Range Resources sets aside $35 million for Oklahoma royalty lawsuit

Range Resources sets aside $35 million for Oklahoma royalty lawsuit by Jim Fuquay, April 25, 2013
A class-action lawsuit in Oklahoma that seeks $160 million in alleged royalty underpayments from Range Resources led the Fort Worth-based oil and gas producer to book $35 million in potential expenses during the first quarter, according to a Securities and Exchange Commission disclosure today. “While we believe we have strong defenses to the claims made in this lawsuit,” Range said in its filing, it concluded that amount was appropriate  “given our evaluation of the law in Oklahoma, the outcomes in similar litigation and our assessment of the current status of the litigation.” Range also said it has appealed a Feb. 19 court ruling certifying a class. Deductions for post-production expenses “by third parties who transport and process natural gas production” form the basis of the suit, the company said in the filing. Range said that while it believes that “current case law in Oklahoma … allows operators to deduct value-enhancing costs for treating, compression and other post-production expenses incurred to increase the value of a marketable product,” the extent of the deductions could be something a judge or jury must determine. Range generally sells its Oklahoma natural gas production to third parties “which, in many cases, do transport and process the gas,” it said. Range Resources-Midcontinent, the subsidiary involved, Range said, “has substantially complied with its royalty payment obligations under its leases and we therefore intend to vigorously defend this litigation.”