HELENA (AP) - Devon Energy Corp., a major natural gas producer in Montana, cheated landowners and others out of millions of dollars in royalty payments, a landowners' group contends in a federal lawsuit filed here.
Brian Engel, a spokesman for Devon Energy, said Wednesday the company had not yet seen the lawsuit, which was filed late Tuesday, but told the Great Falls Tribune that such disputes over royalty payments are becoming more common across the country.
The lawsuit, filed by the Montana Land and Mineral Owners Association and others, seeks class-action status on behalf of all Montana natural gas royalty owners doing business with the Oklahoma-based Devon Energy. Some of the plaintiffs are farmers and ranchers with property in or near Belt, Big Sandy, Havre and Malta.
It alleges that the company, among other things, has improperly deducted certain expenses before computing the price on which its royalty payments are based, and has underreported the amount of gas produced. In all, the lawsuit alleges, the company owes some $5 million to mineral rights owners. The suit also seeks punitive damages.
''Defendants continue to underpay the individual plaintiffs and class members, and continue to make misstatements on each royalty statement they transmit to the plaintiffs and class members,'' the lawsuit contends.
Royalty owners own the mineral rights to the natural gas, and companies that extract it have agreements to pay the owners a royalty on the natural gas that is removed - usually 12.5 percent of the market price for the gas.
Devon Energy, headquartered in Oklahoma City, is one of the largest natural gas producers in the country, with 4,000 employees. It reported $563 million in net profits for the first three months of this year.
Engel said Devon ''places a high value on our relationship with all of our royalty owners'' and is committed to the ''highest level of integrity and professional behavior in documenting our businesses.''
John Mudd, a Missoula lawyer representing the plaintiffs, said landowners hired his firm and several others earlier this year to investigate the royalty payments Devon Energy reported.
He said the payments often lacked detail on special charges.
If U.S. District Judge Donald Molloy approves the lawsuit for class-action status, it could represent ''thousands of royalty interest owners throughout the state of Montana,'' the complaint said.
The Montana Legislature in March passed a law requiring oil and gas companies to itemize all charges assessed against a royalty owner, but the law doesn't take effect until July 2006.