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Current Trends in Class Action Royalty Settlements

Mark C. Rodriguez, Justin R. Marlles, Tifani M. Jones, Private Oil & Gas Royalties: The Latest Trends, Developments, and Challenges in Oil & Gas Royalty Litigation

Oil and gas royalty class actions often consist of thousands of interest owners covering hundreds, if not thousands, of wells and leases. Typical claims include highly technical claims such as failure to develop oil and gas reserves and improper deduction of post-production costs. Given the complexity all of this creates, parties to royalty class actions spend significant time and resources negotiating acceptable settlement terms that cover the thousands of owners in the class and that address the claims and issues in the case. The work, however, is not over once the settlement is inked. In many ways, the work is only beginning.

Settlement of a royalty class action presents a number of challenges. Beginning with the request for preliminary approval of the settlement and the settlement class, and continuing through the approval process and distribution of the settlement fund, the parties and their counsel must effectively manage the numerous procedural and practical challenges inherent in a royalty class action. Failure to effectively manage these challenges can substantially increase the time, expense, and risk associated with a class settlement and, in some cases, can jeopardize the settlement itself.

The purpose of this paper is to examine and discuss the mechanics of settling a royalty class action. In many respects, parties in a royalty class action face m