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DCP Midstream Interest Due on Late Oil and Gas Payments OK Class Action

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DCP Midland Oil Pipeline

When a larger party owes payments to a much smaller party—one with fewer resources and less power—it is easy for the larger party to delay or manipulate those payments. Oklahoma law has attempted to provide some protection to holders of oil and gas leases in mandating that interest be added to untimely payments. The complaint for this class action claims that DCP Operating Company and/or DCP Midstream, LP have not paid the mandatory interest on delayed payments.

The class for this action is all non-excluded persons or entities who

  • Received untimely payments from DCP for oil and gas proceeds from Oklahoma wells, and
  • Whose payments did not include statutory interest.

Excluded are

  • Agencies, departments or instrumentalities of the USA or the state of Oklahoma,
  • Publicly-traded oil and gas companies and their affiliates,
  • Persons or entities that plaintiff’s counsel may be prohibited from representing under Rule 1.7 of the Oklahoma Rules of Professional Conduct, and
  • Officers of the court.

Companies gain from delaying payments, in having the use of the funds for a longer period or in earning interest on them. The complaint quotes the Oklahoma Attorney General as saying, For decades, oil and gas producers or first purchasers would for various reasons delay or decline to distribute proceeds from the first sale to interest owners and use those funds for their own purposes…”

Thus, the complaint claims that oil and gas companies “frequently and intentionally avoided” making revenue payments, sometimes even for years, until they were demanded. This not only deprived well owners of the money they were owed; it burdened the courts with more and more cases brought by owners against purchasers.

In order to curtail this abuse, Oklahoma passed a law that requires that such payments be made within certain time periods. If the payments are not made within that time, interest must be added, regardless of the reason for the delay.

In this case, the complaint alleges, defendants DCP Operating Company and/or DCP Midstream, LP have delayed payments to the Donald D. Miller Revocable Trust. The Trust owns oil or gas wells in Oklahoma, including the Gamebird 1-7H well. DCP holds a lease on the well, dated January 5, 2016, and is required to pay revenue to the Trust.

The complaint claims that payments of this revenue have been late, but have not included the interest mandated by the law. The complaint thus claims that DCP has breached it obligation to pay interest and committed fraud, among other things. 

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