Hilcorp Interest on Late Oil and Gas Royalty Payments New Mexico Class Action

This class action against Hilcorp San Juan, LP alleges that the company does not pay its oil and gas royalties on time, and that it violates New Mexico’s Oil and Gas Proceeds Act by not then paying interest on the untimely royalties.

The class for this action is all non-excluded persons or entities who own royalty interests in New Mexico wells who (1) have received untimely payments from Hilcorp at any time since May 26, 2018 on oil, gas, and related hydrocarbons produced and sold by Hilcorp from New Mexico wells in which such non-excluded persons have a royalty interest and (2) on which payment Hilcorp has not paid such persons interest at the statutory rate of eighteen percent per annum.

The New Mexico Oil and Gas Proceeds Act has rules on payments to those who own royalty interests in oil, gas, and other hydrocarbons. The complaint claims that these royalties must be paid “within six months after the first day of the month following the date of the first sale from any well which produces oil, gas, or related hydrocarbons within the State of New Mexico.” This applies to the first sale from the well.

After this six-month period, payments must be made, the complaint says, “within 45 days of the end of the calendar month in which payment is received by the operator on its sale of oil, gas, and other hydrocarbons produced from wells in the State of New Mexico.” Operators like Hilcorp, who do not meet these deadlines and make late payments, the complaint alleges, must pay the royalty owners “statutory interest at a rate of eighteen percent per annum.”

The plaintiff in this case, White River Royalties, Inc., owns royalty interests in some Hilcorp oil or gas wells. The complaint alleges that Hilcorp has failed to make its payments to White River on time, and that it has also failed to pay the eighteen percent interest on the late royalties.

For example, the complaint alleges that Hilcorp produced and sold natural gas from the Carle 002 (Blance MV) San Juan, New Mexico well in September 2017, in which White River has a royalty interest. The complaint claims that this was not a first sale and that Hilcorp received payment for that natural gas before December 2017. But White River did not receive Hilcorp’s payment from this sale until December 2019, the complaint alleges. When Hilcorp finally did pay, the complaint claims, it did not add the eighteen percent interest that it was by then required to pay to White River.

Article Type: Lawsuit
Topic: Royalties
Tags: Late Payment Fees, Oil and gas, Royalties, Royalty Payments