Spyglass wells case might be dead on the vine

Capitol News Bureau
KELO scales of justice court

PIERRE, S.D. (KELO) — The court case against the owners of some natural-gas wells in northwestern South Dakota is at a standstill, in part because the defendants no longer have any lawyers in South Dakota representing them.

A lawyer from the South Dakota Office of Attorney General updated the state Board of Minerals and Environment on Thursday about the matter.

The state board voted in March 2019 for the attorney general to pursue civil penalties totaling $15,494,000 against Spyglass Cedar Creek LP of San Antonio, Texas.

The state’s then-Department of Environment and Natural Resources sought the penalties for numerous alleged violations at 40 wells in Harding County.

Officials at DENR, which has since combined with the state Department Agriculture, said they were made aware that Denver-based New Frontier Energy Inc. had purchased interest in the wells but Spyglass never transferred the permits.

Doug Abraham, a Pierre attorney representing Spyglass, responded in October 2019 that DENR was not only aware of New Frontier’s role but also “had communicated with NFEI, and worked with NFEI directly as if they were the permittee.”

Abraham asked for a jury trial. But before anything further happened, he withdrew.

So did Brett Koenecke. who works with Abraham at the May Adam law firm in Pierre. In March 2020, they stopped representing defendants Spyglass and Xanthus Capital LLC, also of San Antonio, Texas.

New Frontier reportedly holds an $18 million lien against Spyglass Cedar Creek.

The state’s case against Spyglass lay dormant for 13 months. In April this year, Circuit Judge Christina Klinger withdrew, too. Circuit Judge Margo Northrup was assigned to replace her. Judge Northrup granted the state’s motion to file a second amended complaint.

On Thursday, Steve Blair from the attorney general’s office brought the state board up to speed. His immediate problem?

“There is no named individual in the court file to communicate with,” he said.

Blair said he had been unsuccessful in reaching the named companies to schedule a hearing. One reason: “There’s no individual currently named as the defendant.”

Rex Hagg of Rapid City chairs the state board. Hagg, a lawyer, asked Blair about trying to force the entities’ hand in some way.

“I really wouldn’t speculate as to how the case would proceed,” Blair answered.

Blair said he wants to continue trying to reach someone with the companies. Blair said he mailed motions to the Texas addresses listed as registered agents for the companies but hasn’t heard back.

Hagg asked whether a judge would deem that appropriate service.

“I would hope so. I couldn’t speculate how the court would look at that,” Blair said.

Responded Hagg, “That’s the whole purpose of having service agents.”

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