Royalty owners challenge Flywheel Energy's deduction practices in Arkansas courts

In a recent meeting of the House Agriculture and Economic Development Committee, significant concerns were raised regarding the practices of Flywheel Energy, a company accused of unfairly deducting royalties from property owners in the Fayetteville Shale Play. The discussion highlighted the impact of these deductions on local royalty owners, many of whom have been adversely affected since Flywheel acquired Southwestern Energy in 2019.

During the meeting, a representative shared that approximately 1,500 royalty owners attended town hall meetings in January and February to voice their grievances. These owners expressed frustration over Flywheel's interpretation of Arkansas law, which they argue is inconsistent with industry standards and has resulted in substantial financial losses for them. The representative emphasized that while some property owners are receiving fair payments through the Arkansas Oil and Gas Commission, others who leased directly to Flywheel are facing unjust deductions.

The committee also discussed a failed class action lawsuit aimed at compelling Flywheel to honor the terms of the leases it purchased. A federal judge's ruling in New Jersey was cited as a barrier to justice for Arkansas royalty owners, leaving them without the resources to challenge Flywheel effectively in court.

In response to these issues, the committee is considering legislation aimed at amending Arkansas law to prevent companies like Flywheel from exploiting loopholes that allow them to shortchange local royalty owners. The proposed bill seeks to protect the rights of property owners and ensure they receive fair compensation for their resources.

As discussions continue, the implications of this legislation could significantly impact thousands of Arkansans, ensuring that their rights are upheld in the face of corporate practices that have raised ethical concerns. The committee's actions signal a commitment to addressing these challenges and supporting the local community in the ongoing struggle for fair treatment in the energy sector.