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Landowners sue XTO Energy

They claim insufficient lease payments

PITTSBURGH — Two Butler County property owners filed a lawsuit Tuesday in federal court against XTO Energy alleging insufficient payment of royalties from natural gas drilling operations.

The plaintiffs, Richard Marburger as trustee of the Olive M. Marburger living trust and the Thiele family, allege XTO Energy has been deducting operating expenses from their royalty payments, which their lease agreement states they would not do.

“The lease is a contract, and they breached it. They made a promise, and they broke it,” attorney David Borkovic said.

The suit was filed by Jones, Gregg, Creehan and Gerace, a Pittsburgh-based law firm.

It was filed as a class-action lawsuit and the complaint says there are potentially more than 100 plaintiffs and more than $5 million in the controversy.

Because the plaintiffs live in Pennsylvania and XTO is based in both Delaware and Texas, the suit was filed in U.S. District Court for the Western District of Pennsylvania.

The mineral rights were leased for the Marburgers’ 97.7 acres in Forward Township and the Thieles’ 148 acres in Jefferson Township by Phillips Production in 2007, according to the complaint.

Both leases stated the property owners would receive one-eighth of the proceeds the company received for gas sold under the lease.

In 2011, Exxon Mobil acquired Phillips Production and the leases and gas drilling operations in the region were put under control of XTO Energy.

The suit alleges XTO has disregarded the language in the leases and deducted various expenses in calculating and paying royalties. The families believe there are numerous other land owners who have been wronged.

“Mr. Marburger and the Thiele Family Limited Partnership are attempting to sue on behalf of everyone who had a lease with Phillips and are being charged expenses,” Borkovic said about the suit’s class action potential.

The two plaintiffs are both seeking amounts that exceed $75,000.

XTO has 21 days to respond to the complaint, though it is likely it will request an extension, Borkovic said.

After XTO responds to the complaint, the judge likely will designate a period of discovery during which the lawyers for the plaintiffs will access XTO land records to compile a complete list of property owners who would qualify as plaintiffs under a class-action suit, Borkovic said.

If a judge rules the case may continue as a class-action suit, the plaintiffs would be notified and would be able to opt out, which would allow them to file their own individual claims.

They would not need to do anything to remain as a party to the suit, Borkovic said.

XTO is waiting for receipt of the suit and could not comment.