US Shale Producers Must Face Oil Price-Fixing Claims, Judge Rules

U.S. District Judge Matthew L. Garcia in New Mexico ruled Aug. 31 that consumers, businesses and local governments had alleged enough facts at this stage to support an inference that shale producers agreed to restrict domestic output.

Law360 reported Sept. 2 that Garcia preserved the core of the consolidated proposed class action while dismissing only a limited number of state-law claims. The ruling doesn’t determine that the companies participated in an unlawful conspiracy, but allows most of the case to proceed.

The plaintiffs accuse eight domestic shale producers and two executives of participating in an agreement to restrain U.S. production and artificially increase prices for crude oil and refined products including gasoline, diesel and home-heating oil, according to Garcia’s opinion.

The producer defendants include Permian Resources Corp., Expand Energy Corp., Continental Resources Inc., Diamondback Energy Inc., EOG Resources Inc., Hess Corp., Occidental Petroleum Corp. and Pioneer Natural Resources Co. Former Pioneer CEO Scott Sheffield and Hess CEO John Hess were also named.

The consolidated complaint asserts 54 claims and seeks certification of a nationwide class of end purchasers for injunctive relief under the Sherman Act, along with damages under various state laws.

Read more: US Shale Producers Lose Bid to Toss Oil Price Antitrust Case

We’d love to be your preferred source for news.

Please add us to your preferred sources list so our news, data and interviews show up in your feed. Thanks!

Add as Preferred Source

According to allegations summarized by the court, hydraulic fracturing helped fuel a surge in U.S. oil production during the shale revolution. The plaintiffs contend producers later moved away from aggressive production growth and coordinated restraints on output.

Garcia concluded that the complaint, viewed as a whole, plausibly alleges a domestic agreement aimed at limiting U.S. production and raising prices. He cited allegations involving market conditions, production decisions, communications and public statements in finding that the conspiracy claims could proceed.

The defendants had challenged the case on several grounds, including whether the plaintiffs adequately alleged an antitrust conspiracy and whether disputes touching on OPEC and global petroleum markets could properly be decided by a federal court.

Garcia rejected arguments for dismissal under the political-question and act-of-state doctrines, emphasizing that the central allegation concerns an agreement among domestic defendants rather than an agreement involving OPEC members or foreign governments.

The producers did prevail on some issues. Several state-law claims were dismissed or restricted, and Expand Energy secured dismissal of the Sherman Act claim against it.

Garcia otherwise denied individual dismissal motions from Continental, Diamondback, EOG, Permian Resources and Occidental, while Hess’s effort to dismiss the claims for failure to state a claim was also rejected.

Personal-jurisdiction questions involving Hess, John Hess and Pioneer remain unresolved. Garcia ordered limited discovery on those issues.

Source: Law360