Chesapeake Continues Fight with Mineral Owners

by Elizabeth Alford on August 12, 2015

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.

Related: Chesapeake Before Texas Supreme Court

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.

The motion filed by the office of Kelly Hart & Hallman, states that “According to the court, the contract allows the Hyders to pick the royalty they like best: (1) the one with a lower value, which they can take in-kind and which ‘might’ or ‘might not’ bear postproduction costs; or (2) the more valuable royalty, which is paid in cash and bears no postproduction costs. This has never been Texas law and is contrary to the way the court has dealt previously with affiliate sales.”

The trouble started back in 2006, Chesapeake bought a lease from another company for a property owned by the Hyder family. The Hyder’s claim the company began improperly deducted money from their royalty checks to cover post-production costs and was uncooperative in trying to re-negotiate.

After the Hyders filed a lawsuit, the case made its way through the system where both the trial court and the Fourth Court of Appeals in San Antonio ruled in the case for the mineral owners on all claims.

Previous post:

Next post: