Ohio Oil & Gas Royalty Class Action Lawsuit

In October 2016, our firms filed a lawsuit on behalf of Ohio lessor Cunningham Property Management Trust against Ascent Resources – Utica, LLC, accusing Ascent of improperly deducting inflated post-production expenses from mineral owners’ royalty payments.  Later, the firms filed an August 2019 lawsuit on behalf of Ohio lessors, Brian and Cynthia Eaton, against Ascent, accusing the oil and gas operator of improperly taking post-production expenses from royalty payments of mineral owners who have leases with “market enhancement clauses.” In July 2020, a federal court in Columbus, Ohio combined both cases into one legal action.

Co-counsel Ethan Vessels, from Marietta-based law firm Fields, Dehmlow & Vessels, explained:

“We believe mineral owners have suffered at least $125 million in damages because of Ascent’s improper royalty payment practices over the past seven years.”

According to a court filing, Ascent categorizes leases into three MEG groups: “gross proceeds” leases; “net proceeds” leases; and “market enhancement” leases.

This litigation involves the leases Ascent included in the net proceeds lease and market enhancement lease MEG groups.  Ascent Revenue Controller, Jeff Lenocker, testified that Ascent treats all leases within each group “the same in terms of deductions.”  In an amended complaint, our Ohio-lessor clients assert that Ascent systematically over-charges the net proceeds MEG group for “post-production” expenses and systematically miscalculates royalty payments for the “market enhancement” MEG group by taking deductions that were not permitted by their leases.

Ohio Law allows oil and gas producers to make post-production deductions from oil and gas royalties, but only if the deductions are reasonable.

Plaintiffs allege that Ascent systematically unearths inflated and unreasonable deductions by over-charging for post-production expenses such as gathering, compression, processing of liquids, and pipeline transportation charges.  According to the court, “two companies owning a majority stake in Ascent also have substantial stakes in various companies providing post-production services to Ascent.”  Our clients allege that Ascent pays these expenses to affiliated companies that share common ownership, resulting in “sweetheart” deals that unfairly burden the mineral owners and ultimately reduce their net royalties.

Oil and Gas Expert Rick Harper reviewed royalty statements involved in the litigation and testified that post-production deductions were substantially higher than anticipated, at times reaching 88% of the gas’ value.

In addition to taking inflated deductions, our lawsuit further alleges that Ascent systematically miscalculates royalties by blindly applying broad deductions without complying with a duty to enhance, or to increase, the value of the marketable oil before Ascent can deduct the enhancing costs.

Harper testified that leases in the market enhancement clause MEG Group required Ascent to create a better price for the gas before it could lawfully deduct post-production expenses.

According to the court’s filing, however, “Ascent did not consider whether the expenses it deducts enhanced the value of the product.” Harper testified that he compared  royalty statements of Ohio lessors in this litigation to similarly situated Ohio lessors leasing their mineral interests to another oil and case company and found that Ascent was deducting over twice as much as for post-production expenses than the other company.

According to its website, Ascent is now the largest oil and natural gas producer in Ohio.

Mark Troutman

Mark Troutman is dedicated to protecting consumers against corporate misdeeds. He has served in leadership roles in complex litigation cases across the country.

Shawn Judge

Shawn Judge prosecutes complex class actions and mass torts. Shawn is also an experienced mediator offering private mediation services for any civil dispute.

Brian Bailey

Brian Bailey represents clients harmed by corporate misconduct in complex litigation including employment discrimination, personal injury, data breach and consumer protection cases.

Ethan Vessels

Ethan has recovered over $100 million in verdicts and settlements for his clients in the last decade. He is one of fewer than 84 National Board of Trial Advocacy board-certified civil trial specialists in Ohio recognized by the Ohio Supreme Court.

Fields, Dehmlow & Vessels, LLC handles high-stakes disputes ranging from serious injuries, wrongful deaths, mass torts, oil-and-gas disputes, insurance denials, elder abuse, and business break-ups.

Partner Ethan Fields has been recognized every year from 2016 through 2021 for inclusion in the Thomson Reuters SuperLawyers list, which annually recognizes no more than the top 5% of practicing attorneys in Ohio. In most cases, he prefers to work on a contingent fee, sharing the financial risks of litigation with his clients.

Recent Firm Results

• Settlement exceeding $1.2 million on behalf of a worker injured in an industrial accident
• Settlement exceeding $1,000,000 on behalf of a widow, and her daughters, whose husband died in an industrial accident
• Settlement of $685,000 on behalf of a patient who suffered a severe reaction to a negligently-prescribed prescription drug