Apache Corp. filed a lawsuit last week against Dynegy Midstream Services LP and Versado Gas Processors LLC in the district court of Harris County, TX, claiming that the companies “engaged in bad faith” and broke their contractual obligations to pay for natural gas and natural gas liquids.

In the lawsuit, Apache alleges that Dynegy and Versado — a joint venture between Dynegy and ChevronTexaco that processes gas in New Mexico and West Texas — “wrongfully sought” to keep for themselves millions of dollars that belong to Apache. The suit stems from agreements between the three companies, in which Apache agreed to sell and deliver gas from wells located on leases in New Mexico and West Texas to Dynegy and Versado, which in turn agreed to receive, process and pay Apache for the gas.

In question are some 20 different contracts for which Apache says it was not compensated. Apache said it performed every one of its obligations under the contracts, but Dynegy and Versado have “failed or refused to pay the agreed amounts for all the Apache gas delivered.”

Dynegy has denied all of Apache’s claims. “We have paid and will continue to pay Apache for gas delivered to us and processed at Versado facilities,” said John Sousa, a Dynegy spokesman. “We deny Apache’s allegations that we acted in bad faith and breached our contractual obligations, and we will vigorously defend ourselves against this action filed by Apache.”

Among other things, Apache’s alleges that Dynegy and Versado did the following:

In addition, Apache said the companies attempted to cover up their deeds. “Dynegy and Versado added insult to injury by trying to cover up their wrongful conduct by breaching audit clauses in their contracts with Apache,” the Houston-based producer said in its lawsuit. “Despite Apache’s repeated and contractually proper requests for audit data, Dynegy and Versado to this day have refused to produce a substantial volume of their relevant books and records.”

Apache said it is seeking both Dynegy’s and Versado’s withheld audit data and $3.9 million in damages. The company said that even the limited information provided by the companies illustrates that they had underpaid by millions of dollars. Apache added that it gave the defendants written notice of certain amounts that were owed under the contracts, but Dynegy and Versado refused to pay.

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