Nearly three dozen Wyoming landowners are suing Occidental Petroleum Corporation and its recently acquired company Anadarko Petroleum Corporation alleging they monopolized both the oil and gas market and the leasing rights in Laramie County. Occidental Petroleum acquired Anadarko this year in a deal valued at $55 billion and is in the process of finalizing the sale.
The lawsuit was filed November 25 in the U.S. District Court of Wyoming.
Attorneys representing the landowners argue Anadarko has utilized its checkerboard leases along with horizontal drilling to take over thousands of acres and obtain over 2,000 drilling permits. According to those lawyers, Anadarko then set inflated prices for the land by selling to its own subsidiaries which, in effect, excludes competitors from producing.
"Anadarko has tied up all permits and permissible locations for wells in the relevant market… other companies have refrained from seeking fair market leases of mineral rights from owners of even-numbered parcels, including Plaintiffs," the filing read.
The landowner's attorneys say the company has not drilled a well to produce oil or gas in Laramie County since 2013, it's never attempted to drill a two-mile horizontal well in the county, and the company has no firm plans to drill wells in the county. They argue that shows Anadarko's intent to exclude competition and inflate value.
Attorneys say the impact to landowners is serious. For one, the company's position allows them to force landowners into accepting below-average royalty rates.
"The alternative for Plaintiffs who refuse to accept such a rate is that [Anadarko] or [Occidental] in interest can compel such Plaintiffs to be subjected to forced pooling under Wyoming Statute," the filing explains. "The damages sustained by Plaintiffs are in the millions of dollars, in an amount yet to be fully determined, consisting of the diminution in the value of their property."
Lastly, the landowners' legal team says Anadarko has leveraged its position in Laramie County in its recent sale to Occidental Petroleum.
Melissa Shoeb, Vice President of Corporate Affairs for Occidental Petroleum, wrote in an e-mail, "we believe the litigation is without merit and intend to vigorously defend it. We do not expect that the litigation will have any impact on the timing or outcome of our pending sale process."
Carl Larry, market specialist for Refinitiv, a financial data provider, said Occidental must believe it has the upper hand or it wouldn't be willing to take this case to court and threaten its own sale process.
"But if it is true, then the issue becomes much bigger. How does Occidental do this financial reporting? How are they booking their assets? And how are they looking at these subsidiaries as taking on these leases at prices that are unjustified?" he asked. "It could open up a can of worms."
Larry said if Anadarko does build a monopoly in Laramie County, then the impact could be huge to the entire industry.
"I don't think the industry can handle something like this. Another black eye, the industry at this point in time, could be devastating and a ripple effect. We can see other people question other companies and their lease sales within their subsidiaries," he said.
The landowners' attorneys allege two federal violations and three state violations, including of the Wyoming constitution.
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