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NM jury rules gas royalty owners are owed millions

Federal jurors have awarded nearly $10 million to San Juan Basin royalty owners who contended BP America Production failed to pay adequate natural gas royalties.

The Albuquerque Journal reported in a copyright story that the verdict set compensatory damages at $9.74 million.

Jurors ruled last week that Steven Abraham and the class of royalty owners who filed the lawsuit proved BP did not pay royalties "on a value consistent with the market value of the gas at the well."

A BP spokesman in Houston, Daren Beaudo, told The Associated Press on Monday, "We are disappointed in the jury' s decision and will have to evaluate what our next steps will be."

BP attorneys argued in court documents that those filing the lawsuit had not produced any evidence to show why the company' s payments were not consistent with the market value of unprocessed gas at the well. The claims concerned natural gas processed at the New Blanco Plant from about 8,000 wells in northern New Mexico' s San Juan and Rio Arriba counties since 2007.

Royalty owners contended BP was not entitled to deduct processing costs before paying royalties because the company had to process the natural gas to make it marketable. Santa Fe attorney Gene Gallegos, who filed the lawsuit in 2009, said BP was charging a 25 percent processing fee. "They hide it on the statements to the royalty owners," he said.

Royalty owners typically have received checks ranging from $10 a month to thousands of dollars a month, with the average royalty check totaling $100 to $200.

According to court documents, 4,000 members of the class action will share in the verdict. Gallegos said they come from all over the United States.

It' s too soon to say how much an average class member will get, he said.

The lawsuit originally also sought punitive damages, but U.S. Magistrate Judge Daniel Schneider dismissed that claim.

Source: Albuquerque Journal

04/05/2011

 

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