October 2018
HOUSTON – The Lanier Law Firm has reached a $221 million settlement on behalf of a group of Oklahoma gas royalty owners who claimed that energy giant BP PLC made improper deductions of processing costs and other services from their natural gas royalty payments. The lawsuit further claimed that the company had not paid proper royalties on other products produced from the wells, such as helium and heavy hydrocarbons known as condensate.
The settlement agreement includes $147 million in cash, as well as policy changes that could result in tens of millions in additional royalties to the owners, based on past and future production.
The Lanier Law Firm founder W. Mark Lanier and firm attorney Reagan E. Bradford represented lead plaintiff John Cecil in the lawsuit, originally filed in September of 2016 in the U.S. District Court for the Eastern District of Oklahoma. The firm represented the class along with attorney Rex A. Sharp of Prairie Village, Kansas. The class, which was preliminarily approved in September 2018, includes thousands of royalty owners.
“This is an important case that shines a bright light on the corporate behavior and financial games that have shortchanged these owners for far too long,” says Mr. Lanier. “These owners simply wanted payments that were fair and based on the terms of the contracts they held. We hope this deal sparks energy companies to review and properly calculate royalty payments, and brings about greater scrutiny by owners and regulators into these practices.”
According to the filing, BP America Production Co. operated a series of natural gas wells and paid royalties to the group of owners for more than 15 years. However, the BP subsidiary allegedly created “sales” in the noncommercial market that pushed back the start date for when royalty payments should have been made.
Among other claims, Mr. Cecil sought damages based on BP’s alleged breach of lease, breach of fiduciary duty and fraud. The lawsuit claimed BP had quietly settling similar claims with individual royalty owners, enabling the company to continue making improper deductions from other royalty owners.
The case is Cecil v. BP America Production Co., No. 6:16-CV-00410.