Ordinary landowners sometimes lease their land to companies that extract oil, gas, or minerals from it. Unfortunately, these lessors do not have much insight into the records or billing processes of the extraction companies involved. The complaint for this class action alleges that XTO Energy, Inc. makes improper deductions from the natural gas royalties it owes to landowners in the Fayetteville Shale area of Arkansas.
The class for this action is all persons who (1) have entered into oil or gas leases now held by XTO Energy (2) that cover land in the Fayetteville Shale gas formation in Arkansas from which natural gas is being obtained, (3) where the leases contain provisions forbidding XTO from deducting from the lessors’ royalty payments the costs of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting, and marketing the gas, and (4) from whose royalty payment XTO is nevertheless deducting these costs.
For example, Jerry McCarty, one of the plaintiffs in this suit, leased his land in Cleburne County, Arkansas in December 2009 to Chesapeake, LLC for the exploration and drilling of oil, gas, and other hydrocarbons.
The original lease required that Chesapeake pay McCarty, the Lessor, “1/5thof the net proceeds realized by the Lessee for all gas (including all substances contained in such gas) produced from the leased premises and sold by Lessee, less Lessor’s proportionate share of taxes and all costs incurred by Lessee in delivering, processing, compressing or otherwise making such gas or other substance merchantable…”
However, Chesapeake added an Exhibit A to the lease that specifically modifies these terms. The complaint quotes it as saying, “notwithstanding any language herein to the contrary, all oil gas or other proceeds accruing to the Lessor under this lease or by state law shall be without deduction, directly or indirectly, for the cost of producing, gathering, storing, separating, treating dehydrating, compressing, transporting, and marketing the oil, gas and other products produced hereunder to transform the product into marketable form…”
At some point, the contract was transferred to XTO, and XTO made the payments to McCarty for the gas taken out of his land.
Prior to January 2016, the complaint says, no deductions were made for costs, such as production gathering, storing, and so on. However, beginning with payments in January 2016, XTO began to deduct these expenses from the royalties paid to McCarty.
The other plaintiffs have similar stories.
Plaintiffs’ counsel notified XTO that it was violating both the leases and the requirements of the Arkansas Code pertaining to such leases. However, XTO refuses to pay.
The complaint claims breaches of contract.
Article Type: LawsuitTopic: Consumer
Most Recent Case Event
XTO Energy Deductions from Gas Lease Payments Complaint
April 19, 2019
Ordinary landowners sometimes lease their land to companies that extract oil, gas, or minerals from it. Unfortunately, these lessors do not have much insight into the records or billing processes of the extraction companies involved. The complaint for this class action alleges that XTO Energy, Inc. makes improper deductions from the natural gas royalties it owes to landowners in the Fayetteville Shale area of Arkansas.
xto_energy_deductions_on_leases_compl.pdfCase Event History
XTO Energy Deductions from Gas Lease Payments Complaint
April 19, 2019
Ordinary landowners sometimes lease their land to companies that extract oil, gas, or minerals from it. Unfortunately, these lessors do not have much insight into the records or billing processes of the extraction companies involved. The complaint for this class action alleges that XTO Energy, Inc. makes improper deductions from the natural gas royalties it owes to landowners in the Fayetteville Shale area of Arkansas.
xto_energy_deductions_on_leases_compl.pdf