Wake Energy takes on Devon in a fight over 2021 winter storm natural gas prices

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Two years after the 2021 Winter Storm Uri devastated Oklahoma and Texas with power outages and caused natural gas prices to soar to historic levels, a lawsuit is being played out in Oklahoma City federal court involving one of the state’s major energy firms.

Yes, the historic gas prices are at the root of the lawsuit, just as they were in the rate hike requests sought and won by some of Oklahoma’s major utilities before the Oklahoma Corporation Commission.

In this case, a small energy company, Wake Energy, is taking on a giant—Devon Energy.

Devon Energy was sued by Wake Energy LLC and Wake Operating LLC,  Edmond-based firms that own oil and natural-gas
interests in some of the wells produced by Devon. Wake contends that Devon failed to pay the proportionate share of the increased gas prices in the royalties Devon owed to the oil and natural gas interest owners.

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Wake also accused Devon of entering into various contractual arrangements in order to conceal the actual price and profits Devon was receiving from its natural gas sales after the winter storm. It claimed Devon underpaid or “defrauded” the company and other oil and natural gas interest owners.

Within the past week, Oklahoma City U.S. District Court Judge Patrick R. Wyrick ruled against Wake as it pressed ahead seeking some of the contractual information that Devon maintained was confidential and should remain under seal rather than being made a public record in the court.

Wake sought Sales Data that Devon marked as confidential and Devon filed a request for a protective order regarding the information. As the court ruling indicated, Wake did not challenge the classification upon receipt of the information and in his June 23 decision, Judge Wyrick determined the Sales Data “is confidential and is protected by the Protective Order and Wake violated the Protective Order by placing the unredacted unsealed Sales Data in the public record.”

The judge ruled that subpoenas containing information taken from the data should “be permanently sealed for this stage of the proceeding.”

Wake argued there was a “broad public right of access to all judicial records and that Devon should not be allowed to force Wake to litigate “in the dark”.”

The subpoenas in question focused on KPMG, Devon Energy Corporation’s external auditor. Devon argued the documents sought by the subpoenas fell within Oklahoma’s accountant-client privilege: communications and information related to KPMG’s accounting services and advice to Devon Energy Corporation.

The judge agreed with Devon, ruling that the state’s accountant-client-privilege statute prevents Wake from subpoenaing the accountant for information obtained from its client.

Wyrick ruled  for Devon, explaining there is no public right of access to unfiled discovery.

“In sum, Wake blatantly violated the agreed Protective Order by placing confidential information into the public record without redaction or seal. Devon is entitled to protection of its proprietary information. For these reasons, the Court permanently seals the
subpoenas,” ordered Judge Wyrick.

He granted Devon’s motion to permanently seal the subpoenas and quashed the subpoena issued to KPMG.

The case is listed as: Case No. CIV-21-00352-PRW.