Chesapeake Before Texas Supreme Court

Chesapeake Before Texas High Court
Chesapeake Before Texas High Court

Chesapeake Energy is back in the news again for continued disputes over royalty payments. This time, the company stood before the Texas Supreme Court to challenge a 2014 Appeals Court ruling that would cost them at least $1million.

Related: Chesapeake Lawsuit Adds to Legal Trouble

At the heart of the case is the property owners (Hyders) allegations that Chesapeake improperly deducted money from their royalty checks to cover post-production costs. They say that the problems began after Chesapeake bought their lease from another company in 2006 and have since continued to alter their interpretation of their obligations outlined in the lease.

In 2010, the Hyders finally sued Chesapeake for improperly subtracting postproduction costs from their royalty checks for gas taken from their own property. In 2012, state District Judge Melody Wilkinson awarded the family nearly $1 million and the decision was upheld last year by the 4th Court of Appeals in San Antonio.

The case is being watched closely by property owners and by the oil and gas industry, many who believe this decision can fundamentally change change in Texas oil and gas law.

In Texas, mineral owner have a four-year stature of limitations in which to file a lawsuit to dispute royalty payments and many are racing to the lawyers.

Related: Mineral Owners Race the Clock in Texas

this is one of a long line of cases in which Chesapeake has sought to profit at the expense of royalty owners.
— National Association of Royalty Owners-Texas

Attorneys George Parker Young and Dan McDonald are just two who are getting ready to come after Chesapeake. The attorneys  expect to file up to 400 lawsuits by the end of the year that could name as many as 40,000 plaintiffs.