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What: Shares of Range Resources (NYS: RRC) saw heavy pressure today, falling by as much as 13% today after Bloomberg reported that a Pennsylvania appeals court ruling posed questions regarding ownership of natural gas found within the Marcellus shale formation.
So what: Pennsylvania's Superior Court indicated that the state's law governing ownership of oil and gas rights is far from clear and wanted a lower-court judge to gather expert advice in a case that pits current landowners against heirs. The report quotes a Houston-based attorney, Larry Nettles, as saying, "Dozens of energy companies have invested billions of dollars in leashing shale gas production rights in Pennsylvania. This opinion calls into question whether they have those rights."
Now what: The state has always required landowners to consider oil and gas rights independently when transferring ownership of resources located underneath a property's surface. The defendants in this particular dispute contend that shale gas is different and should not be considered independent since it is found within rock. Range Resources general counsel David Poole mentioned that oil and gas companies will now need to scrutinize the titles of the properties they've leased, and that the courts' ambivalence will create "chaos." Until the courts can come to a decision, uncertainty over the outcome will be an additional risk that shareholders will need to face. Add this stock to your watchlist to keep an eye on it as events unfold.
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