Collusion Alleged for Natural Gas Rights

(CN) - Vantage Energy, The Carlyle Group and others defrauded dozens of Texas landowners by offering lucrative deals for mineral rights in the Barnett Shale natural gas formation - $27,500 per "net mineral acre" - then failing to pay up, the landowners say in eight new complaints in Fort Worth.

Twenty such complaints, all with multiple plaintiffs, have been filed in Tarrant County Court since April, claiming that Vantage, Carlyle and others colluded to "drive down bonus payments" by locking up mineral rights in the formation, denying the landowners the chance to negotiate with other companies.

Named as defendants are Delaware-based Vantage Energy LLC, Quantum Energy Partners, Riverstone Holdings dba Carlyle/Riverstone, the Carlyle Group dba Carlyle/Riverstone, Lime Rock Partners, and the Caffey Group.

According to one of the eight new complaints filed this week, in 2007 gas companies began soliciting residents whose properties overlaid the Newark East Field, an area of prolific natural gas production commonly known as Barnett Shale. The 11 residents in one complaint, who belong to the Southwest Fort Worth Alliance (SFWA), say that after the defendants locked up the rights to the Alliance's land, they never paid up.

The defendants, aka "Vantage/Caffey," pitched their services as oil and gas developers, and the plaintiffs "accepted the terms that were offered, and have complied with every term of the contract. They have done everything Vantage/Caffey has asked of them," the complaint states.

The plaintiffs say they "reasonably relied upon such representations and did not accept other offers from other companies to least the property ... . Plaintiffs have now lost the opportunity to lease to such other companies because the market has changed dramatically due, at least in part, to defendants' conduct, which plaintiffs believe is in furtherance of a collusive agreement between each of the defendants herein and others within the industry to drive down bonus payments."

The plaintiffs claim the defendants "made representations to the plaintiffs which they knew were false at the time they were made or which in the exercise of ordinary care such defendants should have known were false. Such representations include, but are not limited to, representations that Vantage/Caffey would lease plaintiffs' mineral interests, that defendants would offer the SFWA lease to 'everyone' in SFWA, that the money necessary to sign all mineral interest owners within SFWA was already in the bank, that Vantage/Caffey had sufficient economic and financial wherewithal to lease all mineral interest owners within the SFWA boundaries and to develop the gas and minerals under such land, that Vantage/Caffey had sufficient knowledge, training, experience, skill and expertise to maximize the recovery of plaintiff's minerals from the property, and that plaintiffs would receive bonus checks in the agreed amounts. These representations were made with the intention of inducting plaintiffs to lease the property to Vantage/Caffey and with the intention of preventing plaintiffs from leasing the property to anyone other than Vantage/Caffey and their agents ... . Plaintiffs justifiably relied upon such representations to their harm, detriment and economic injury."

The plaintiffs seek specific performance and punitive damages for fraud, real estate fraud, breach of contract, negligent misrepresentation and deceptive trade.

The plaintiffs are represented by Kip Petroff, and Dean Riddle with Riddle & Williams, both of Dallas.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit