Energy independent Continental Resources has accused sector player Hess Corp of fraud to the tune of $69 million in a lawsuit alleging the latter artificially inflated the price of its midstream services through deals with its own subsidiaries.
Per a Reuters report citing the lawsuit, the alleged fraud concerned oil wells in North Dakota, in which Continental Resources holds non-operating interests. The net revenues that the company received from those wells was much lower than their market value because of those inflated midstream prices that Hess allegedly charged for its services.
“Hess Corp has transferred value from its upstream assets to its midstream assets rather than operate with the best interests of non-operating working interest owners in mind,” the lawsuit said. It was filed at a Houston court.
The subsidiaries that Continental claims were involved in the defrauding are Hess Bakken Investments, which operates 483 wells in the Williston Basin in North Dakota, and Hess Midstream, which operates mainly in the Bakken and the Three Forks plays in the state, Continental said.
Per the lawsuit, the ownership of Hess Corp in these two companies has resulted in higher fees for their services for companies such as Continental, which hold working but non-operating interests in oil wells in the area the two service. Per the allegations, the revenue loss ranges between $34 million and $69 million.
Hess Corp is currently in the process of getting taken over by Chevron in a deal worth $53 billion and first announced back in 2023. Progress has been slowed, however, by Exxon’s argument that it has right of first refusal to Hess Corp’s stake in their joint Guyana venture, in the Stabroek Block. That stake is one of the main reasons Chevron wants to buy Hess, so if Exxon wins the dispute, the takeover may well fall through.
By Charles Kennedy for Oilprice.com
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