Let Us Take on Anadarko Together

We have a lease, which involves 2 wells in Bradford County. We are looking to see if there are others here who have a lease that states "No Deductions," and who have ended up specifically with Anadarko taking deductions. Cameron at Anadarko Customer Relations told us they do not care what the lease says, it is their practice to take deductions. I spoke with their legal department and they said they can take deductions even though our lease says they cannot. Our only recourse is legal action. I know the people with Rosenbloom or Friendsville leases have that No Deduction clause. Are there any of you on here, or any others with a No Deduction clause and who are having Anadarko take deductions, and have you joined a lawsuit that exists? If not, how can we get others together to take on Anadarko in court?  Anadarko lost a big lawsuit in Texas in June 2015 for doing the same thing.

Chesapeake, StatOil and Mitsui are honoring the No Deductions clause and have been outstanding to deal with. THis issue is for those with Anadarko.

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Permalink Reply by Moldyoak on September 26, 2015 at 1:20am

Can you be a bit more specific as to your 'no deduction' clause?  I.e., do you have the de facto Friendsville lease, or is your lease a different lease with that specific wording included (in the definition of "royalty")?  Also, what deductions are they taking - are they deducting for the whole gamut aka what CHK has been doing to those with old boilerplate leases, or are they deducting selectively?  This is very interesting - do you know of others either in your unit/units or elsewhere with the same lease that you have, and is Anadarko deducting from them as well?

Permalink Reply by Dr. Larry A. Maxwell on October 2, 2015 at 5:18am

Here is the specific language in the lease, "It is agreed that the royalty paid shall be the amount received at the wellhead without any deduction."

Chesapeake, StatOil and Mitsui have all honored that part of the lease and take no deductions at all.

After numerous phone calls to Anadarko's Owners Relations, after they said they did not care what the lease said because it is their standard practice to take deductions, they told us to write to them to ask them to not take the deductions.  We did that twice, with certified mail, yet they never responded.

I finally got a call back from their legal department. They said the lease allowed them to take deductions because they do it after the wellhead. They said by taking deductions we were receiving a larger payment.  I pointed out how that was not true at all. I asked if they were honoring the term in the lease about no deductions, they acknowledge the term but said it did not apply to them.  I asked if we needed to take legal action to get them to comply with the terms of the lease. Then they asked me if I would accept a settlement and what would we want. I said, they needed to reimburse the deductions taken and to stop taking any more deductions. They asked me to put that in writing. I told them we did that already. They acknowledged receiving that correspondence and said they would review it.

It was not until I showed them we knew what the lease said and finally asked if we needed to take legal action, that they asked if we would take a settlement.

Permalink Reply by Jeffrey Beunier on September 26, 2015 at 11:10am

its rather ironic that CHK is being used in the same sentence as "outstanding to deal with"

Permalink Reply by Hopeful on October 8, 2015 at 2:31am

I agree and I wish that Dr. Maxwell would stop saying how wonderful Chesapeake is. Dr. Maxwell, this is my opinion on Chesapeake (CHK)...

They are the worst oil/gas company in existence. If they have honored any clause in your neck of the woods, that is news to me. They are the most sued company in the industry. I know of a law firm in Texas that has assembled a slew of mineral owners and CHK is now facing THOUSANDS more lawsuits for deductions. CHK is being sued in multiple states for their common practice of totally disregarding lease terms and even courts have ruled with boneheaded decisions in CHK's favor. I know of great lawyers scratching their heads on rulings. Like, nobody in their right mind should have ruled in CHK's favor! Perhaps the judge was in bed with CHK.

CHK is and has been from day one deducting over 1/3 of my royalties with deductions. They resort to trickery and deception with their accounting procedures used on their check stubs. I make no bones about it and say it every chance I get -- they are the worst company in oil and gas and I hope they go bankrupt. They have millions of acres of leasehold (they are the #2 exploration company in America as far as wells drilled goes) and if they go broke, hopefully, a better company will pick up their acreage.

Chesapeake is a horrible company  and is HUGELY disliked in the the oil and gas industry. I do not know anybody in the oil business who admires them. "Questionable practices," and "deceit" are common terms used to describe them.

P.S. Aubrey McClendon, the ousted former CEO, started another company -- American Energy Partners, LP. I would be extremely wary of any company headed by McClendon. He is the most skilled oil and gas dealmaker I've ever seen; he's absolutely brilliant in that regard. But scruples... I don't think he has any. I think greed runs the man.

Dr. Maxwell, I hope it works out for you. In general, my perception of Anadarko is good. I think they are one of the better companies.

Permalink Reply by Joe Fabeetz on September 28, 2015 at 4:09am
I find it amazing that someone at Anadarko's (or anyone's for that matter) CR dept would respond like that. Per Moldyoak's comment, would you post the language referring to deductions and perhaps we can make some sense of it?
Permalink Reply by James on September 28, 2015 at 4:15am

Have you heard of the Buck 1H well in Carroll County?

Permalink Reply by Joe Fabeetz on September 28, 2015 at 6:43am
No but I don't follow that many specific cases. I am familiar with the practices of a number of oil and gas operators and some common "wiggle room" lease clause wording so I was intrigued by your original post.
Permalink Reply by scs570 on September 28, 2015 at 4:06pm
Like others have mentioned, it would be useful to share the specific language in your lease.
Permalink Reply by Thomas Lilli on September 28, 2015 at 8:50pm
Your first step is to find an attorney to take the case. If you find a good one who will do it, he/she will have determined the merits.

Depending on whether it's pro-Bono or not, it could be quite costly.

It may be that an attorney could advertise or do a direct mailing for a class action suit. They would be able to find the effected parties through their resources.
Permalink Reply by Moldyoak on September 29, 2015 at 1:31am

He stated that he spoke with the company legal department and was told they (the company) can take deductions.  This is why it's crucial to see the exact terminology of the lease in question because there must be something in the language which is giving them (the company) what they perceive to be an 'out.'

The fact that CHK is not taking deductions but Anadarko IS makes this even more mysterious.

Permalink Reply by Dr. Larry A. Maxwell on October 2, 2015 at 5:22am

I was looking to see if there were any people in this group who have one of the Friendsville or Rosenbloom leases, which all have the no deduction clauses, who are having the same problem with Anadarko. I believe there are more than 100 people who have the same lease we do.

I understand Bradford County is looking to join a lawsuit against Anadarko.

It is sad a company like Anadarko mistreats people.

And I do applaud Chesapeake, StatOil and Mitsui for honoring the no deduction clause.

Permalink Reply by Joe Fabeetz on September 29, 2015 at 1:34am
Actually your first step is to read your lease and find out if post production deductions are or are not allowable. Then determine if the sale of the product takes place at the wellhead (on the lease) or at the purchaser location. Putakes a ton of difference as to that critical definition.

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