Cases around oil leases usually center on payment of less than the amount actually owed or a failure to pay interest on royalties paid late. This one alleges the Marathon Oil Company has not paid a required share of the oil produced to those who own the leased property as well as the taking of improper deductions in calculating royalties.
The class for this action is all persons to whom Marathon has paid royalties on oil produced in North Dakota pursuant to leases or overriding royalty agreements that also require that Marathon deliver to the credit of the lessee “free of cost, in the pipe line to which lessee may connect wells on said land, the equal of [a certain percentage] of oil produced and saved from the leased premises.”
In November 2009, Robert Arnson entered into an oil and gas lease with Kasmer & Aafedt Oil, Inc., making him the lessor for land he owned in North Dakota. The following month, Marathon acquired the lessee’s interest from Kasmer.
In 2012, Arnson assigned his interests to the limited liability company Robert and Lori Arnson, LLC.
The complaint alleges that the Arnson lease contains a provision for an oil royalty and quotes it as saying, “In consideration of the premises, the said Lessee covenants and agrees: 1st To deliver to the credit of Lessor, free of cost, in the pipe line to which Lessee may connect wells on said land, the equivalent 3/16TH (THREE SIXTEENTH) part of all oil produced and saved from the leased premises.”
While Marathon has produced oil from the Arnson premises, and paid royalties on it, the complaint alleges, it has not delivered the promised oil portion.
In addition, the complaint alleges Marathon has made incorrect calculations of the royalties due on the Arnson lease, by improperly deducting from the sale price costs related to transporting the oil from the well to and through a pipeline or related to transporting the oil to a delivery point where it is sold. The complaint also claims, “on information and belief,” that Marathon has also deducted other costs that are not permitted. These costs are represented on the royalty statements as “PTPC—Pipeline/Transporter/Purchasing Costs.”
According to the complaint, “Marathon’s deduction of the above-referenced costs in its calculation of royalties paid to [the Arnson company] on oil sales is not permitted under the oil royalty provision” in the lease, and “Marathon has materially breached its contractual obligations to [the Arnson company] under the Arnson lease by taking such deductions in its calculation and payment of oil royalties to [the Arnson company].
The result, the complaint says, is that Marathon “has materially breached its contractual obligations” to the Arnson company and other, similar lessors.
The complaint alleges breach of contract and asks for declaratory judgment.
Article Type: LawsuitTopic: Royalties
Most Recent Case Event
Marathon Oil Delivery of Royalties on Leases North Dakota Complaint
March 26, 2021
Cases around oil leases usually center on payment of less than the amount actually owed or a failure to pay interest on royalties paid late. This one alleges the Marathon Oil Company has not paid a required share of the oil produced to those who own the leased property as well as the taking of improper deductions in calculating royalties.
Marathon Oil Delivery of Royalties on Leases North Dakota ComplaintCase Event History
Marathon Oil Delivery of Royalties on Leases North Dakota Complaint
March 26, 2021
Cases around oil leases usually center on payment of less than the amount actually owed or a failure to pay interest on royalties paid late. This one alleges the Marathon Oil Company has not paid a required share of the oil produced to those who own the leased property as well as the taking of improper deductions in calculating royalties.
Marathon Oil Delivery of Royalties on Leases North Dakota Complaint