In re: Sheridan Holding Company I, LLC, et al.
Taylor-Sheridan Fund 1 Settlement
Case No. 20-31884

Frequently Asked Questions

 

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  • This Class Lawsuit was originally filed as two separate cases and consolidated into Case No. CIV-18-29, Kyle Alan Taylor and Tony Ray Whisenant v. Sheridan Production Company, LLC et al, on file in the United States District Court for the Western District of Oklahoma. In addition to the Class Lawsuit, an individual suit was filed in state court, Born, et al. v. Sheridan Production Company, L.L.C., No. CJ-2012-47, Caddo County, Oklahoma. Plaintiffs, on behalf of themselves and, as Class Representatives, on behalf of all similarly situated royalty owners, asserted in both the Class Lawsuit and Born that Defendants breached express terms and implied duties in the leases and breached their fiduciary duty by deducting costs incurred after the gathering line inlet from royalty. The Released Claims (as defined in ¶ 1.24 of the Settlement Agreement) include all claims that were or could have been asserted in the Class Lawsuit and Born relating to royalties on gas and gas constituents in connection with the Class Lawsuit and Born.

    Defendants have adamantly denied, and continue to deny, the claims asserted in the Class Lawsuit and Born and have vigorously defended against them.

    On the Petition Date, Defendants filed voluntary petitions under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. With the commencement of the Bankruptcy Proceeding, the Parties jointly moved for preliminary approval of the Settlement and approval of the Notice to be provided to potential members of the Settlement Class. If the Settlement is not approved or is terminated, the Parties shall be returned to the status quo that existed immediately prior to the date of execution of the Settlement Agreement. If the Court finally approves the Settlement, the Class Lawsuit and Born will be dismissed with prejudice.

    By giving this Notice, the Court is not expressing any opinion regarding the merits of either the Class Representatives’ claims or Defendants’ defenses. Nothing contained in the Notice should be construed as suggesting the Court’s view as to which side might prevail should this matter proceed to class certification and trial on the merits.

  • The Court has entered the Preliminary Approval Order.

    In the Order, for settlement purposes only, the Court approved the Settlement Class as described above and designated Kyle Alan Taylor, Tony Ray Whisenant, Stanley Ray Born and Ronda Jean Born as the Class Representatives of the Settlement Class and appointed the below named lawyers from four law firms as Settlement Class Counsel:

    Rex. A. Sharp
    Sharp Law, LLP
    5301 W. 75th Street
    Prairie Village, KS 66208

    Allan DeVore
    Jandra Cox
    DeVore Law Firm, PLC
    5709 NW 132nd St.
    Oklahoma City, OK 73142

    Michael E. Grant
    Grant Law Firm, PLLC
    512 N.E. 12th Street
    Oklahoma City, OK 73103

    Charles Rubio
    Diamond McCarthy, LLP
    295 Madison Avenue, 27th Floor
    New York, NY 10017

    You may hire your own attorney if you wish; however, you will be responsible for your attorney’s fees and expenses.

  • Following extensive settlement negotiations, the Class Representatives, on behalf of themselves and the Settlement Class, Settlement Class Counsel, and the Defendants have agreed to enter into the Settlement Agreement and grant the mutual releases of the Released Claims contained therein.

    The basic terms of the Settlement Agreement between the Settlement Class and the Defendants are as follows:

    1. Defendants will pay the sum of $5,094,000.00 (subject to adjustments set forth in the Settlement Agreement) to the Settlement Class in full, complete, and final settlement of all Released Claims as to all Released Parties.  Defendants shall not be liable to the Settlement Class, the Class Representatives, or Settlement Class Counsel for any other costs, expenses or fees.
    2. The Released Parties include: (a) all Defendants, the Affiliates of Defendants, including those named on Exhibit F attached to the Settlement Agreement, and the Reorganized Debtors and shall also include the respective past, present and future Affiliates, employees, officers, directors, limited partners, general partners, shareholders, managers, members, attorneys, agents and/or other representatives of such entities; (b) the Settlement Class Members (including Class Representatives) and their attorneys; and (c) other working interest owners in Class Wells, who shall also constitute Released Parties, but only to the extent Defendants and/or the Affiliates of Defendants marketed gas or gas constituents and paid royalty on behalf of such other working interest owners prior to the Petition Date.
    3. Defendants and the Class Representatives agree that the Settlement Proceeds, subject to adjustments for opt-outs and exclusions from the Settlement Class, shall be for the benefit of the Settlement Class, subject only to payment of court-approved Class Fees and Expenses and Administration Expenses.
    4. Upon the Effective Date, all Settlement Class Members shall be deemed to have released all of the Released Parties, Settlement Class Counsel, and the Class Representatives from all claims arising from or in connection with the negotiation, execution, solicitation, administration, determination, calculation, or payment of benefits or the investment or distribution of the Settlement Proceeds.
    5. The Released Claims (as defined in ¶ 1.24 of the Settlement Agreement) include, all claims, demands, actions, causes of action, allegations, compulsory or permissive counterclaims, credits, off-sets, defenses, rights, obligations, costs, fees, losses, and damages of any and every kind or nature, known or unknown, whether in law or equity, in tort or contract, or arising under any statute or regulations, that are associated with the marketing, movement, treatment, processing, sale, trade, calculation, reporting, allocation, payment, and similar acts/activities relating in whole or in part to royalty on gas and its constituents produced from the Class Wells (including residue gas, natural gas liquids, fuel gas, casing head gas, drip condensate, condensate, helium, nitrogen, and any other forms of hydrocarbon gas production or products therefrom) and on-lease and off-lease use of such gas during the Released Period.

