It’s often difficult for those who lease rights to gas and oil companies to know what’s being taken out of their land, what is done to it, and how much they should be paid for the final product. The complaint for this class action claims that OXY USA, Inc. is underpaying royalties to the plaintiff.
The class for this action is all those who own royalties on OXY-operated wells (or non-operated wells where OXY marketed its share and paid royalty owners directly) in Beaver Country or the eastern half of Texas County, in Oklahoma, specifically Ranges 15E, 16E, 17E, 18E, or 19E, between April 1, 2009 to April 1, 2014.
Laws about oil and gas wells set out uniform ways of figuring royalties due to those who lease the land on which the wells are located. These laws require that the lessees bear all the costs of midstream processes that put the products in marketable condition. Only after the product is in marketable condition, the complaint says, does a royalty owner have to pay a share in any additional processes required to enhance the value of the product.
Plaintiff Tony R. Whisenant has leased land to OXY for gas exploration and production. The lease requires that OXY pay him for “gas of whatever nature or kind (with all of its constituents) produced and sold or used off the leased premises, or used in the manufacture of products therefrom, 3/16 of the gross proceeds received for the gas sold, used off the premises, or in the manufacture of products therefrom … said payments to be made monthly.
Unfortunately, oil and gas companies have not been known for their transparency or promptness in paying such fees. According to the complaint, OXY considers its accounting processes to be confidential, so that lessors like Whisenant cannot properly check the amounts they are paid.
The complaint claims that OXY underpaid Whisenant and other lessors in a number of ways on the gas and other constituents taken out of his land.
- Helium: Deduction of midstream processing costs and payment of less than the Grade A price.
- Drip concentrate: No payment of royalties.
- Natural Gas Liquids (NGLs): Deduction of processing costs and payment of incorrect royalties.
- Residue Gas: Deductions for midstream processing; payment of royalties on net rather than gross price; royalties figured on lower than the actual volumes.
- Affiliate Sales: Sales to an affiliate at lower prices than originally negotiated with other buyers, thus reducing the price of royalties paid.
The complaint claims breaches of leases and fiduciary duty, among other things.
Article Type: LawsuitTopic: Consumer
Most Recent Case Event
OXY USA Unfair Calculation of Oklahoma Gas Royalties Complaint
August 23, 2018
It’s often difficult for those who lease rights to gas and oil companies to know what’s being taken out of their land, what is done to it, and how much they should be paid for the final product. The complaint for this class action claims that OXY USA, Inc. is underpaying royalties to the plaintiff.
oxy_unpaid_roylaty_complaint.pdfCase Event History
OXY USA Unfair Calculation of Oklahoma Gas Royalties Complaint
August 23, 2018
It’s often difficult for those who lease rights to gas and oil companies to know what’s being taken out of their land, what is done to it, and how much they should be paid for the final product. The complaint for this class action claims that OXY USA, Inc. is underpaying royalties to the plaintiff.
oxy_unpaid_roylaty_complaint.pdf