Chesapeake Before Texas Supreme Court

April 2, 2015 Elizabeth Alford

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.

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.

“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.

Chesapeake Lawsuit Adds to Legal Trouble

March 18, 2015 Elizabeth Alford

Legal trouble continues to haunt Chesapeake Energy as mineral owners dispute royalty payments and contracts. This week, white tailed deer are at the center of another lawsuit that is now in a San Antonio court.

A recent lawsuit filed in January, claims that a Chesapeake employee hunted, killed and removed the white-tailed deer that roamed the Dimmett County property of James Birkner. Birkner’s lease with Chesapeake dates from 2010 and does not authorize hunting by Chesapeake employees on this land. Once the allegations were made, the company abruptly ended negotiations to renew its lease and vanished from the property. The claims against Chesapeake include negligence, trespass and breach of contract.

The company has other legal trouble. In January, the company agreed to pay $119 million to settle a class action suite from 2013 that included thousands of royalty owners involving possibly 10,000 wells. And, most recently, a group of landowners in Bradford County, PA filed a suit alleging that Chesapeake and Williams Partners violated antitrust laws by conspired to restrain trade in the market for gas gathering services.

In February, Chesapeake filed a lawsuit against American Energy Partners alleging that ex CEO Aubrey McClendon stole confidential documents including maps of oil and gas prospects before leaving the company in 2013. Read more here

With more and more Texas lease holders scrutinizing their royalty statements the company may have more to worry about.

Chesapeake is active all across the Eagle Ford including Atascosa County, Dimmit County, Duval County, Frio County, Goliad County, LaSalle County, McMullen County, Washington County, Webb County and Zavala County.

Chesapeake Sues American Energy Partners

February 18, 2015 Elizabeth Alford

Chesapeake Eagle Ford Acreage - Drilling Map — Chesapeake Eagle Ford Drilling Map

Chesapeake Energy, a major producer in the Eagle Ford, has filed a lawsuit against former CEO Aubrey McClendon’s new company, American Energy Partners. The suit alleges McClendon stole confidential documents including maps of oil and gas prospects before leaving the company in 2013.

The suit was filed on Tuesday in Oklahoma County District Court and relies on a forensic audit of Mr. McClendon’s emails that are said to contain evidence of wrongdoing.

“It is beyond belief that the company that I co-founded 25 years ago and where I worked tirelessly to build it into one of America’s largest and most successful oil-and-gas producers has now decided to add insult to injury almost two years to the day after my resignation by wrongly accusing me of misappropriating information.”

— Mr. McClendon

McClendon founded Chesapeake in 1989 and came under scrutiny multiple times throughout the past several years as his position magnified. He was named one of the few eagle Ford Billionaires in 2013.

Apache Corp. Sues Eagle Ford Oilfield Services Companies

June 24, 2014 Kirk Eggleston

Houston-based Apache Corporation is in the midst of an ongoing legal battle stemming from relationships it had with oilfield services companies in the Eagle Ford Shale. Apache is alleging fraud by the principals of two oilfield services companies and a string of other parties for more than $1 million, according to a report in the Houston Chronicle. Bexar County District Court documents show lawsuits were filed in late April of 2014 against three oilfield services companies — Stag Energy Services LLC, Double M Services, and Bronco Services LLC. James C. Mann and Robbie L. Ward, of Stag Energy and Double M Services, were named in the suit. Both companies have shut their doors.

According to the Chronicle, Mann worked at Stag with his now estranged wife, Ward, who was part owner in the company. After the dissolution of Stag in November of 2013 by its majority owner Steven Staglik, who was not named in the suit, Mann and Ward shifted their operations to Double M. The former Stag and Double M provided contract drilling services, equipment rental, and trucking services in the Eagle Ford and Permian Basin.

Apache alleges Chad Walker, a former construction foreman for the oil giant, began approving unsubstantiated invoices from the service companies run by Mann and Ward. In a court filing, Walker denied the allegations. In the Chronicle's report, separate attorneys for Mann and Ward also denied the company's claims.

Although this specific case puts a bad light on a few oilfield service companies and some alleged bad apples, most of oilfield service companies and oilfield workers in the Eagle Ford are on the up and up. As with any boom, where there is a good deal of money to be made, some people will be tempted to take advantage of the moment. EagleFordShale.com will keep you updated as this case develops.