Oct 5, 2018 3 min read

An Independence Township couple who entered an oil and gas lease with Range Resources are accusing the company of failing to adhere to a cap on the deductions it took from royalty checks for costs incurred once the gas was out of the ground.

In a civil complaint filed Sept. 27 in Washington County Common Pleas Court on behalf of Robin and Thomas Pflasterer of Oak Road, the husband and wife also claim Range broke its deal with them by causing them to lose money when it didn’t drill additional wells.

In March 2011, Range settled a federal class-action lawsuit brought by plaintiffs representing more than 25,000 people in Pennsylvania and Ohio, in an agreement reported to be worth more than $22 million.

The landowners had challenged the propriety of deductions the Marcellus shale driller took from royalty payments. Allegations they lodged included one that Range had stiffed them by basing royalties on the volume of the gas at the point where the gas was sold to calculate royalties, instead of the volume at the wellhead.

The 2011 agreement, known as the Frederick settlement, included a provision capping the post-production costs Range could deduct from royalties.

The Pflasterers had executed their lease in 2009. They placed their 284-acre property in a family trust in 2012, and the trust also acquired the agreement with Range. The trust is named as a plaintiff in their case.

The Pflasterers allege Range committed a breach of contract by not applying a code that appears to denote the deduction cap outlined in the Frederick agreement “to all transactions identified in the pay stubs that Range transmits to the plaintiffs with production royalty payments.”

“As a result, it is averred that the production royalties that Range has paid to the plaintiff have been wrongfully reduced by the unauthorized deductions taken by Range,” wrote their attorneys, Robert Burnett and Brendan O’Donnell of the Pittsburgh firm Houston Harbaugh.

In addition to a judgment against Range, costs and termination of the lease, the complaint also seeks “an accounting of each monthly royalty payment since March 2011” and “copies of all source documents or electronic databases from which the information was derived,” based on the plaintiffs’ suspicion there could be “further discrepancies” in the royalty calculations.

Representatives for Range said they hadn’t been served with the lawsuit and declined comment.

Portions of three wells traversed the Pflasterers’ property. A second breach-of-contract claim in their case relies on language in the lease agreement to allege Range had an obligation to drill more of them.

One was from a pair of wells known as the McAdoo Unit, which entered production in the second half of 2011, according to the complaint. Two others were from the three-well Green Dorothy Unit, which started production at some point in 2013.

Burnett and O’Donnell wrote that both units have been productive, and “a reasonably prudent operator would have drilled additional wells in the McAdoo Unit and the Dorothy Green Unit” as allegedly required by the terms of the lease.