Continental Resources, a US oil company, claims that Hess has defrauded them of $69 Million

Continental Resources, a U.S. producer of shale gas, has filed a suit against Hess Corp. The lawsuit alleges that the company was defrauded of up to $69,000,000 through a series deals conducted by Hess Corp. with its subsidiaries.

Continental claimed that Hess - which operates hundreds wells in North Dakota - artificially inflated its midstream service fee by entering into agreements between itself and its subsidiaries. The lawsuit claimed that the net revenues from hydrocarbons produced by the wells in which Continental has a non-operating interest were below market value because of excessive service fees paid to Hess Midstream Partners.

The lawsuit, filed in federal court in Houston, stated that "Hess Corp. has transferred value from upstream assets to midstream assets instead of operating with the best interest of non-operating owners working interests in mind."

Hess Bakken Investments is a Hess-owned subsidiary that operates 483 wells producing oil and gas in the Williston Basin. Continental has a working stake in this company. Continental's headquarters are in Oklahoma City.

Continental reported that Hess Corp owns 38% of Hess Midstream. This company is a major owner of oil, gas, and produced water assets, primarily located in the Three Forks and Bakken shale play. Continental stated that it and non-operating owners of working interests in these wells are therefore more financially burdened than Hess.

The filing stated that Continental lost revenue of between $34 and $69 million for oil and natural gas production.

Hess Midstream reported in its last earnings report that the throughput volumes for gas processing, oil terminaling, and water gathering rose by 8%, 7%, and 9% respectively, in the first three months of the year, compared to the same period the previous year. This was primarily due to increased production.

Continental Resources has said that it will not comment on any pending litigation.

Hess didn't immediately respond to comments. Reporting by Georgina Mcartney, Houston; Editing and production by Richard Chang

(source: Reuters)