Chesapeake Energy|Faces Class Action

     DALLAS (CN) – Chesapeake Energy subsidiaries improperly deduct post-production costs from natural gas royalty checks, leaseholders say in a class action.
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     Charles Warren, of Dallas, and Robert Warren, of Plano, sued Chesapeake Exploration and Chesapeake Operating, both of Oklahoma City, in Federal Court.
     The Warrens say Chesapeake Exploration was assigned more than 300 oil, gas and mineral leases in Tarrant and Johnson counties, and contracted with Chesapeake Operating to drill and operate the gas wells in the Barnett Shale formation, beginning in 2008.
     They say the leases they signed expressly prohibit 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 states. “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.”
     The plaintiffs say that at no time did Chesapeake’s royalty statements show that post-production cost deductions were made.
     They seek actual damages, an accounting and an injunction for breach of contract. They are represented by Robert O’Boyle with Strasburger Price in Austin.

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