By Attorney Douglas A. Clark
PAGasLeaseAttorney.com | PipelineAttorney.com
Pennsylvania’s Landowner-Only Oil and Gas Attorney

Introduction

In the spring of 2025, the United States Supreme Court denied certiorari in Rescigno v. Statoil/Equinor & EQT (Equitrans), bringing to a final close one of the most important royalty-related legal actions in recent Pennsylvania natural gas history.

I had the privilege of serving as a key member of the legal counsel team for Pennsylvania landowners throughout this case, which resulted in a $7 million class action settlement addressing significant issues involving royalty payments, improper deductions, valuation practices, and the manner in which operators calculated and distributed proceeds owed to landowners.

This article explains:

  • what the case involved;
  • why the settlement matters;
  • the specific royalty practices challenged;
  • what Pennsylvania landowners can learn from this outcome;
  • how the oil and gas industry continues to handle royalty valuation; and
  • why legal representation is essential when dealing with complex royalty structures.

The goal of this post is not only to provide an update on the case, but to serve as a resource for other Pennsylvania landowners who may be experiencing similar problems with their royalty checks today.

The Background: Royalty Payment Problems Facing Pennsylvania Landowners

Across Pennsylvania’s Marcellus and Utica shale regions, one of the most common complaints I hear from landowners involves royalty deductions and royalty underpayments.

Even when leases appear to guarantee “no deductions” or promise “gross proceeds,” many operators still:

  • reduce royalties through post-production charges;
  • apply gathering, compression, dehydration, marketing, or transportation fees;
  • use internal “netback” pricing models;
  • rely on affiliate sales to undervalue the gas stream; and
  • employ calculation methods that are not disclosed clearly on the royalty statement.

The Rescigno case centered on these types of issues, with landowners asserting that royalty payments were not properly calculated, not properly credited, or not made consistent with the lease terms or Pennsylvania law.

The Core Legal Issues in Rescigno

Although royalty disputes can involve several different theories, the Rescigno litigation focused on how operators valued natural gas and how royalty deductions affected the payments owed to landowners.

Key issues included:

1. Whether deductions taken from royalty payments were authorized under the leases.

Some leases restrict or prohibit certain categories of post-production costs, while others limit deductions unless they enhance value or unless the operator meets specific contractual requirements.

2. Whether the operator used an appropriate price for calculating royalties.

Royalty valuation may be influenced by:

  • affiliate transactions;
  • sales to marketing subsidiaries;
  • “index minus” or “netback” methods;
  • the point of sale (wellhead vs. downstream); and
  • whether the operator sold gas at arm’s length.

Improper valuation often results in substantial underpayment to the landowner.

3. Whether the well operator accurately accounted for production volumes.

Royalties are calculated on:

  • the volume of hydrocarbons sold;
  • the price received;
  • the landowner’s fractional interest; and
  • any authorized deductions.

In Rescigno, we asserted that certain inappropriate practices resulted in incorrect payment amounts.

4. Whether the royalty statements provided enough information for landowners to verify payments.

Many Pennsylvania royalty statements:

  • lack detail;
  • do not break down costs;
  • obscure whether deductions are permitted by the lease; and
  • fail to show production volumes clearly.

Transparency — or lack thereof — is often at the heart of Pennsylvania royalty disputes.

The Litigation Journey

Representing Pennsylvania landowners in Rescigno required many years of coordinated effort and legal advocacy, including:

  • federal district court filings and litigation;
  • extensive time consuming discovery and data analysis;
  • expert review of royalty calculations and operator accounting practices;
  • Third Circuit appellate proceedings;
  • skilled negotiations leading to a comprehensive class settlement; and
  • responding to the petition challenging the Third Circuit victory all the way to the United States Supreme Court.

When the Supreme Court denied certiorari in spring 2025, the settlement and all underlying rulings were preserved and final, with no further avenue for challenge. In short, we won!

The Settlement: $7 Million for Pennsylvania Landowners

The settlement created a $7 million fund to compensate affected Pennsylvania landowners for the royalty-related issues raised in the litigation.

This outcome is significant because:

  • It compensates royalty owners for payments that may not have been made consistent with the lease terms.
  • It provides financial recovery for landowners who otherwise would struggle to challenge complex royalty accounting individually.
  • It reinforces that operators can be held accountable for royalty practices.
  • It sends a clear and strong message to the industry that Pennsylvania landowners are prepared to assert their rights through The Clark Law Firm, PC.

Every affected class member receives calculated compensation based on their ownership interest, lease terms, and the duration of the royalty issues involved.

Why This Case Matters for Pennsylvania Royalty Law

The Rescigno settlement stands out as an extremely meaningful moment for the rights of Pennsylvania landowners. It provides several important takeaways:

1. Royalty Deductions Must Comply With the Lease — Not Operator Preference

An operator cannot simply impose deductions or valuation methods because they claim it is “industry standard.”
The lease controls.

The case reinforces that Pennsylvania federal courts will examine:

  • deduction categories;
  • pricing methodologies;
  • the operator’s interpretation of “market value,” “net proceeds,” or “gross proceeds”; and
  • the meaning of “at the wellhead” and “downstream price”.

This is essential for landowners across the state who signed leases with varying royalty clauses.

2. Transparency Matters — and Lack of Detail Is Not an Excuse

Many royalty disputes arise because landowners cannot determine how their royalties were calculated.

