Landowners pleased with BP settlement

Roger Fillion, Rocky Mountain News

Published July 19, 2006 at midnight

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Checks totaling about $120 million have been mailed to about 4,500 landowners in southwestern Colorado, under a settlement struck with BP America over a natural gas royalty payments dispute.

The checks ranged from a couple of pennies to nearly $2 million.

"It felt pretty good after 12 years," Richard Parry, an Ignacio rancher, said of receiving a check he described as not "one of the largest ones."

Parry launched the suit against the former Amoco Production Co. a dozen years ago. BP later bought Amoco.

Parry's suit became a class-action lawsuit involving landowners from La Plata and Archuleta counties.

The case centered on the underpayment of royalties for natural gas production in the two counties. It was filed in May 1994.

In October 2003, a Colorado district judge ruled against BP in the case. He said BP and predecessor Amoco - when calculating royalty payments - couldn't deduct costs tied to getting the gas ready for market.

In particular, the company removes water and carbon dioxide from the gas.

It also raises the pressure of the gas before it's delivered to interstate pipelines.

The case was scheduled for a second trial in October 2005 to determine the amount of damages, when an agreement was reached on settlement terms.

"We didn't want to drag this fight out any longer," said BP spokesman Dan Larson.

In an earlier statement, BP said it agreed to settle "to avoid the costs and uncertainties associated with ongoing litigation and in the interests of promoting good relations with mineral property owners."

BP's payments to the landowners cover royalty payments dating from June 1991 to the present.

The company also agreed to stop making the disputed deductions, which means landowners will get fatter royalty payments.

When combined with the payments mailed out, the current value of the discontinued future deductions brings the total value of the case to about $230 million.

Parry said other participants in the suit have been grateful for the payouts. "I've gotten some thank-you cards and some thank- you phone calls," he said.

He predicts the money will provide a shot in the arm for the ranchers, farmers, retirees and others involved.

"It's going to help the local economy down here," Parry said.

Gas royalties paid

• What: BP paid out about $120 million to landowners in La Plata and Archuleta counties under a settlement of a natural-gas royalty payments dispute.

• Number of landowners involved in class-action suit: About 4,500

• Nature of case: Underpayment of royalties for natural gas production

• Case first filed: May 1994

fillionr@RockyMountainNews.com or 303-892-2467

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