Chesapeake Energy to pay $119M in Oklahoma royalty case

Chesapeake Energy to pay $119M in Oklahoma royalty case

Jan 26 2015, 17:13 ET | About: Chesapeake Energy Corporation (CHK) | By: Carl Surran, SA News Editor 
  • Chesapeake Energy (NYSE:CHK) agrees to pay $119M under a preliminary settlement with Oklahoma mineral rights owners who accused the company of improper royalty payments dating back to 2004.
  • Landowners accused CHK of improperly withholding royalty money and charging them for the costs of processing and transporting gas; the class action lawsuit affects more than 11,800 wells in Oklahoma.
  • CHK has faced similar lawsuits in Pennsylvania and other places where it operates.

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0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 1, 2015 at 6:26am

Phil,

     I did a search of my email account for the Chesapeake Eastern VP's quote that I sent to a friend and here is what I found cut & pasted from my email. I used a partial quote, but later I used the entire quote out of the paper which I kept nearby for several weeks. Note that it is the Sept 22nd 2013 issue of Farm And Dairy. Farm & Dairy usually uses other stories like Propublica.org. I reread the Propublica version a few times and found no mention of the VP CHKs quote, so F&D must have added info from a PA newspaper. When I'm ready to use the quote, I'll talk to Farm & Dairy to get another copy of the Sept 22nd 2013 paper, or use the local Library that has back issues.

"Chesapeake has made it public in the local newspaper (Farm & Dairy http://www.farmanddairy.com/ ) that it is a "good business practice" to not pay the royalty and force the landowner to go to court. Now the lawyers get a percentage of what would have been the landowners if Chesapeake had been honest".

Farm & Dairy http://www.farmanddairy.com

Read "Unfair Share" in the Sept 22nd issue of Farm And Dairy on line to see where I got my info.

Permalink Reply by Kyle Nuttall on February 2, 2015 at 7:13am

Is this the quote you were thinking of?  It's in ProPublica, not Farm and Dairy, but I thought I'd run it by you and see anyways.

“The duty of the corporation is to make money for shareholders,” Anderson said. “Every penny that a corporation can save on royalties is a penny of profit for shareholders, so why shouldn’t they try to save every penny that they can on payments to royalty owners?”

Permalink Reply by frank speaker on January 30, 2015 at 6:17am

The Atty Gen. office gave sound advice when he stated that Ohio has a lack of law which could address your complaints. I am trying to get people to realize that grousing does absolutely no good, and that the only effective way of dealing with these problems is drawing up model legislation and demanding our state representatives support it. Is anybody on board with this?

Permalink Reply by frank speaker on January 30, 2015 at 6:21am

The court decision in Ok. was based on Oklahoma state law

Permalink Reply by Tree Farmer on January 31, 2015 at 2:10am

I have a history of going in front of the legislature in Ohio to voice opinions about a forestry excise tax that was proposed by the ODNR Div of Forestry director dujur (it failed). I would gladly drive to the big house and do the same to curtail these ba$tard OG companies from fleecing landowners. Now we need to get a bill drafted or get in there face so they draft one for us!

The Ohio Senate - how a bill becomes law

Step 1 : Introduction

Senators put their ideas into writing in the form of a bill. Once a bill is drafted, it is introduced and given a unique number before being assigned to a committee that handles bills on that topic. To become law in Ohio, a bill must receive three "considerations" in each house of the General Assembly. Introduction of a bill constitutes "first consideration."

 

Step 2 : Committee Process

Committees are the best forum for thoroughly studying a bill. They give senators an opportunity to hear from experts and concerned citizens who testify before a committee to express their opinions or make recommendations. Through this process, members may change the bill with alterations called amendments or choose to take no action at all. If a committee recommends a bill be considered by the entire Senate, the bill is voted upon and reported by the committee. The referral of a bill to a committee constitutes "second consideration."

