Business News

Battle Royale

by Walter Pierce

In a fight over oil royalties, it's landowners 2, oil company 0. In a fight over oil royalties, it's landowners 2, oil company 0. By Walter Pierce

Friday, July 19, 2013

So far so good for four plaintiffs fighting an oil company over royalty payments on three wells in Acadia and Jeff Davis parishes. The state's 3rd Circuit Court of Appeal in an opinion issued in mid-July backed a Lafayette district judge's ruling in favor of the plaintiffs.

Joseph Freeman, Mabel Freeman, John Block and Sally Block sued Block T Operating over the Tyler, Texas-based company's decision to withhold royalty payments to the quartet.

The Freemans and Blocks originally signed an agreement with Kurios Oil & Gas for overriding royalty payments on the wells in late 2008. In March of 2010 Kurios assigned working- and net revenue interest in the wells to Block T. The latter company made royalty payments to the four for about six months, but began refusing the payments beginning in May 2011.

In seeking to have the case dismissed in Lafayette district court where the Blocks and Freemans filed suit, the company cited state public records law for denying payment, arguing the plaintiffs failed to file deeds on the wells until after Block T took assignment of the wells from Kurios.

15th Judicial District Judge Thomas Duplantier denied Block T's motion to dismiss the suit, ruling, ominously, that the "plaintiffs are entitled to all overriding royalties due to them through the current date, together with legal interest thereon, as required by law. The remaining issue regarding the bad faith of defendants in denying payment of such funds will be reserved for a later date."

Pending an appeal to the Louisiana Supreme Court, the case remains to be litigated in district court; the appellate ruling merely backs Judge Duplantier's refusal to toss the lawsuit. And even with two wins now under their collective belt, the Freemans and Blocks shouldn't start making vacation plans yet: a Lafayette attorney with experience arguing royalty cases points out that in one of the cases cited as precedent in the recent 3rd Circuit opinion - Cimarex Energy Co. v. Mauboules - the Louisiana Supreme Court just three years ago vacated a more than $6 million dollar judgment in favor of plaintiffs who sued an oil company over delinquent royalty payments - a judgment rendered in Lafayette district court and upheld by the 3rd Circuit.