What is this lawsuit about?
A class action lawsuit was filed against Bullseye Energy, Inc., CEP Mid-Continent, LLC, and others, seeking monetary damages and other applicable relief associated with the alleged underpayment of royalties and related claims (the "Lawsuit"). The parties have agreed to resolve the Lawsuit through a settlement.
The Lawsuit is currently pending in the United States District Court for the Northern District of Oklahoma located in Tulsa, Oklahoma, Case No. 12-cv-411-TCK (PJC), consolidated with Case No. 15-cv-455-TCK (PJC) (the "Court"). The Lawsuit was initiated by individual royalty owners acting on behalf of themselves and other similarly situated royalty owners (the "Class Representatives") against the Defendants, seeking monetary damages and other applicable relief associated with the alleged underpayment of royalties and related claims. The Court has not ruled on the class certification or the merits of the claims asserted by the Class Representatives, or the affirmative defenses asserted by the Defendants. Instead, the Class Representatives and the Defendants have entered into a Settlement Agreement.
Who is included?
Subject to certain exceptions, the Settlement Class is specifically defined as follows:
All persons or entities who own or owned minerals in the state of Oklahoma subject to an oil and gas lease or (b) who are or were unleased mineral owners who have elected under the Oklahoma Corporation Commission Forced Pooling Order to take the bonus/royalty option, covering the released period, wherein (1) they received royalty on the sale and disposition of gas attributable to Bullseye Energy, Inc.’s and CEP Mid-Continent, LLC’s interests in well(s) located in the counties of Nowata or Washington; and (2) their royalty payments were reduced as a result of the reduction of production volumes and/or production proceeds attributable to marketing, gathering, compressing, dehydrating, treating, processing or transporting of hydrocarbons produced from well(s) located in the counties of Nowata or Washington.
What are the potential benefits of the Settlement?
Some of the primary terms of the Settlement Agreement, which the court is being asked to approve, are as follows:
Bullseye and CEP will pay the settlement amount of $700,000.00 (seven hundred thousand dollars) as consideration for all Class Members releasing the Released Claims against the Released Parties and entering into a covenant not to sue (all as defined in the Settlement Agreement). In addition, Bullseye has agreed to calculate royalties payable to Class Members in the future, for a period of ten (10) years, based upon a substantial reduction in the fuel, compression and gathering fees previously being deducted when arriving at the price upon which royalties had been paid in the past.