Lawsuit Accuses Gas, Oil Companies of Fraud
A class-action lawsuit has been filed in U.S. District Court in
Wheeling alleging two companies engaged in fraud and breach of
contract.
The State Journal
21 October 2010
By Linda Harris, Ohio Valley Correspondent
Range Resources Appalachia LLC and Duncan Land & Energy Inc. have
been named in a class-action suit filed in U.S. District Court in
Wheeling charging them with fraud and breach of contract in their
dealings with landowners in the Mountain State.
Backwater Properties LLC and Vance River Terminal Inc. filed the
lawsuit. Both are Monongalia County companies that leased oil and gas
rights to Range Resources, which is headquartered in Fort Worth, Texas,
through Pittsburgh-based Duncan, a leasing facilitator. Between 500 and
1,000 West Virginians fall into the class, the lawsuit alleges.
The suit alleges Range conspired with Duncan to offer landowners
above-market bonuses and royalties subject to an approval period of
90-180 days. The complainants accuse the company of using the approval
period to gauge spot prices for oil and gas "to determine whether the
offers would preserve the desired profit margin" and voided any deals
wherein price drops would make it unprofitable for them to honor the
agreements.
According to the lawsuit, the signed leases discouraged competition and
prevented landowners from contracting with other companies, with the
built-in approval period allowing them to renegotiate contracts or
jettison them altogether if spot prices fell.
Range spokesman Matt Pitzarella, however, said the company's envoy made
no secret of the need to get management approval of any lease
agreement. Up to the point where Range management signed off on a
lease, he said property owners were and are legally entitled to
negotiate with other companies.
"All of our leases require management approval, it's written right on
the contract," he said. "There was late in 2008 a dramatic decline in
natural gas prices and because of that, coupled with geologic
conditions -- what we believe to be the quality of the (area) plus
geographic conditions -- we decided that some leases did not receive
final management approval. That included some in West Virginia. Those
folks were free to negotiate with other companies then, as they are
today. They could always negotiate with someone else because they
didn't have a final agreement."
He said Range determined geologic conditions and gas prices made
executing those leases "not in Range's interests."
"We believe we did everything within the bounds of the law," Pitzarella
said. "We communicated our actions at that time with residents. We let
them know if we weren't going to finalize or execute agreements. We
certainly wished them all the best in finding another company to lease
to. Another company might look at the property and make a different
determination then we did, and those people certainly could sign a
lease with them."
A spokesman for Duncan Land & Energy could not be reached.