The case highlights growing judicial recognition that “opaque accounting” practices can — and should — be challenged.

3. Affiliate Sales and “Netback Pricing” Are Increasingly Scrutinized

When gas is sold to an affiliate or valued “on paper” rather than at an actual market sale, the potential for underpayment increases.

Rescigno contributes to the broader trend of courts evaluating:

  • whether affiliate transactions reflect fair market value;
  • whether “index minus” pricing is appropriate; and
  • whether operators are undervaluing gas before calculating royalties.

This has implications for thousands of Pennsylvania landowners.

4. Group Action Can Be More Effective Than Individual Claims

Royalty disputes often involve:

  • complex accounting;
  • highly technical data; and
  • dealings with major corporate operators.

An individual landowner typically cannot compel:

  • detailed accounting records;
  • internal pricing models;
  • affiliate contracts; and
  • gas marketing data.

Class litigation provided a unified approach, and the settlement reflects the strength of coordinated legal action by our team.

My Role as Counsel for the Pennsylvania Landowners

As a lead attorney representing the Pennsylvania landowners in the Rescigno case, my responsibilities included:

  • reviewing and interpreting leases to determine royalty obligations;
  • analyzing deductions, valuation methods, and accounting;
  • collaborating with experts in gas pricing, midstream transportation, and market valuation;
  • advocating for landowners in federal court;
  • developing legal theories related to improper deductions and underpayment;
  • negotiating settlement terms;
  • ensuring landowners received compensation; and
  • opposing the petition for Third Circuit and United States Supreme Court review.

Throughout the process, my focus remained on protecting the interests of Pennsylvania landowners and ensuring that operators followed both contractual requirements and Pennsylvania law.

Lessons for Pennsylvania Landowners Today

Even though Rescigno concluded in 2025, the underlying issues persist across Pennsylvania. If anything, royalty disputes are becoming more common.

Here is what landowners should take away from this outcome:

1. Review Your Royalty Statements Regularly

Look for red flags such as:

  • inconsistent monthly volumes;
  • unexplained swings in deductions;
  • line items labeled “gathering,” “compression,” “marketing,” “transportation,” or “post-production costs” that may not be authorized;
  • large negative adjustments; and
  • unclear or missing price indexes.

Many landowners discover issues only after years of potential underpayment.

2. Know Whether Your Lease Allows Deductions

Some leases:

  • prohibit deductions;
  • allow only certain categories;
  • require enhanced value;
  • impose a marketable condition requirement; and
  • require payment based on gross proceeds.

Others include “at the wellhead” clauses that operators sometimes interpret broadly and beyond the scope authorized by Pennsylvania law.

Understanding the specific language of your lease is critical.

3. Do Not Assume the Operator’s Price Is the Correct Price

Operators often use:

  • affiliate sales;
  • index pricing;
  • netback formulas; and
  • internal transfer prices

These approaches are typically unknown to thee royalty owner and can reduce royalty values dramatically.

4. Landowners Have the Right to Challenge Improper Royalty Payments

Whether through:

  • direct negotiation;
  • audit;
  • arbitration (if required by the lease);
  • mediation (if required by the lease);
  • individual litigation; or
  • group or class litigation

Landowners are not powerless.

The Rescigno settlement demonstrates that Pennsylvania landowners have strong legal options when royalties are not paid correctly.

5. Early Legal Review Saves Money Long-Term

A detailed legal consultation of your lease and royalty payments may reveal:

  • improper deductions;
  • valuation discrepancies;
  • historical underpayments; and
  • misinterpretation of lease terms.

Waiting years to seek advice often results in lost claims and reduced or precluded recovery.

Why I Write These Blogs — And Why Pennsylvania Landowners Trust My Firm

As a Pennsylvania attorney who has represented only landowners for over 18 years, my practice focuses exclusively on protecting the rights of those who own the oil, gas, and mineral estate — not the companies developing it.  I have never represented a gas or oil company, and I never will.

My firm represents Pennsylvania Royalty Owners with:

  • royalty payment disputes;
  • improper deduction claims;
  • lease negotiation and renegotiation;
  • audit and investigation of operator accounting;
  • pipeline and right-of-way agreements;
  • well pad and surface use agreements;
  • above and below ground water line agreements;
  • amendments, ratifications and extensions of oil and gas and pipeline easement agreements;
  • storage field matters;
  • lease termination disputes;
  • buying and selling oil and gas rights;
  • assigning and transferring royalties, agreements and oil and gas rights;
  • breach of contract issues; and
  • any other oil and gas related issue.

The Rescigno case demonstrates what is possible when landowners have strong representation and refuse to accept unclear or improper royalty practices.

Conclusion: A Major Victory — And a Call to Action for Pennsylvania Landowners

The $7 million settlement in Rescigno v. Statoil/Equinor represents a major achievement for Pennsylvania landowners and sends a clear message:

Royalty payments must be accurate, transparent, and consistent with the lease and the law.

If you are a landowner experiencing:

  • royalty deductions;
  • unexplained price reductions;
  • affiliate sales that lower your royalty value;
  • opaque royalty statements; or
  • large swings in monthly payments

you may have the right to challenge the operator and seek compensation.

For questions about royalty payments, lease representation and interpretation, or gas company accounting practices, visit:

PAGasLeaseAttorney.com

PipelineAttorney.com

or contact my office at 570-307-0702 to schedule a consultation. Protecting Pennsylvania landowners is — and always has been — my only priority