count has enough detail “to allow ... Halcon to prepare a defense.”

Wallace added that he is not saying, for instance, that a breach of contract occurred, only that the landowners have “pleaded facts that, if deemed true, would be actionable.”

He added that, while it is too early to say whether Halcon could be assessed punitive damages, it also is too early to say they could not.

Barring any additional filings challenging the sufficiency of the suit, Halcon will not have to file a formal answer to the allegations.

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