YOUNGSTOWN - Property owners whose mineral rights are held by the now-bankrupt D&L Energy should not see an interruption in the arrival of their monthly royalty checks, at least for now.
Federal Judge Kay Woods, overseeing the Chapter 11 bankruptcy case, on Friday gave the interim go-ahead for D&L to continue paying the bills associated with its regular business operations.
Local oil and gas attorney Alan Wenger of Harrington, Hoppe and Mitchell on Friday pointed out that generally, bankruptcy courts will preserve a bankrupt company's ability to continue doing business.
D&L Energy, in the spotlight in recent years for controversies surrounding its oilfield waste disposal business, also is the operator of production wells and the owner of mineral rights on more than 17,000 acres of real estate.
"That bankrupt estate can utilize that asset as any given asset, including selling or assigning those rights," Wenger said.
That could create an opportunity for the company to raise capital to pay its debts and eventually emerge from bankruptcy reorganization.
In fact, court documents indicated that D&L Energy had already done just that.
"Between 2011 and 2012, D&L sold portions of its deep rights to various purchases for gross proceeds in excess of $17 million," the court document states. "D&L currently owns some or all of the deep rights to approximately 17,000 acres of real estate. D&L's interest in these deep rights has substantial value as the average sale price for the deep rights pertaining to one acre of real estate is in excess of $2,300."
For now, though, the company will maintain those rights.
And while the company hinted that it may be looking to market those rights to other oil and natural gas drillers, any deal to sell those rights would require the approval of the bankruptcy trustee and the federal judge.
"The bankruptcy trustee and the judge could change the terms of the contracts," Wenger said. "There might be some delays (in royalty payments) because of administrative issues."
But other than that, distribution of monthly royalty checks from the production wells to property owners should be routine.
A message left seeking comment with D&L Energy was not returned.