By Shane Hoover
CantonRep.com staff writerPosted Oct. 28, 2015 at 8:16 PM
A subsidiary of Chesapeake Energy has cheated Ohio mineral owners out of $30 million in royalties and possibly more, according to a lawsuit filed Monday in Columbiana County.
Chesapeake has drilled 674 wells in Ohio’s Utica Shale, the most of any company. The Oklahoma City-based driller didn’t immediately respond to messages seeking comment.
The proposed class-action lawsuit accuses Cheaspeake subsidiary, Chesapeake Operating, of violating lease agreements by selling oil and gas from Ohio wells at below-market prices and improperly deducting production and post-production costs from royalty payments.
Companies with stakes in those wells are defendants in the case, including Chesapeake Exploration, CHK Utica, Total E&P USA, Pelican Energy and Jamestown Resources.
The alleged misconduct started in 2011, and Chesapeake Operating continues to make improper deductions from existing wells and any new wells that come into production, while claiming in royalty statements that no deductions were made, according to the lawsuit.
The plaintiffs seek to recover the withheld royalties, monetary damages, attorney fees and costs.
CLASS ACTION SOUGHT
The case was filed by attorneys for two Columbiana County farms and a Summit County resident who owns mineral rights in Carroll County. Their leases only allowed deductions for taxes.
But the lawsuit could have a wider sweep. Chesapeake Exploration used nearly identical terms in other leases involving at least 1,000 owners and 40,000 acres in Stark, Carroll, Tuscarawas, Columbiana, Guernsey, Harrison, Belmont and Jefferson counties.
“I’ve gotten dozens and dozens of phone calls over the last few months,” said William G. Williams, an attorney with Jackson Township-based Krugliak, Wilkins, Griffiths & Dougherty, one of the firms representing the plaintiffs.
It will be up to Common Pleas Judge C. Ashley Pike to decide if the case goes forward as a class action.
