Texans OK Chesapeake Energy’s $51 Million Offer

FORT WORTH (CN) — More than 11,800 Texas landowners have approved a $51 million settlement with Chesapeake Energy and Total S.A. over claims they were cheated out of natural gas royalties, their attorneys said Wednesday.
     The McDonald Law Firm and Circelli, Walter & Young in Fort Worth announced that 91 percent of their 13,000 clients agreed to the settlement reached in May, the Fort Worth Star-Telegram reported.
     The clients who agreed to the settlement account for 97.15 percent of the natural gas produced on the owners’ lands.
     The attorneys had until July 11 to persuade at least 90 percent of their clients who held at least 95 of the natural gas produced from May 2011 to February this year to agree to the settlement.
     The original settlement amount of more than $52 million was prorated to match the 97.15 percent of natural gas produced.
     “We are pleased that the required number of plaintiffs … have accepted the terms of the settlement agreement, resolving this matter,” the law firms and Chesapeake said in a joint statement.
     Chesapeake agreed in May to pay $29.4 million in cash and $10 million through a loan payable in 2019. Total agreed to pay $13.1 million in cash under the deal.
     More than 13,000 landowners from North Texas’ Barnett Shale filed the lawsuits, mostly in Tarrant and Johnson County courts.
     In a 2012 federal lawsuit, 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.”

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