SE Texas Record

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Suit alleges Colorado company breached contract over North Dakota oil and mineral leases

By Michelle Massey, East Texas Bureau | May 21, 2010

MARSHALL- Pursuant to a contract, a Texas company claims it wired more than $400,000 to a Colorado company to cover lease bonuses and fees from oil and gas leases from mineral owners in North Dakota.

However, the Texas parties accuse the Colorado company of not using the funds properly and otherwise, not performing as promised under the contract.

Larry T. Long, trustee, and Arkoma Bakken LLC filed a breach of contract lawsuit against Eco Resources LP, Heather Rodewalt and Larry Gilmore on May 12 in the Marshall division of the Eastern District of Texas.

According to court documents, the plaintiffs entered into an agreement on June 1, 2009, that established an "Area of Mutual Interest" for oil and gas leasing in North Dakota.

Under the agreement, the defendant was to obtain oil and gas leases from mineral owners in the area of mutual interest and assign those leases to the plaintiffs in exchange for a 10 percent interest in each lease.

Long and Arkoma Bakken also agreed to reimburse Eco Resources for the lease bonuses paid to the lessors, landmen day rates and other expenses incurred by the defendant in the lease acquisition process.

The plaintiffs state that Eco Resources obtained leases from more than 150 mineral owners but did not assign most of them to Arkoma Bakken as agreed.

Further, the plaintiffs state they discovered serious title problems and that Eco Resources had not paid its landmen or several lessors for the bonuses.

A number of lessors repudiated their leases with Eco Resources and leased their minerals to other companies. In an effort to diminish their losses, the plaintiffs demanded that the defendants turn over the leases, but rather than comply, Eco Resources began purging, releasing several dozen of leases in the last month, according to the complaint.

Long and Arkoma Bakken are asking the court to issue a permanent injunction to prevent Eco Resources from any further divestiture of the leases taken and relief for breach of contract, conversion, theft of property and fraud against the defendants.

The plaintiffs are requesting actual and exemplary damages, interest, court costs and attorneys' fees.

Longview attorneys Vance P. Freeman and Matthew S. Wolcott of Shore Freeman Mills PC are representing the plaintiffs. Jury trial requested.

U.S. District Judge T. John Ward is assigned to the litigation.

Judge Ward agreed that the plaintiffs are facing imminent harm and issued a temporary restraining order preventing the defendant from further divestiture of the oil and gas leases.

A preliminary injunction hearing is set for Monday, May 24.

Case No. 2:10cv00153

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