Shale Boom Brings Challenges to the Banking Industry
Residential mortgage lenders used to pay little attention to oil and gas
leases. Then came the drilling boom in
the Marcellus and Utica shales and a spate of negative publicity about the
potential adverse effects of fracking. Our firm has been engaged in an ongoing
project to review oil and gas leases in connection with loans secured by
mortgages on residential properties. We
advise our lender client regarding whether the lease contains sufficient
protections for the borrower and the bank that the loan can or should be made.
We also review requests from oil company lessees that the bank’s existing mortgage
be subordinated to their leases.
Oil + Gas Leasehold Interest Litigation
Our attorneys regularly represent oil and gas producers defending
claims by landowners seeking to cancel oil and gas leases for alleged breaches
of implied covenant to develop, lack of production under secondary term and
Oil + Gas Foreclosure Litigation and Resolution
Our firm recently resolved multi-million-dollar foreclosure litigation
relating to real estate and mineral interests. These negotiations involved the
resolution of an amount claimed due for an oil and gas development loan and a
lien on oil and gas interests. The successful resolution included the creation
of a new oil and gas lease, securitization documents and a work-out agreement.
Workout and Friendly Foreclosure of Failing Pipeline Company’s Assets
In this case, the pipeline company failed during completion of a major
project for a mid-stream transporter during the rainy winter season; the
mid-stream transporter alleged faulty construction and the pipeline company
defaulted on its loan. Attorneys at Kegler Brown negotiated a loan workout between
the lender, the mid-stream transporter and the pipeline construction company,
as well as other creditors, to complete construction, release liens, sell
assets and pay debts.