Sublette reaches settlement with Vanguard
PINEDALE – The Sublette County Treasurer’s Office and Attorney’s Office finally brought an end to the ongoing Vanguard Natural Resources litigation.
Speaking to the Sublette County Board of Commissioners at its meeting on Tuesday, county treasurer Emily Paravicini explained the fallout of a settlement agreement reached between the county and the Texas-based oil and gas firm.
Paravicini said, in total the county will receive just over $690,000 out of the settlement. That is, comparatively speaking, about 33 percent of what the county sought in litigation. That was a gross total and does not account for the $345,545.50, already on the county’s bill in lawyer fees, which also did not include the final day of litigation, which Paravicini thought would cost an extra $50,000.
That leaves about $300,000 to distribute to the county itself, as well as the various tax districts and schools.
“Not great but it means we’re done,” Paravicini said.
Deputy county attorney Clayton Melinkovich said Sublette County had the most invested in this litigation and thanked the commissioners for granting Paravicini the authority to bring the ongoing settlement discussions to a conclusion.
Commissioner Sam White, a veteran in the oil and gas industry, said he was expecting a settlement closer to 30 percent of what was owed.
The vote to approve a motion accepting this decision came with heavy exhales and years of long days in litigation.
Issues began when Vanguard Natural Resources, LLC., received a bill for tax-assessed production from Sept. 1, 2016, to Dec. 31, 2016, in January 2017. According to court records, Vanguard paid Sublette County $2,490,829.74 on Jan. 31, 2017. That same day, Vanguard paid Campbell County $268,930.21 and paid Johnson County $321,659.60.
The company filed for Chapter 11 bankruptcy the following day.
Vanguard paid Campbell, Carbon, Johnson, Natrona, Park and Sweetwater counties with checks dated Nov. 10, 2017, but did not pay Sublette County, according to court records. Because the counties do not have a priority lien in the event of a bankruptcy, the county was left without $2.4 million owed.
Sublette County was one of six Wyoming counties that sought tax revenue out of that bankruptcy. Sublette, however, was the only county to travel and present evidence in the United States Bankruptcy Court for the Southern District of Texas Houston Division. (It’s worth noting Vanguard skipped Wyoming’s bankruptcy process through the Board of Equalization.)
Vanguard countered with a lawsuit against Sublette and the other counties. The company sought $2.4 million in taxes paid to Wyoming that should have been used to pay debts of higher priority. It also argued that it found mistakes in deductions from transported material of minerals, recalculating its tax burden for each operating well from 2014, 2015 and 2016.
The lawsuit at that time, as previously reported in the Roundup, maintained the company had more than $1.3 billion in liens held by first and second lenders that should have been given preference over money owed to Sublette County.
That case stayed in litigation ever since, until some significant progress was made earlier this year. The situation was discussed most recently during a commissioners’ meeting last month in executive session.
As a result of this litigation, Sublette County does not have to pay back the $2.4 million it was initially paid by Vanguard – now a subsidiary of Grizzly Energy, LLC.
Paravicini told the commissioners all the Wyoming counties needed representatives to sign a sheet, which would then be sent to Vanguard in order to write a check for the settlement amount.
“Once we get that check I’ll distribute to the schools and then subtract the amount for the lawyer fees,” Paravicini said. “Because at this time the county has carried all that on our shoulders.”
The settlement came at the conclusion of an all-day litigation session. Paravicini said there were counties that weren’t ready to give any more resources than necessary, and Sublette was getting close to that point. All counties ultimately came to individual agreements so if a remaining county in Wyoming does not agree to its deal, it doesn’t impact Sublette’s agreement with Vanguard at all.
“How long do you drag something out before you just get to, ‘We’re still covering our expenses, we still have a little to show for it and we’re done,’” she asked.
Melinkovich said if commissioners hadn’t given Paravicini authority to act during those settlement discussions, the matter could have gone to court and become far more expensive. While the county didn’t get its original amount sought, it got something out of litigation that will directly contribute something to the tax base.