Breaking News
More () »

Texas oil company facing Idaho lawsuit files for bankruptcy

The filing means the federal lawsuit in Idaho is on hold.
MIDLAND, TX - JANUARY 20: A pumpjack sits on the outskirts of town at dawn in the Permian Basin oil field on January 21, 2016 in the oil town of Midland, Texas.

BOISE, Idaho — A Texas company that made Idaho a natural gas and oil-producing state but is facing a federal lawsuit from disgruntled royalty recipients as well as an investigation by Idaho authorities has filed for bankruptcy protection.

Alta Mesa Resources and associated companies filed for Chapter 11 bankruptcy protection last week in U.S. Bankruptcy Court in Texas.

The filing means the federal lawsuit in Idaho is on hold. Some Idaho mineral rights holders contend the company underpaid royalties using shady accounting methods. The company has denied the allegation.

RELATED: Texas oil company denies wrongdoing in Idaho royalty lawsuit

Vaughn Fisher, an attorney representing the Idaho mineral rights owners in the lawsuit, didn't return a call from The Associated Press on Tuesday.

Alta Mesa Resources is based in Houston. However, an independent company has since been formed called High Mesa, which now has ownership of operations in Idaho. Some of the same people involved with Alta Mesa Resources are also part of High Mesa. It's not exactly clear how that change will affect the federal lawsuit in Idaho.

Alta Mesa doesn't mention Idaho in its bankruptcy filing, saying the financial difficulties stem from unprofitable investments in Oklahoma.

The Idaho class-action lawsuit from mineral rights owners contends royalties were underpaid following deductions and other charges as natural gas or oil moved from the ground to the market. The lawsuit contends those deductions were not part of lease agreements.

Idaho is not a part of that class-action lawsuit.

However, the state has two investigations of its own. One involves a royalty audit of wells on state land requested by the Idaho Land Board, which includes Republican Gov. Brad Little. The other is an investigation by the Idaho Oil and Gas Conservation Commission looking into the accuracy of the amount of gas and oil Alta Mesa reported being produced at wells.

RELATED: Idaho opts to force Texas oil company to turn over records

There's been conjecture that Idaho's initial lax reporting rules approved by Idaho lawmakers allowed Alta Mesa to pull and sell an unknown amount of natural gas and oil from the ground without reporting it.

Mick Thomas, administrator for the Idaho Department of Lands' Oil and Gas Division, said there were lax requirements and poor bookkeeping early on, but he's found no evidence of underreporting based on comparing multiple records tracking shipments and end sales.

"I was really chasing that dog pretty hard for the better part of a year and a half," Thomas said. "We found that the volumes really matched up. This showed us that regardless of what was said, there really weren't secret black trucks driving off in the middle of the night with oil."

However, he noted, the commission investigation did find a 28% difference in a product called condensate produced at what is called the Kaufmann well. That well is part of the Idaho lawsuit.

Currently, very little production of gas or oil is happening in Idaho due to low prices.

Before You Leave, Check This Out