Exxon Sued by Whisenhunt over Gas Royalties

by Arkansas Business Staff  on Monday, Dec. 16, 2013 12:00 am  

An investment arm of the Little Rock commercial developer Joe Whisenhunt is hauling Exxon Mobil Corp., its subsidiary XTO Energy and other firms into court for allegedly shortchanging him on natural gas royalties.

The amount Whisenhunt Investments LLC and other family entities said they are owed?

$6.4 million.

Whisenhunt said in a lawsuit filed in U.S. District Court in Little Rock that he started entering into oil and gas lease agreements in 2005 for the development of natural gas wells on his 4,000-acre cattle ranch at Bee Branch in Van Buren County.

Whisenhunt said he was entitled to a 40 percent royalty payment on production from each well on leased mineral acres with no deductions other than severance taxes.

Whisenhunt originally leased the mineral rights to Petrohawk Energy Corp. of Houston, but then Petrohawk sold its Arkansas interests to XTO in October 2010. Starting in February 2011, Whisenhunt alleges, Exxon/XTO has consistently paid less than required by the terms of the leases.

“The deficiency in royalty payments is the result of concealed deductions from the sale of gas by Exxon/XTO of amounts for gathering, storing, …. delivering and marketing the production of the wells.”

The other plaintiffs include Whisenhunt’s daughter, Kari L. Whis-enhunt, and her husband, Douglas S. Robertson. The couple acquired property in Van Buren County in their own names or through HMR LLC, the lawsuit said.

Joe Whisenhunt accused XTO of “fraudulently evading the terms of the leases by creating a sham or bogus price upon which” Whisenhunt’s royalties were calculated.

Whisenhunt said XTO has refused to pay him the balance and hasn’t provided him with the documentation requested.

Whisenhunt is seeking the money Whisenhunt Investments is owed plus other unspecified amounts of damages.

KCS Resources LLC of Houston, the parent company of Petrohawk, is a co-defendant. Those firms have responded by denying the allegations of wrongdoing.

Robert Honea of Fort Smith, an attorney for Exxon/XTO, wasn’t immediately available for comment.

 

 

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