EQT Agrees to $53 Million Settlement for Improper Gas Royalty Payments

Feb 13, 2019

Natural gas driller EQT Corporation has agreed to settle a class action lawsuit brought by thousands of West Virginia gas owners.

 

In the preliminary settlement agreement approved today, the company said it will pay $53.5 million for failing to make proper gas royalty payments between 2009 and 2017.

The class action lawsuit, Kay Company, LLC, et al. v. EQT Production Company, et al., was filed in 2013. More than 10,000 West Virginia gas owners who had entered into agreements with EQT joined the suit. They argued the company, which is the second largest gas producer in the state, improperly reduced royalties owed by taking unnecessary deductions.

 

Participants said EQT should not have subtracted money from royalty payments for activities taken "post-production" including deducting the cost of transporting and processing gas.

 

EQT had argued royalty payments were fair and said deducting “post-production” costs was routine.

Under the settlement agreement, the company said it will stop the practice "on leases determined by the court to not permit deductions," according to a press release by the company.

In the release, EQT characterized the settlement as a way to win back the confidence of West Virginia residents and community leaders.

 

"This was an opportunity to turn over a new leaf in our relationship with our West Virginia leaseholders and this mutually beneficial agreement demonstrates our renewed commitment to the state of West Virginia," stated CEO Robert McNally.

 

Reporting from the Charleston-Gazette Mail and ProPublica show the company and other drillers in the state have litigious track record related to royalty payments.

 

EQT is also suing to gut a 1982 royalty law that was meant to boost royalty payments to gas owners.

 

Individuals and companies that produced and/or sold gas to EQT between December 8, 2008 through December 31, 2017 may be eligible for settlement benefits under the deal.

The deal still needs final approval from a court. A hearing is scheduled for July 11, 2019.