 

Step 3 : The Floor

All members have an opportunity to debate and amend a bill when it goes before the entire Senate on the floor. When debate on a bill is concluded, the Senate President directs the Clerk of the Senate to call the roll, and members cast their votes. If a bill receives a majority of the votes cast (17 of the 33 votes in the Senate), it passes and moves to the Ohio House of Representatives, where a similar process is followed. Consideration of a bill on the floor constitutes "third consideration."

 

Step 4 : Concurrence

If the House makes any changes to the bill, the Senate may vote on whether to concur with the changes. If the Senate does not concur with the House changes, a conference committee made up of members from both chambers meets to reconcile differences between the two versions of the bill. Once the revised bill is approved by the Senate and the House, the bill becomes an "act" and is sent to the governor for his review and signature.

Permalink Reply by Tree Farmer on January 31, 2015 at 2:13am
Permalink Reply by Tree Farmer on January 31, 2015 at 2:49am

I just sent this to my senators;

I am writing to ask for your help in stopping big oil from fleecing the tax coffers of the state of Ohio. It is a well know fact that companies like Chesapeake are using creative accounting tricks to rob oil and gas royalty owners and then only paying fines if a judge orders the remittance. The VP of Chesapeake is quoted as follows, "It's a Good Business Practice to not pay landowners Royalties, then go to court and only pay what the Judge orders".

Do you think for a moment that these robber barons are paying more Ohio tax because of these tactics implemented by a sea of forensic accountants working on their side? Do you think the landowners in Ohio are paying more taxes on the depleted royalty checks they receive?

We need laws to keep the big oil companies from ripping off the tax payers. The new found gains from those lost tax dollars would easily make up for the current excise tax the Governor is trying to implement. And the cost of said excise tax will be borne by the landowners (tax payers) once again.

Permalink Reply by frank speaker on January 31, 2015 at 3:03am

That is excellent. Now I must sit down and write a letter of my own.

Permalink Reply by Robin Hood on January 31, 2015 at 3:22am

This is a good idea, let's hit them at the trough, if they can get more feed we can get their attention. What are the numbers, hundreds of millions in lost revenue due to Chesapeake's and others stealing Ohio's resources?

Permalink Reply by Alan Bowers on January 31, 2015 at 7:45am

Tree Farmer,

"It's a Good Business Practice to not pay landowners Royalties, then go to court and only pay what the Judge orders"

This quote says a lot about their intentions.

Do you think you could track down where you found the quote and identify which "Vice President" made the statement and possibly the source where it shows up in print?

It would be very helpful if you could.  Especially for those Land Owners/Royalty Owners who are about to enter into litigation with Chesapeake.

Chesapeake Energy appears to use the title of "Vice President" in much the same way a bank would.  They have quite a few of them.

At latest count there are four (4) Executive Vice Presidents and sixteen (16) Senior Vice Presidents for Chesapeake Energy.  They still have people with the title "Vice President" below them.  And that doesn't even begin to take into account all of their subsidiaries.

Permalink Reply by Tree Farmer on January 31, 2015 at 2:40pm

The quote may be an urban legend, this article is as close as I have found, so far!

http://www.nofrackingway.us/2014/04/17/royally-fracking-ripped-off/

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 2, 2015 at 5:07am

Tree Farmer,

       I have the hard evidence of what is happening in Ohio.

As you may know, Chesapeake sent me the spreadsheet of Buck Well 1H first 6 months of production that shows all the theft strategies they have used on our well. They have yet to pay for a gallon of NGLs. In fact the spreadsheet shows as much as 175% deduction of the value of our NGLs and is always greater than 100%. We like PA are paying CHK to take our NGLs.

I've scanned and sent the spreadsheet along with my Royalty Statements to a large number of people to ensure the information gets out to the public.

Using this information will leave no doubt that theft is taking place in Ohio and that the Feds need to receive copies of each wells Theft Spreadsheet as part of the DOJ subpoena request of CHK.

I think the evidence will cause the gov & atty gnl to realize partnering with CHK was a big mistake. They have ignored the laws of the state to allow this theft to continue.

Friend me and I will send you the spreadsheet and royalty statements. The royalty statements show 0 deductions each month which is contrary to the Theft Spreadsheet 3 column of deductions.

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