A North Texas federal court of appeals has given Oklahoma City’s Devon Energy something of a victory in defending itself from lawsuits filed by East Texas royalty owners.
The 5th U.S. Circuit Court of Appeals, which covers cases in Texas, Louisiana and Mississippi, reversed a lower court’s ruling that certified a class of natural gas royalty owners who accused Devon Energy Production LP of cheating them on royalty payments. In reversing the lower court ruling, the appeals court said the district court had failed to consider the statute of limitations and other issues.
The royalty owners were those in the Barnett Shale gas field where Devon Energy Production has thousands of wells in what’s known as the Bridgeport Rich Gathering System. The suit accused Devon of “sham” sales of the raw and unprocessed gas to its corporate affiliate Devon Gas Services, LP.
Devon, according to the suit sold the gas “at a price artificially reduced by an unreasonably high processing fee” which was passed on to the royalty owners.
In this week’s ruling, the appeals court ordered the lower court to reconsider Devon’s claims that the statute of limitations had not been considered.