Merit Energy No Interest with Late Payments Oklahoma Class Action

Merit Energy Company, LLC produces oil, gas, and other constituent products from oil and gas properties, for which it pays royalties to those with interest in these properties. Oklahoma’s Production Revenue Standards Act (PRSA) requires that when those payments are made beyond the time period in which they are due, oil and gas producers must automatically pay interest on the unpaid portions. But the complaint for this class action alleges that Merit does not do this unless the payees specifically ask for it.

The class for this action is all persons or entities who (1) received late payments under the PRSA from Merit (or its designee) for oil and gas proceeds from Oklahoma wells, or whose proceeds were sent as unclaimed property to a government entity by Merit, and (2) whose proceeds did not include the statutory interest required by the PRSA.

According to the complaint Merit operates the Eaves 3, Eaves 4, Eaves 5, Eaves Unit 2, Robert Eaves 1, and Walter Eaves Unit 1 wells, which are located in Latimer County, Oklahoma, in which the plaintiff for this class action own interests.

The complaint quotes the PRSA as saying, “Proceeds from the sale of oil or gas production from an oil or gas well shall be paid to persons legally entitled thereto … commencing not later than six (6) months after the date of first sale, and … thereafter not later than the last day of the second succeeding month after the end of the month within which such production is sold.”

This defines the deadline for the payments, after which they will be considered to be late. If the payment is late, the complaint alleges, “the holder automatically owes interest on the late payment.” The complaint cites the findings of two earlier court cases to say that, “No notice or demand [is] required before an owner is entitled to statutory interest.”

However, “upon information and belief,” the complaint claims that Merit does not pay this interest automatically, but only if the owners demand it.

As an example, the complaint refers to a payment for October 2021 production from the wells that Merit paid on February 20, 2022, a date past the payment deadline set by the PRSA. The complaint says Merit did not include interest in the payment amount.

The sole count in this case is the breach of the statutory obligation to pay interest on the late payment.

Article Type: Lawsuit
Topic: Royalties
Tags: Refusal to Pay Interest, Royalties, Royalty Payments