      The Released Claims specifically include, but are not limited to, those claims that arise from or in connection with acts or omissions of any of the Released Parties (including, but not limited to, all intentional or negligent misconduct), which were or could have been asserted, made, or described in the operative petition, complaint, or amended complaint, and the answers or counterclaims in the Class Lawsuit and in Born, or that could have been alleged as a compulsory or permissive counterclaim, credit, off-set or defense, and shall also include and release any alternative theories of recovery for the same claims, actions, or subject matter that could have been asserted in the Class Lawsuit and in Born, even if not asserted.
    6. Defendants have asserted and continue to assert many defenses to the Class Representatives’ and Settlement Class’ claims and contentions.  Defendants expressly assert their defenses have merit and that they have no liability to the Settlement Class or the Class Representatives.
     
  • Settlement Class Counsel has requested that the Court (i) award Settlement Class Counsel an attorney’s fee in an amount to be determined by the Court but not to exceed forty percent (40%) of the Settlement Proceeds as is customary in Oklahoma royalty underpayment class actions; (ii) award the Class Representatives a fee in an amount to be determined by the Court but not to exceed two percent (2%) of the Settlement Proceeds; (iii) reimburse Class Counsel from the Settlement Proceeds for all litigation expenses paid by Settlement Class Counsel, including expert and consulting fees and other litigation expenses in amounts to be determined by the Court; and (iv) authorize payment of Administration Expenses.  If the Court approves this request, such amounts will be deducted from the Settlement Proceeds before the Net Settlement Amount is calculated and Distribution Checks are mailed to the Settlement Class Members.

    Defendants have provided or will be providing data on the volume of gas produced by each Class Well on an Mcf basis for the Released Period and the last available revenue transaction report for each Class Well in their possession as of the Petition Date.  From this data, the Class’s expert and Settlement Class Counsel will aggregate the production of gas on an Mcf basis from each Class Well for the entire Released Period and compare that volume to the total volume of gas produced on an Mcf basis from all Class Wells for the entire Released Period to arrive at a percentage of volume produced by each Class Well during the Released Period.  The Class’s expert will then apply this percentage to 56% of the Settlement Proceeds to arrive at a preliminary estimate of the Net Settlement Amount to be distributed to each Class Well.  Using 56% of the Settlement Proceeds for the preliminary allocation assumes 44% of the Settlement Proceeds will be used to pay court-approved Class Fees and Expenses and Administration Expenses.

    Utilizing this methodology, a proportionate share of the estimated Net Settlement Amount will be preliminarily allocated to each Class Well.  Utilizing the last available revenue transaction report for each Class Well obtained from Defendants or, if necessary, relevant royalty owner information from successor third-party operators, the preliminarily allocated amount will be further allocated from the Class-Well-level to each royalty owner in each Class Well.  A preliminary Summary Final Distribution Report will be posted on the website when it is available to show you your allocated portion of the Net Settlement Amount.  If a Settlement Class Member’s distribution amount is less than $5.00, the Settlement Administrator will not issue or mail a Distribution Check to such Settlement Class Member.  Instead the amount will be held as Undistributed Proceeds and distributed as part of the Final Undistributed Fund.  Please check the website periodically for updated information.

    If a Class Well was plugged or shut-in during the Released Period, then the amount allocated to that Class Well shall be paid to the last known royalty owners paid by Defendants in those wells.  If a Class Well was sold during the Class Period, then the amount allocated to the Class Well shall be paid to the last known royalty owners as may be ascertained from relevant royalty owner information provided by successor third-party operators to Settlement Class Counsel, publicly available data, or otherwise upon fair inquiry.

