Chesapeake Energy Settles Gas Royalty Claims

     DALLAS (CN) — Chesapeake Energy and a French partner agreed to pay over $52 million to settle hundreds of lawsuits filed by North Texas landowners claiming they were cheated out of millions in natural gas royalties.
     Oklahoma City-based Chesapeake announced the settlement on Monday, agreeing to pay $29.4 million in cash and $10 million through a loan payable in 2019. Chesapeake’s partner in the joint venture, France-based Total S.A., will pay $13.1 million in cash under the deal.
     “We are pleased to have reached a mutually acceptable resolution of this legacy issue and look forward to further strengthening our relationships with our royalty owners,” Chesapeake spokesman Gordon Pennoyer said in a statement.
     The lawsuits were filed by 13,000 landowners in North Texas’ Barnett Shale. The cases were mostly filed in Tarrant and Johnson County courts, and by Fort Worth-based law firms Circelli, Walter & Young and the McDonald Law Firm.
     In a federal lawsuit filed in 2012, one proposed class of landowners said they signed leases that expressly banned deduction of expenses from royalties including costs of treating, marketing and transporting the gas to market.
     “But instead of paying royalty without deduction of post-production costs, as required by the lease, the Chesapeake entities improperly subtracted post production costs from the royalty due to the plaintiffs,” the complaint stated. “The Chesapeake entities employed a scheme whereby they ignored the contract language and made extensive deductions of post-production costs that were the Chesapeake entities’ obligations.”
     Attorneys for the landowners have until July 11 to get written approval for the settlement by at least 90 percent of their clients.
     Attorney George Parker Young said the settlement was reached after three weeks of “good faith mediation” by a former federal judge.
     “(T)he case has been resolved to our satisfaction, though it is subject to our clients’ written approval,” Young said in a statement. “We are pleased that we have achieved a mutually acceptable global settlement and greatly appreciate the constructive approach taken by Chesapeake’s current leadership to resolve this matter.”

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