Ruling denies summary judgment request by energy companies, allows lawsuits to move toward trial
A Tarrant County judge has rejected efforts by Chesapeake Exploration and Total E&P USA to dismiss claims in multidistrict litigation (MDL) filed by North Texas mineral interest owners over “sham” transactions associated with royalty payment calculations, clearing the way for the “sham” transactions claim to proceed.
Attorneys Daniel H. Charest and Spencer Cox of Dallas, of Burns Charest LLP, and co-liaison counsel James Key orchestrated the successful defense to the oil companies’ summary judgment motion. On June 5, 2018, Tarrant County District Court Judge Dana Womack denied the motions, which allow the claim to move forward.
In the lawsuit, mineral owners in the Barnett Shale formation in North Texas argue that the wellhead sale of gas between Chesapeake and Total affiliates should be disregarded when calculating royalties because the practice qualifies as a “sham” transaction under Texas law. The court’s ruling rejects legal challenges by Chesapeake and Total and ensures that Texas juries will hear evidence and decide whether the oil and gas operators used affiliate transactions to avoid contractual obligations to pay the full amount of royalties.