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Ky. Company Sues Over Natural Gas Royalties

PIKEVILLE, Ky. (AP) - An eastern Kentucky company has sued the largest natural gas producer in the Appalachian Basin, saying the company underpaid landowners more than $45 million in royalties.

Pikeville-based Appalachian Land Company sued Equitable Production Company in U.S. District Court last week. Appalachian Land claims Equitable has been incorrectly paying royalties on leases held by landowners.

Appalachian land claims Equitable is obligated under the lease to pay royalties of one-eighth of the market price at the well of all gas produced on the lessor's land, and are allowed to include severance taxes in the market price.

Appalachian Land claims Equitable improperly takes out production costs and severance taxes from the market price, leaving it artificially low.

Equitable spokesman Dave Spigelmyer said the company's practices are consistent with their contracts and business practices in Kentucky.
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Information from: Appalachian News-Express,
http://www.news-expressky.com

(Copyright 2008 by The Associated Press. All Rights Reserved.)

AP-NY-07-13-08 1306EDT


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