November 20, 2015 Articles

The Impact of Crude Oil and Natural Gas Market Trends on Litigation

The environment of low crude oil prices and other dynamics in unconventional oil and gas plays have increased litigation in this industry.

By Bob Broxson, Sonya Kwon, and Julie Carey – November 20, 2015

The continuation of the oil price slide along with the softening global market leave the industry on shaky ground. The market is flush with crude oil, in large part because of the U.S. shale revolution, with additional supply on the horizon once Iranian sanctions are lifted. Tepid demand and an uncertain outlook due to the looming economic downturn in Asia are also negatively affecting the market. The net effect for U.S. producers in unconventional oil plays is mounting financial pressures. Some producers are better positioned than others to endure because of hedging positions, strong balance sheets, and other economic factors. However, sustained lower prices around $40 will continue to have a negative impact on the entire sector.

The environment of low crude oil prices and other dynamics in the unconventional oil and gas plays have increased litigation in this industry. Some of the areas with heightened disputes are royalties, land and lease rights, labor and employment disputes, and regulation of hydraulic fracturing activities.

Navigant attempted to identify all cases filed in U.S. federal and state courts relating to unconventional oil and gas litigation. While Navigant’s list may not be exhaustive, we believe the case data present a representative picture of the nature and volume of unconventional oil and gas industry litigation filed during the first half of 2015. Navigant usedCourthouse NewsLaw360, news articles, and other court reporting services to identify the details of relevant cases. Navigant then reviewed and evaluated these cases for inclusion in our report. For the purposes of this study, Navigant did not include cases filed in arbitrations, non-litigation agency actions, or administrative proceedings. Investigations and decisions by the Federal Energy Regulatory Commission are also not reflected in these findings.

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