    The distribution described above is based upon the following assumptions: (a) that very few sales of royalty interests in Class Wells have occurred during the Released Period; (b) if sales did occur during the Released Period, the buyer was entitled to receive payment for all past claims covered by the Settlement; and (c) if royalty interests passed through inheritance, devise, intra-family or interfamily transfers, that it was the intent that the heir, devisee or transferee also receive payment for all past claims covered by the Settlement.  To the extent these assumptions are incorrect or a payee is not the proper party to receive payment, such Settlement Class Member who receives payment shall in turn make the correct payment to the proper party or parties entitled thereto or return the funds to the Settlement Administrator.

    A draft of the Plan of Allocation and Distribution, which details more fully the allocation process, is available from the Important Documents page and remains subject to Court approval.

  • The Settlement Fairness Hearing will be held on July 13, 2020 beginning at 11:00 a.m. (CST), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division, Courtroom 400, 4th Floor, 515 Rusk St., Houston, Texas 77002.

    A Settlement Class Member who does not opt-out does not need to appear at the Settlement Fairness Hearing or take any other action to participate in the Settlement.

    1. You can participate in the Proposed Class Settlement by Doing Nothing

      By taking no action, your interests will be represented by the Class Representatives and Settlement Class Counsel. As a Settlement Class Member, you will be bound by the outcome of the Settlement, if finally approved by the Court. The Class Representatives and Settlement Class Counsel believe that the Settlement is in the best interest of the Settlement Class, and, therefore, they intend to support the proposed Settlement at the Settlement Fairness Hearing.
       
    2. You may Opt Out of the Settlement Class

      If you do not wish to be a member of the Settlement Class, then you may opt out of the Class as set forth in ¶ 10.3 of the Settlement Agreement. You must file your opt-out so it is received by the Settlement Administrator on or before 5:00 p.m. CST on May 29, 2020, by mail to:

      Taylor-Sheridan Fund 1 Settlement
      c/o JND Legal Administration
      P.O. Box 91231
      Seattle, WA 98111

      IN ORDER TO BE VALID, YOUR OPT-OUT MUST BE RECEIVED BY THE SETTLEMENT ADMINISTRATOR ON OR BEFORE 5:00 P.M. (CST) ON MAY 29, 2020.

      Your opt-out must state the following:
      1. I elect to opt-out of the Settlement Class. I understand it will be my responsibility to pursue any claims I may have, if I so desire, on my own and at my expense;
      2. My Sheridan royalty identification owner number is #__________. I have owned a royalty interest in the following Class Wells: [identify each Class Well by Well/ property name as shown on your check stub]; and
      3. Your notarized signature.
         
    3. You May Remain a Member of the Settlement Class but Object to the Proposed Settlement

      Under the Settlement Agreement, you have the right to remain a member of the Settlement Class but still object to the proposed Settlement and any of its terms, including the requests for Class Counsels’ Fees and Expenses and Administration Expenses. To object to the Settlement, you must file with the Clerk of the Court for the United States Bankruptcy Court for the Southern District of Texas, Houston Division, 515 Rusk St., Houston, Texas 77002, by May 29, 2020, a written objection containing the following information:
      1. The caption of this action shown above on the first page of the Notice;
      2. A reasonably detailed statement of each objection;
      3. Your current address and phone number;
      4. Your owner identification number with Sheridan;
      5. The name of each well in which you own a royalty interest as shown on your check stub from Sheridan; and
      6. Your signature.

      If you fail to timely file such written statement or to provide the required information, the Court will treat your objection as not filed at all. Also, any appeal by a valid and timely objector must comply with the Settlement Agreement.
  • If the Court does not approve the Settlement or if a Party exercises its right to void or terminate the Settlement, or if the Settlement fails to become effective for any reason, the Parties shall be returned to the status quo that existed immediately prior to the date of execution of the Settlement Agreement.

  • The Notice of Settlement contains only a summary of the Class Lawsuit, Born, and the proposed Settlement Agreement.  The pleadings and other papers filed in the Debtors’ chapter 11 cases are available for review at http://cases.primeclerk.com/SheridanI or the Court’s website at www.txs.uscourts.gov/bankruptcy.

    You also may obtain a copy of the Complaint and Settlement Agreement from the Important Documents page.

    DO NOT CALL OR WRITE THE COURT, THE OFFICE OF THE CLERK OF THE COURT, THE DEFENDANTS, OR THEIR COUNSEL REGARDING THE NOTICE. INQUIRIES SHOULD BE MADE TO THE SETTLEMENT ADMINISTRATOR.

For More Information

Visit this website often to get the most up-to-date information.

Mail

Taylor-Sheridan Fund 1 Settlement
c/o JND Legal Administration
P.O. Box 91231
Seattle, WA 98111