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Devon Energy’s $28 Million Settlement Over Gas Royalties OK’d

June 17, 2021, 3:02 PM

Devon Energy Production Co. will pay $28 million to Texas well owners who say they were underpaid royalties after a federal court in the state granted final approval of a class action settlement and plan of allocation.

The settlement is fair and reasonable considering the complexity and duration of the case, and the “risks involved in establishing liability and damages,” according to the U.S. District Court for the Northern District of Texas. The plan of allocation is also fair and reasonable to the class, the court said Wednesday.

Class counsel was awarded about $9.3 million in attorneys’ fees, according to the ruling. The court also approved about $612,000 in litigation expenses and $80,000 to be divided evenly among the named plaintiffs.

Plaintiffs argued they were underpaid millions of dollars in royalties for processing gas extracted from wells at the Bridgeport Gas Processing Plant owned by Devon Energy’s affiliate, Devon Gas Services, between 2008 and 2014.

Devon Gas Services deducted 17.5% of the value of residue gas and natural gas liquids as a processing fee, the lawsuit says, which was improperly passed on to class members by reducing their royalty payments. Devon Energy could have obtained a higher price through a lower processing fee, but it “failed to do so in order to secretly create a lucrative profit center,” according to the complaint.

Devon Energy has denied any wrongdoing, the court said.

Judge Ed Kinkeade issued the final approval.

Wick Phillips, Seidel Law Firm PC, Kessler Topaz Meltzer & Check LLP, and Mattingly & Roselius PLLC represents the class as class counsel. Hedrick Kring PLLC represents the class as local counsel. Thompson & Knight LLP represents Devon.

The case is Seeligson v. Devon Energy Prod. Co., N.D. Tex., No. 3:16-cv-00082, 6/16/21.

To contact the reporter on this story: Maya Earls in Washington at mearls@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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