Energy, Utilities & Water  January 21, 2021

Farr Farms sues PDC Energy, claiming underpayment on royalties

DENVER — A company long controlled by a prominent Greeley-area farming family is suing Denver-based energy producer PDC Energy Inc. (Nasdaq: PDCE), alleging that it was underpaid royalties for production on its property for 25 years.

In the complaint filed Monday in Denver County District Court, Farr Farms Co. claims that it has consistently been paid less than what it is owed in royalties based on the market price of the oil because the Denver-based company deducted midstream and downstream costs from the farms’ payments without proper disclosure.

The lease for the minerals was first enacted in 1981. PDC acquired that lease in 2005 from a now-defunct oil producer. The suit does not specify how much Farr Farms claims it is owed.

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PDC has 12 leasehold interests in a portion of land directly south of the Greeley-Weld County Airport that include Farr Farms as grantees, according to county records.

It’s unclear if the proceeds of those royalties are distributed to the remaining members of the Farr family.

Farr is seeking class-action status to include any other mineral rights owners in Colorado that contracted with PDC since 2005, alleging that other royalty holders were subject to the improper deductions.

The Farr family has farmed on land east of Greeley since 1880 and added a cattle and sheep feedlot in 1940. Led in part by William Daven “W.D.” Farr, the family was instrumental in laying the groundwork of what is now the Colorado-Big Thompson project to transfer water from the western slope to the Front Range.

W.D. Farr also served on the Greeley Water Board and Northern Colorado Water Conservancy District for 40 years and sat on the federal Water Pollution Control Advisory Board in the 1970s.

His son, Bill Farr, founded Centennial Bank of the West in 1992, which operated along the Northern Front Range until it was purchased in 2004 by Guaranty Bank and Trust Co. He also was president of Farmers Bank in Ault, and had leadership stints with several local and national water and cattle organizations.

The family sold the lot and its 35,000 head of cattle in 1988.

A representative for PDC declined to comment Wednesday.

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