Major Gas Company Adopts Model Lease Practices

Attorney General Spitzer today announced that one of the largest natural gas and oil exploration companies operating in the state will follow a new set of land leasing practices that will provide local landowners with more and better information concerning natural gas leases.

The agreement with Fortuna Energy Inc. follows an extensive investigation by the Attorney General's Office into the accounting and leasing practices of several energy exploration companies in New York's natural gas-rich Southern Tier and Finger Lakes regions. The investigation began in the fall of 2004 following complaints by local landowners about leasing tactics used by Fortuna and other gas exploration companies to gain access to their property.

"This agreement ensures that all landowners Fortuna contacts in the future will have accurate information available to use in deciding whether to sign a lease with the company," Spitzer said. "I commend Fortuna for taking steps towards greater transparency and consumer protection and I encourage all other industry participants to follow their lead."

Beginning in 2004, the Attorney General's Office began receiving complaints about the practices of Fortuna and other energy exploration companies in their pursuit of leases, including claims that they used misleading information, pressure tactics and discouraged land owners from consulting attorneys before signing leases.

Under today's agreement, Fortuna will adopt a new set of business practices for negotiating natural gas exploration leases, which are set forth in a legal document between the company and the Attorney General's Office.

In addition, the Attorney General's investigation revealed that Fortuna underpaid $50,000 in royalties owed to some landowners. The company has since reimbursed the money, plus interest, to all affected landowners.

Beyond agreeing to new business practices, Fortuna has paid $100,000 to the state for costs of conducting the investigation.

Fortuna, based in Horseheads, is a subsidiary of Talisman Energy of Calgary, Alberta, Canada.

The investigation was conducted by Assistant Attorneys General Roberto Barbosa and Michael Danaher, under the supervision of Dennis McCabe, Assistant Attorney General in Charge of the Binghamton Regional Office.

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