Chesapeake Settles Lawsuit Over Royalty Deductions in Texas
Chesapeake Energy will pay the city of Arlington $700,000 to settle a lawsuit accusing the company of using a complicated scheme devised to reduce royalty checks for gas pumped from under parks, airports and other pieces of public property.
The Arlington City Council voted 8-0 Tuesday to approve a deal reached with the Oklahoma City-based company and Total E&P USA, a French energy company that owns 25 percent of Chesapeake’s Barnett Shale holdings.
Mayor Robert Cluck, who recently had surgery, was not present.
The city sued in August, saying that Chesapeake, which holds leases on about 1,900 acres of public property, based its royalty payments on gas prices that were well below the actual sales price and improperly deducted certain post-production costs.Read more by clicking here.
This is the same type of practice that has drawn negative attention (and lawsuits) to Chesapeake in the Marcellus and Utica shale plays. Time will tell how those cases will be resolved.
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