Chesapeake: $1 Billion in Unpaid Royalties

by Elizabeth Alford on September 21, 2015

Chesapeake Energy is in the news again as new claims surface from mineral royalty owners who believe they were swindled by the company.  

Related: Chesapeake Continues Fight with Mineral Owners

A new lawsuit that involves over $1 billion in unpaid royalty payments was filed in Tarrant County against Chesapeake Energy, according to The lawsuit accuses Chesapeake of deliberately cheating property owners by improperly calculating the price of gas sold at the wellhead and by wrongly deducting expenses.

Related: Royalty Owners Win Big

The lawsuit consolidated over 400 individual cases from all over the globe including Dallas, Pennsylvania and Ohio and France and affects 25,000 property owners.

“The vast majority are just smaller landowners, even some folks who own bigger tracts who really were not familiar with the oil and gas industry,” said attorney Dan McDonald of the McDonald Law Firm in Fort Worth. “Most of them signed leases presented to them by a [corporate] landman.”

In June, the Texas Supreme Court sided with mineral owners when it ruled that Chesapeake Energy had improperly deducted postproduction costs from the mineral estate owners’ natural gas royalties. The victory was short-lived, however, and Chesapeake attorneys filed an appeal this week asking the court to withdraw its opinion and re-hear the case.

Related: Chesapeake Before Texas Supreme Court

The defendants in this case include Chesapeake Energy Corp., Chesapeake Operating LLC, Chesapeake Energy Marketing, another subsidiary of Chesapeake Energy, Aubrey K. McClendon and Total E&P USA.

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