OKLAHOMA CITY (CN) – A class of landowners in Oklahoma and Kansas announced Thursday the settlement of a federal antitrust lawsuit against Chesapeake Energy and others for nearly $7 million, ending claims filed a day after indicted former CEO Aubrey McClendon died in a fiery single-car crash.
The plaintiffs filed a motion for preliminary approval of the settlement late Wednesday in Oklahoma City federal court. They say the agreement was the “hard-fought product of two separate all-day mediation sessions” conducted by a former federal judge. If approved, the money will be dispersed to potentially thousands of individual and commercial property owners in northwest Oklahoma’s Anadarko Basin.
Several lawsuits were filed against Chesapeake, SandRidge Energy and former SandRidge CEO Tom L. Ward after March 2, 2016, the day McClendon’s car collided with a concrete embankment in Oklahoma City, killing him. The plaintiffs cited a federal indictment filed against McClendon a day earlier accusing him of conspiring to rig bids for their natural gas leases in violation of the Sherman Act.
The leases allowed Chesapeake to drill for natural gas under their property in exchange for signing bonuses and subsequent royalties. The lawsuits were consolidated one month later.
The plaintiffs claim a conspiracy existed to “fix, stabilize and artificially suppress” the prices paid for their leasehold interests, that bids were rigged and prices paid were agreed upon by conspirators.
Christopher Cormier with Cohen Milstein in Denver, a co-lead attorney for the plaintiffs, said the settlement gives the landowners the “relief and justice they deserve.”
“In case proceedings, Chesapeake admitted to potential isolated instances of anticompetitive conduct, and while the plaintiffs believe a large-scale conspiracy could ultimately be proven, they determined this guaranteed settlement provides much-needed closure and accountability,” he said in a written statement.
Chesapeake declined to comment on the settlement Thursday afternoon. Spokesman Gordon Pennoyer confirmed published reports that Chesapeake is paying $2.65 million of the settlement amount.
The defendants denied any wrongdoing under the terms of the settlement.
“Defendants contended that there was no overarching conspiracy or any communications outside of these select few transactions, and that Chesapeake did not admit to a larger conspiracy in the parallel DOJ investigation,” the plaintiff’s motion states. “Mr. Ward denies that any such communications related to those purchases violated the antitrust laws in any way. They parties heavily debated these issues throughout the course of litigation and during the mediation.”
McClendon’s estate is not a party to the lawsuit. Law enforcement said he “pretty much drove straight” into a highway overpass the day after his indictment and died. He faced up to 10 years in federal prison and a $1 million fine if convicted. He was well-known as part owner of the Oklahoma City Thunder basketball team.
McClendon founded Chesapeake in Oklahoma City in 1989. It became the second-largest natural gas producer in the country, growing its business through hydraulic fracturing, or fracking, in major domestic shale formations including the Marcellus Shale, spanning from West Virginia to New York, and the Barnett Shale in North Texas.