Atmos Energy to get $3.5 million in settlement with Kentucky company in royalties case



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LOUISVILLE, Kentucky — A Texas energy company will get $3.5 million as part of a settlement reached on Friday with a Kentucky company to end long-running litigation over a dispute about oil and gas royalties.

Under the terms of the agreement, Resource Energy Technologies, which filed for bankruptcy protection in 2009, and its owner John F. Charles of Park City, Kentucky, and the estate of Robert E. Thorpe Jr., will drop all legal claims against Atmos Energy of Dallas. Charles will also be required to pay $15,000 immediately to Atmos. The settlement does not require any party to admit fault.

Atmos also agreed not to pursue any further legal action against Charles or Resource Energy as long as the settlement is paid in a timely fashion.

Atmos sued Resource Energy Technologies in federal court in 2011, alleging misrepresentation and unjust enrichment by Resource Energy and another company's owners.

That suit came after a jury in Edmonson County awarded the landowners and Resource Energy $24.7 million a year earlier. That judgment came in a lawsuit brought by landowners who claimed they didn't get their rightful royalties from an oil and gas project. A state appeals court overturned that verdict in 2013.

Judge Joy A. Moore, writing for the court, concluded that the landowners failed to make a case against Atmos Energy on several fronts. The landowners argued that they did not receive royalties from the gas and oil produced on their lands. Moore noted that, under Kentucky law, landowners have no claim to own oil and gas found under their property once a lease is signed — the product belongs to the person who signed the lease to drill.

The case stems from a series of gas rights deals signed by the landowners in southern Kentucky. The landowners initially signed royalty contracts with two attorneys and an entity known as Park City and Resource Energy Technologies. Park City later reached an agreement with Atmos Energy, which did the drilling and distributed the money.

Atmos overestimated the amount of gas in the fields, which produced for about a year in 2008 and 2009, but not nearly in the quantities projected by the company. When the promised royalties didn't come through, the landowners sued for fraud.

Resource Energy Technologies' bankruptcy ended in 2010 when it failed to propose a reorganization plan to a federal judge. At the time of the bankruptcy filing in 2009, Resource Energy listed between $500,000 and $1 million in both assets and liabilities.

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Follow Associated Press reporter Brett Barrouquere on Twitter: http://twitter.com/BBarrouquereAP

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