Equinor SA, which until last fall was jointly developing a leasehold in the Eagle Ford Shale, is facing a lawsuit by royalty owners that accuse the Norwegian-based producer of manipulating numbers and engaging in questionable business practices.
The producer, formerly known as Statoil SA, has been working in the South Texas venture since 2010. Last November joint venture partner Repsol SA agreed to take over full operatorship, including Equinor’s 63% stake.
However, the Provost Umphrey Law Firm has filed a series of individual lawsuits in Harris County, TX, charging Equinor “and related oil and gas entities” with “systematically” short changing royalty owners in the Eagle Ford Shale. The law firm said it is representing more than 200 royalty owners.
"Equinor disregarded both express and implied provisions of its lease agreements with royalty owners and entered into sham transactions with its own sales and marketing companies in order to manipulate the price paid on oil and gas production since 2013," said lead counsel Bryan O. Blevins Jr. "These transactions, combined with runaway cost deductions, caused royalty owners to be left holding the short stick by a company that they trusted would pay them what they were rightfully owed."
Plaintiffs include Rayanne Regmund Chesser and Gloria Janssen, who previously sought class-action status against Repsol, which acquired the Eagle Ford properties in 2015 after buying Talisman Energy Inc. The partnership with Repsol included 4,000 royalty owners, 2,800 oil and gas leases covering 59,000 net acres and 494 producing wells.
Three years ago a jury in South Texas had awarded nearly $100 million in damages to Houston’s Matrix Petroleum LLC after ruling that Talisman, when it ran the Eagle Ford properties, violated a joint operating agreement and committed accounting fraud.
At the time, attorney John Kim of the The Kim Law Firm, which represented Matrix, said, "The simple fact was that Talisman failed to provide accurate accounting on volume and revenues for more than five years. It was not an oversight or an error in record-keeping. It was a conscious business decision that robbed Talisman's business partners of millions upon millions of dollars in its revenues from real property interests."
Provost Umphrey claims Equinor and predecessor Statoil “engaged in practices that violate not only the express and implied terms of royalty owner leases but also the Texas Natural Resources Code.” The lawsuits also allege that Equinor/Statoil and related entities committed fraud and conversion and engaged in a civil conspiracy to deprive royalty owners of their rightful payments.
"Our clients have been systematically and intentionally underpaid by Equinor/Statoil for their mineral rights, and our goal is to make sure that the appropriate parties are held accountable," Blevins said.