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The Duncan Group LLC alleges Cimarex Energy Group breached duty in gas leases

By Noddy A. Fernandez | Feb 16, 2018

OKLAHOMA CITY (Legal Newsline) – An Oklahoma limited liability company with royalty interests in wells in the state alleges a well operator took improper midstream service cost deductions or nonpayment of royalties on natural gas wells.

The Duncan Group LLC, on behalf of itself and all others similarly situated, filed a complaint on Feb. 8 in the U.S. District Court for the Western District of Oklahoma against Cimarex Energy Co. alleging breach of the implied duty to market in the lease.

According to the complaint, the plaintiffs allege that they and the class entered into written, fully executed, oil and gas leases with defendant and performed their terms and obligations under the leases. The plaintiff claims the defendant "uses 'work back' or 'netback' pricing as the methodology to pay royalty owners, but does not deduct from royalties for gathering, compression, dehydration or treatment, or the fuel used for those activities."

The plaintiffs hold Cimarex Energy Co. responsible because the defendant allegedly underpaid by taking improper midstream service cost deductions or nonpayment of royalties on natural gas and/or constituents of the gas stream produced from wells in Oklahoma.

The plaintiff requests a trial by jury and seek award of actual damages, costs of suit, expenses and granting such other relief as the court may deem just, equitable and proper. It is represented by Rex A. Sharp in Prairie Village, Kansas.

U.S. District Court for the Western District of Oklahoma case number 5:18-cv-00123-SLP

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