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Royalty lawsuit close to settlement

Phillip Yatespyates@postindependent.comGlenwood Springs, CO Colorado

PARACHUTE, Colorado Williams Production RMT has reached a proposed partial settlement for a lawsuit that alleged the company didnt properly calculate royalty payments for hundreds of Garfield County mineral rights holders.Ninth Judicial District Judge Denise Lynch has given initial approval to the settlement, according to a newspaper notice published Sunday. Williams did not admit to any liability or to the legitimacy of claims against it in the settlement agreement, the notice said.The partial settlement comes from a 2006 lawsuit against Williams, which was filed by Grand Junction attorney Nathan Keever on behalf of Parachute residents Ivo, Sidney and Ruth Lindauer and Diamond Minerals, LLC. The lawsuit sought to obtain class action status for over 1,000 people or groups in Garfield County whove received royalty payments from Williams.Keever said the settlement agreement calls for Williams to come up with a preliminary allocation schedule by Jan.19, which will identify what Williams will have pay to potential members of the settlement agreement. Lynch will hold a hearing over the partial settlement on March 20 in Glenwood Springs.Two claims of the lawsuit still remain and will be argued at a later court date, Keever said. One claim is whether a operator can deduct expenses if the lease specifically provides that royalties will be paid on gross proceeds. The other claim is whether Williams properly deducted for third-party transportation of natural gas.They are important issues that affect other operators or can potentially affect other operators as well, depending on how they are handling their royalty accounting, Keever said. From a damages standpoint, they are large claims as well.A legal complaint filed against the company accused Williams of miscalculating royalty payments because it failed to fully account for proceeds that it received from the sale of gas and other products. In calculating royalty payments, Williams used a price lower than proceeds received from sale and lower than the actual value of gas, the complaint says, according to a previous Glenwood Springs Post Independent report. The complaint further stated that Williams excluded or undervalued proceeds from selling natural gas and excluded volumes of natural gas, hydrocarbons and other products.The case went to a formal mediation in April of 2007, but no settlement agreement was reached. However, the parties continued hold extensive discussions over the next 17 months. That led to an agreement to settle all but two distinct claims.Those two claims will also be discussed at the March 20 hearing, according to the legal notice.The issue of mineral rights holders battling natural gas operators in the county has been ongoing for several years. In 2005, Joan L. Savage, of Rifle, won a favorable Colorado Court of Appeals ruling in a similar claim against Williams. Savage said the company was not paying the appropriate amount of royalties on 110 gas wells on land for which she held the mineral rights. The claim was originally filed in 1998 against Barrett Resources, which merged with Williams. The Colorado Supreme Court declined to hear a Williams appeal of a lower courts decision that sided with Savage.William Clough a now deceased Garfield County rancher won a $4 million award from Williams in the Colorado Court of Appeals in 2004. He also believed the company hadnt paid him agreed-upon amounts of royalties. Information on the settlement can be found at http://www.fleeson.com.Contact Phillip Yates: 384-9117pyates@postindependent.comPost Independent, Glenwood Springs, Colorado CO


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