Ok, just got the papers in the mail today. So we have a lease that says no post-production costs. Chesapeake took it out anyway. wait though, there going to give us back 50% prior June 2014, and a whooping 34% after that. Isn't that like robbing a bank and giving half and less of it back and not going to JAIL. Something is wrong. I'm opting out, how about you?

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Admittedly not sure where the heart of the complaint will end up, but they definitely go beyond the gathering arrangement.  The AG specifically targets misrepresentation of the market enhancement clause and allege unfair and deceptive lease negotiation tactics.  The practices in question are widespread and go well beyond the named defendants.  This would not be a matter of not respecting lease terms or seeking to alter a lease, but to acknowledge the disparity in sophistication and control of the lease parties and defending landowners that have been subject to deceptive and predatory leasing tactics.   I for one have been specifically assured by landmen that the market enhancement clause would not result in deductions for gathering, and compression both of which are being deducted from my royalties.  FYI - I never leased to CHK.

Scott

Upon reflection, I think that's good analysis.  Kane perhaps attempted to broaden the suit against CHK to the max.  In the process she included offenses of which a number of other gas companies might also be guilty.  I've not seen indication, though, of intent by the PA AG to pursue such matters in court with other companies.  Chesapeake and Williams are the big fish, or so it seems to me.

Scott & Frank,

    When a Complaint is filed on the same day that the Defendant accepts the Settlement, the word Collusion comes to mind.

Take a look at the Demchak Intervention Filing for a Bradford County Landowner attached below the New Class Action Complaint above.

It summarizes why the settlement should be discarded by the Court.

I found that very interesting as well.  Particularly the language that indicated the OAG had reached out to CHK ostensibly for some sort of clarification or resolution and is pursuing litigation.    

Scott,

       I just read your post here. I see where you used the acronym OAG, is that the Ohio AG?

If so, that's a surprise. His office girl told me the Laws Of Ohio don't apply to O&G companies when I filed a complaint in Aug 2014.

That was a false statement on her part, but she seemed to have had a coaching session just recently from her boss. They dropped my electronic complaint I had filed with another employee. I think that itself is an issue.

mike came into some money about the same time, around $1 Million, a refund on his campaign from an earlier date. I hope he has proof of that.

Thank you Scott. Fairness is the issue but the market plays and a companies financial position will play a role in the judge's final decision. The judge will not make a decision that will burden the company to the point of bankruptcy.

The initial settlement offer capped the compensation at $17 million but that amount quickly fell to the wayside. The proposed settlement is much higher and offers a slightly new set of terms. Combined the two will remove cash from Chesapeake's current minimal cash on hand and will decrease its income. Currently Chesapeake is in a money losing position.

And to top that off, new accounting rules will further devalue the company. Chesapeake, and all energy companies, must remove from their assets list any well not planned on being drilled in the upcoming 5 years.

This is why I made the statements about finances. I do view the royalty income as a fairness issue but I also want the income to continue for my children.

Hi John - I appreciate the concern about seeing production & development continue, but argue that the company's financial position should not play a role in determining if a settlement is adequate & fair.  CHK is in a fix right now, but allowing them to cheat landowners and steal through royalty deductions sure will not fix their problems.  Even at today's low price they are a $13.5 billion company so a $17 million settlement would represent around 0.0012 of the company value.   Further their partner in NE PA who owns an equal position in most leases and wells is Anadarko whose entity value is over $40 billion. Throw in the value of Statoil and Mitusi and you have plenty of capitol to support development and operations.   As to seeing royalties continue  I would point out that natural gas production is at an all time high and every single pipe that can carry gas out of PA has been full.  The real problem is oversupply which companies like Chesapeake have brought upon themselves.  The difference between $2 & $4 gas is the issue for these companies.  Hard to see how a few pennies to landowners will change the course of development significantly.   Sorry for the long winded response, but it really gets me to see CHK take such huge risks and then try to squeeze every dime out of the people who owned the gas to begin with.  

The landowner leases run with the land....Whoever buys CHK assumes the liabilities that current or future suits may present as a claim to past royalties.

The question I have is If CHK does go bankrupt, what happens to leaseholder claims to prior royalty issues?

BTW, the lawyers do indeed have a firm grip on the plaintiffs and exercise more control over them than may be in the best interests of the rest of the "class".

How much is the Attorney settlement charge?

The 17 million quoted above was the initial settlement but that was set aside for a larger pool settlement. Yes, small potatoes but even that is money that Chesapeake does not have. Attorney fees are being not settled yet but two scenarios exist. One in which Chesapeake is ordered to pay those costs another in which the royalty holders will pay 30% of their recovered royalties for a period of 3 years.

Chesapeake currently sells its gas for a price between $.90 to a $1.30 MMBtu so their income is substantially lower than the Henry Hub price. As to a buyer of the company caution on this point: Chesapeake and others may divest themselves of assets. A well with a normal "boiler plate" corporate contract is desirable. A well with a large number of acres which contain the non-deduction clause is not considered a desirable asset.

Individual wells are bought and sold as corporate strategies are played out. I would put nothing past Carl Icahn and the Chesapeake board in shutting down wells which are lumped into this settlement and selling off profitable wells for necessary cash. And then finally a corporate strategy of lumping undesirable wells under a new corporate umbrella and declaring that group of wells financially bankrupt. Not unheard of it the energy industry.

It would be wonderful if fairness were required in the corporate boardroom or in the court system.

Who do I send the opt out letter to?

Check out NARO. Go to the PA page.

Today, 12/15/15 took my opt out letter to post office sent certified mail, the woman ahead of me was doing the same thing and the post mistress said she had processed over 100of them today and it was only 3pm. And hundreds everyday this week. Obviously the people in New Albany, PA are not going to bite for this bad deal. I am tired of being fleeced, then having to give lawyers a portion of what I am owed to get back what was rightfully mine to begin with.

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