Exco Resources sued by BHP for $9.32 million in hydrocarbon proceeds

By Caroline Salls

Pittsburgh, Oct. 11 – BHP Billiton Petroleum and BHP Billiton Petroleum Properties (NA), LP filed a lawsuit on Wednesday alleging that Exco Resources, Inc. refuses to turn over $9.32 million in hydrocarbon sale proceeds that are attributable to BHP’s royalty and working interests, according to a complaint filed with the U.S. Bankruptcy Court for the Southern District of Texas.

BHP said Exco Operating Co., LP served as operator of properties in which BHP owned royalty and working interests. The Exco debtors received monthly proceeds from the sale of hydrocarbons that are attributable to BHP’s interests.

Through late 2016, BHP said Exco placed its interests and at least $9.32 million in production proceeds that are due to be distributed to the plaintiffs in “suspense status” because of a title dispute between BHP and a third party regarding its interests.

However, BHP said “the debtors improperly refused to release BHP’s suspended proceeds” when the title dispute was resolved.

In addition, despite claiming that it would place the funds into a court registry, BHP alleges that Exco “instead comingled such funds with other funds of the debtors.”

“The debtors’ wrongful comingling must be remedied in order to protect BHP from imminent, irreparable harm, as the debtors have filed a plan of reorganization and disclosure statement that (a) does not segregate BHP’s suspended proceeds, (b) treats BHP as an unsecured creditor with respect to BHP’s suspended proceeds and (c) attempts to distribute BHP’s suspended proceeds to satisfy the claims of other creditors,” the lawsuit said.

As a result, BHP is asking the court to rule that the suspended proceeds are not the property of Exco’s estates, order Exco to turn over the proceeds and grant a preliminary injunction to segregate the proceeds.

Exco is a Dallas-based oil and gas exploration and production company operating in Texas, North Louisiana and Appalachia. The company filed for bankruptcy on Jan. 15, 2018 under Chapter 11 case number 18-30155.

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