The Kansas Supreme Court has upheld a $33 million settlement of a class action brought against Anadarko Petroleum Corp. and previously approved by a lower court, overturning an appeal by one plaintiff who said the agreement was not fair.
In a decision issued Friday in Coulter v. Anadarko Petroleum Corp., the court found that appellant Stan R. Boles, a member of the original settlement class of more than 6,000 natural gas leaseholders, had failed to demonstrate that the going forward provisions of the settlement dealing with future royalty calculations modified terms of existing oil and gas leases.
Boles’ argument that a district court “violated the well established rule of contract construction that precludes a court from altering the contract’s terms…is unavailing for a number of reasons,” according to the court.
The case originated in 1998, when royalty owners entitled to receive a share of the production in the Hugoton gas field in southwest Kansas brought a class action case against Anadarko, claiming that the company had underpaid royalties required by the plaintiffs’ oil and gas leases. Plaintiffs argued that Anadarko should pay royalties on both hydrocarbons and nonhydrocarbons; Anadarko stated that it had been paying royalties on the total heating value of the gas stream as it left the wellhead.
The case was tried in 2002 and reargued in 2006 before being settled in June 2009. Key terms of the settlement included Anadarko’s agreement to pay $33 million in damages for alleged past underpayment of royalties and going forward provisions dictating how the company would calculate future royalties on both hydrocarbon and nonhydrocarbon components of the gas stream.
Boles appealed a district court’s approval of the settlement, claiming that the lawsuit was actually worth $149 million.
Anadarko and the plaintiff class in the case had urged the Kansas Supreme Court to affirm the district court’s approval of the settlement.
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