EQT Corp. on Wednesday said it has reached a tentative settlement with West Virginia landowners to resolve a class action lawsuit that alleges the company wrongly deducted post-production costs from royalty payments.
The company said it has agreed to pay $53.5 million into a settlement fund that would be established to disburse payments to class participants with claims from 2009-2017.
The agreement would resolve a case pending in the U.S. District Court for the Northern District of West Virginia since 2013, Kay Co. LLC et al v. EQT Production Co. et al. It requires court approval, while a certain percentage of the class must also participate.
Under the settlement, EQT has agreed to stop deducting post-production costs, or those that are typically charged to cover marketing expenses, such as compression, dehydration and transmission. The company and class representatives also agreed that future royalty payments would be based on a “clearly defined” index pricing methodology.
Class participants could also elect to adopt the company’s standard lease pooling modification in return for a 2-18% increase in their royalty. Each class member would also have the right to opt out of the settlement with the nation’s largest natural gas producer.
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