In Lutz v. Chesapeake Appalachia, the plaintiff alleges that the company fraudulently underpaid gas royalties. Plaintiffs may also pursue claims that were filed earlier, provided they prove that Chesapeake took fraudulent steps to prevent the discovery of the claims. The case could proceed if the plaintiff can demonstrate the company used deceptive means to hide the fact that it had underpaid gas royalties.
Chesapeake Energy Corporation
The plaintiffs in the Chesapeake Energy Corporation underpaid royalty lawsuit have alleged that Chesapeake deducted certain post-production costs from payments to them. These costs included gathering costs, third-party transportation costs, and line variance/fuel costs. These costs were deemed to be grossly inflated and well above market rates, according to the lawsuit. Because of these missteps, the plaintiffs are seeking compensatory and punitive damages, pre-judgment interest, and permanent injunctions against the company.
The settlement imposed on Chesapeake Energy Corporation will help the company settle with landowners in Pennsylvania and Texas. The corporation will be required to pay more than $12 million in compensation to these landowners, which is a significant sum. In addition to the payments, Chesapeake will also be ordered to pay about $3 million in attorney’s fees. The Pennsylvania AG’s lawsuit was slowed by bankruptcy. However, despite the settlement, the company continues to extract gas on land without paying the proper royalty rates.
Ovintiv
The oil and gas lease class action filed in Oklahoma claims that Ovintiv violated the state’s rules regarding the payment of royalties to lessees. Under Oklahoma’s laws, a lessee must own the minerals and operate the drilling operation. Ovintiv, however, deviated from this rule by not reporting the post-production costs. As a result, lessors received low royalties.
This case has received wide media coverage as more than thirty producers have faced similar allegations by the Department of Justice. The case involves the same lease language and could result in millions of dollars in underpaid royalties. In addition to extensive media coverage, Ovintiv vs. Underpaid Gas Royalties has also become a flashpoint in North Dakota politics. The state’s Attorney General has publicly stated that they will fight Ovintiv’s efforts to recover unpaid royalties.
Shell
The Shell underpaid gas royalties lawsuit was filed by Ralph Ross against the Shell Oil Company. Ross is an oil and gas attorney and understood the issues involved better than the typical lessor. Shell had been required to pay royalties to the Rosses on the gas produced on their land, which equaled one-sixteenth of its profits. But between 1994 and 1997, Shell was using a different method of calculating its royalty payments. This led to the underpayment, which Shell claimed was a simple accounting mistake.
The Supreme Court recently reversed the decision of the lower courts in the case. The court said that the fraudulent concealment doctrine did not toll the statute of limitations. This is because royalty owners must be aware of relevant publicly available information. Failure to do so can cause the claim to be barred. Therefore, the plaintiff should not lose his or her chance of obtaining a fair and just settlement. If you are unaware of the fact, it may not be worth filing the lawsuit.
Kerr-McGee
A federal jury has found that oil and gas producer Kerr-McGee underpaid seven million dollars in royalties on federal oil leases. The government had known that the company had an agreement with Texon to sell its oil at a lower rate, but Kerr-McGee continued to pay the company less than it should have. As a result, it was able to absorb the cost of marketing that had previously been covered by its oil-producing partners.
The plaintiffs in Kerr-McGee versus Underpaid Gas Royalties filed suit in April 2020, alleging that the drillers failed to pay them the rightful royalty amounts. The lawsuit alleges that the drillers had deducted payments from their customers’ royalty payments over six years to cover the costs of transporting oil to refineries. Despite this evidence, the case was dismissed without prejudice by the court in February. A judge ruled that the case was a contractual dispute between the drillers and the royalty holders.
Anadarko Petroleum
This Anadarko Petroleum underpaid gas royalties lawsuit claims that Anadarko underpaid its gas royalty payments to certain oil and natural gas producers. The plaintiff claims that Anadarko has failed to pay the gas royalties based on similar formulas that apply to the putative class members. Therefore, this case requires comparing the amounts received and due from Anadarko to the number of royalties that should have been paid.
In this case, the plaintiffs are landowners in the Hugoton gas field. Anadarko is accused of underpaying gas royalties required by the plaintiffs’ oil and natural gas leases. The plaintiffs’ lawsuit originally sought damages, declaratory and injunctive relief, as well as accounting. The case was settled in June 2009.
