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Friday, June 12, 2015

Aubrey McClendon's American Energy Facing Lawsuit for Failure to Pay Lease Signing Bonuses in Ohio

From NGI:
Nearly 60 landowners in southeast Ohio have filed a lawsuit against American Energy Partners LP (AELP), one of its affiliates and a land services company that worked on its behalf over claims that the companies owe more than $ 9.2 million in overdue lease signing bonuses and attorney fees. 
The plaintiffs, including a school district and five towns, filed the lawsuit in Jefferson County Common Pleas Court. It is seeking payment of the $ 9.2 million, plus $ 25,000 or more for each plaintiff in compensatory and punitive damages for breach of contract and unjust enrichment. 
The complaint alleges that shortly after AELP was formed in 2013, it contracted with land services company Great River Energy LLC to acquire leasehold for its Appalachian affiliate American Energy Utica (AEU) LLC in southeast Ohio, including Jefferson County. Acting as a land agent for AEU, Great River entered into leases for the company that were then assigned to it, according to the complaint. 
The leases in question were signed in 2013 and 2014 for a five-year primary term. Their order of payment required Great River to pay lease signing bonuses and fees within 120 days of the signing or identify title defects. According to the lawsuit, Great River It could only surrender the lease upon existence of a title defect and the lessor's inability to cure it within 90 days.

Certain plaintiffs, the lawsuit says, did not receive payment within 120 days and were not notified of any title defects. Another group did not receive payment within 120 days and the lawsuit alleges that afterward, Great River tried to identify title defects later than what was required under the lease agreements.
I found it interesting to note how American Energy responded to questions about the lawsuit:
Great River could not be reached to comment. When asked about the lawsuit, an AELP spokesman said the lawsuit involves Ascent and not AELP and added that it was important to note that distinction. 
"American Energy Utica LLC and American Energy Partners LP deny the allegations and should not have been named as parties in this meritless lawsuit," the company said in a statement.
That is a very slippery little answer, since the only reason there is a distinction to be made between American Energy and Ascent Resources is that American Energy Partners just announced in a press release 3 days ago that American Energy Appalachia Holdings had changed its name to Ascent Resources and was "transitioning to a standalone operating company, fully independent of the broader American Energy Partners, LP (AELP) platform."  Perhaps this lawsuit helps to explain that decision.  The transition to a standalone company is not going to be complete until the end of the year, that same press release stated, so it seems rather disingenuous for AELP to pass this lawsuit off as if it has nothing to do with them.

What can be said is that just a couple of short years after Aubrey McClendon emerged with this new company and jumped right back into the shale game with both feet, American Energy Partners is beginning to encounter some financial and legal struggles that stir up memories of the turmoil surrounding McClendon's ouster as Chesapeake Energy's CEO.

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