An Edmond, Oklahoma energy company, Wake Energy LLC has filed a breach of contract lawsuit in Wyoming federal court against Houston’s EOG Resources.
Wake Energy maintains that EOG has failed to pay royalty proceeds on time, as well as the accompanying interest from failing to meet those deadlines to those who are owed them reported the Wyoming Tribune-Eagle based in Cheyenne
The suit was filed last month in Wyoming alleging EOG Resources, the largest oil and gas operator in Laramie County. Wake Energy LLC is an Oklahoma-based company that acquires oil and gas interests nationwide.
The company argues EOG has violated the Wyoming Royalty Payment Act, which requires oil and gas operators to pay proceeds to everyone with interest in the operation within six months of an initial sale of oil or gas, or within 60 days after the month of subsequent sales.
Any delay beyond those timeframes means the operator or lessee must pay an additional 18% interest on the unpaid proceeds.
According to the plaintiffs, EOG has violated both aspects of the act, which was first enacted by the Wyoming Legislature in 1982 to help royalty interest owners be paid in a more timely manner.
“EOG has adopted a policy of requiring owners to first demand statutory interest before it will pay what is already owed under the statute,” states the lawsuit. “EOG considers this policy an efficient breach of the (Wyoming Royalty Payment Act), because it knows very few owners will actually demand the statutory interest owed.”
The lawsuit was also filed as a class-action complaint, with the plaintiffs stating “there are thousands of absent Class members entitled to interest on late payments made by EOG.”
“The Class is so numerous that joinder of all members is impracticable,” states the lawsuit. “EOG treated Plaintiff and the Class in the same way by failing to pay the required interest on untimely payments.”
For example, Wake Energy has interest in an oil well operated by EOG in Laramie County, but the proceeds owed from that well’s production in March 2019, at a total of roughly $470,000, weren’t remitted to Wake Energy until January 2020, according to court documents.
“And when EOG finally paid those proceeds owed to the Plaintiff, it did not include the 18% interest required by Wyoming statute,” states the lawsuit.
The class action lawsuit was brought by attorney Richard A. Erb Jr. and Bradford & Wilson on behalf of Wake Energy LLC. Counsel have not yet appeared for the defendant. The case is 2:20-cv-00183, Wake Energy LLC v. EOG Resources Inc.
Source: Wyoming Tribune-Eagle