Texas lawyer hunts for plaintiffs in litigation against Chesapeake Energy

By Ellen M. Gilmer, E&E reporter, EnergyWire: February 4, 2015

Dan McDonald is hosting his second meeting of the day — one of nine this week, all in little Pennsylvania towns where royalty owners think a big oil and gas company is a big cheat.

Texas lawyer hunts for plaintiffs in litigation against Chesapeake Energy

Texas attorney Dan McDonald, in blue, talks with royalty owners after a meeting in Mildred, Pa. Photo by Ellen M. Gilmer.

McDonald says the royalty owners are right about Chesapeake Energy Corp. He knows from experience, he says. And he’s angry, too.

“Chesapeake literally is one of the most immoral, crooked companies I’ve ever encountered,” McDonald tells a couple of dozen northeast Pennsylvania royalty owners here in the St. Francis of Assisi Hall. “The dishonesty is just breathtaking.”

But McDonald isn’t just indignant; he’s a lawyer, and he’s looking for business. His Texas-based firm has spent the past year rounding up potential clients in Texas, Louisiana, Oklahoma and Pennsylvania for mass litigation against Chesapeake for shorting royalty owners on payments.

Read Ellen M. Gilmer’s story, “Texas lawyer hunts for plaintiffs in litigation against Chesapeake Energy

Johnson County sues Chesapeake over royalty payments

By Max B. Baker, Fort Worth Star Telegram on January 6, 2015

Johnson County became the latest public entity to sue Chesapeake Energy, saying it was cheated out of royalties on natural gas pumped from county-owned property.

Johnson County became the latest public entity to sue Chesapeake Energy

Johnson County became the latest public entity to sue Chesapeake Energy for allegedly cheating it out of royalties on natural gas pumped from leases on county-owned property. RON T. ENNIS STAR-TELEGRAM ARCHIVES

Also named in the lawsuit is Aubrey McClendon, the company’s former chief executive officer, and Total E&P USA, the French energy giant that bought a 25 percent share in Chesapeake’s Barnett Shale holdings in 2010.

Dan McDonald, a Fort Worth attorney representing individual royalty owners against Chesapeake, filed the suit late Monday in Johnson County civil court. The suit does not mention a dollar amount in losses, but McDonald said it exceeds $50 million.

“Chesapeake has substantially overcharged for postproduction expenses and made billions of dollars by hedging gas on the market and not paying the royalty on it,” McDonald said.

While the firm is still calculating the exact acreage involved, the Chesapeake leases include parkland, rodeo grounds and airport property, as well as county roads and land that has come under its control from eminent domain and other legal actions, according to McDonald and court documents.

Read Max Baker’s story, “Johnson County sues Chesapeake over royalty payments” in the Fort Worth Star-Telegram

Shale Math: Half Full or Half Empty

By Jeff Prince and Eric Griffey, Fort Worth Weekly on December 3, 2014
Fort Worth Weekly

Either way, gas drilling’s gifts are full of questions.

Her first royalty check hit the mailbox in 2008, and Becky Ferruggia was excited to see the amount –– about $8,000. Chesapeake Energy landmen had told everyone in her neighborhood that the gas wells would produce for 20 or 30 years. Subsequent checks were more in the $1,000 range, but by year’s end, she’d collected more than $15,000 in royalties on her two-acre lot in an unincorporated area south of Fort Worth.

The next year her monthly check amounts fell to about $500. By 2010, it was $200 a month. Then $100. After that, royalties fell so low that Chesapeake stopped sending out monthly checks, writing annual checks instead. Ferruggia earned a total of $240 in 2012 and about the same in 2013, for an average of about $20 a month (before taxes).

Ferruggia and her neighbors were confused. They’d banded together from the beginning, sought guidance from experts, fought for a fair lease agreement, and used their own attorney to draw up the contract, which forbade Chesapeake from deducting production costs from the royalties. When everyone’s royalties plummeted, the neighbors wondered what had happened. The wells were still pumping, although the figures included on their statements had become so confusing that few people could figure them out. Chesapeake officials, if they responded at all to complaints, blamed falling gas prices.

The neighbors began to suspect that Chesapeake was fudging records and using a subsidiary company to manipulate gas sales and royalty payments, as well as deducting production costs.

“The price of natural gas did fall, but it didn’t fall as much as they said,” Ferruggia said.

She’s now one of thousands of residents across North Texas joining forces to sue Chesapeake for lost royalties.

Read Fort Worth Weekly’s story about our case against Chesapeake

TX law firm seeks unhappy Haynesville royalty owners for lawsuits against Chesapeake

By WKLA on September 23, 2014

Several hundred mineral rights owners have turned out in Mansfield for a series of meetings offered by a Fort Worth-based law form looking to file mass lawsuits against Chesapeake Energy.

More than 500 showed up for the first 2 “town hall meetings” offered by the McDonald Law Firm in Mansfield on Monday evening. Another 175 or so came to a third session Tuesday night.

More than 500 showed up for the first 2 “town hall meetings” offered by the McDonald Law Firm in Mansfield on Monday evening. Another 175 or so came to a third session Tuesday night.

As a landowner in Fort Worth, Texas, Dan McDonald says he was given the runaround himself by Chesapeake and had to fight for the royalties owed to him. McDonald, who is not an oil & gas attorney, says he learned through is personal experiences in trying to get answers from the natural gas giant.

“What must it be like to be a royalty owner who’s not a lawyer who doesn’t understand the oil and gas business. I want to reach out and help those people.”

Read the full story about our Haynesville royalty owners meetings at KLSA.com

Lawyer seeks thousands of clients for case against Chesapeake

By Max B. Baker, Fort Worth Star Telegram on September 15, 2014

Dan McDonald stands in front of the pulpit of the Genesis United Methodist Church in southwest Fort Worth sporting gray slacks, a short-sleeved white shirt and his best Texas drawl.

Star-Telegram, Ron T. Ennis

Star-Telegram, Ron T. Ennis

Holding a microphone, he paces within the sanctuary, where usually the pastoral message speaks of love and hope and compassion. Tonight, McDonald growls about an “embezzler” and a “thief.”

And while McDonald is not a preacher, the 58-year-old attorney speaks with a missionary zeal for his latest crusade: small landowners who are upset about the dwindling size of their royalty checks and suspect that they are being cheated by Chesapeake Energy.

“I can’t tell you how dishonest these people are. The dishonesty is breathtaking,” McDonald tells about 250 people — old, young, black, white, Hispanic, retired, working stiffs — many of them homeowners from the Candleridge neighborhood in southwest Fort Worth. “They have stolen our money. They have cheated us.”

Read the Fort Worth Star Telegram’s whole story about our case against Chesapeake

Tension grows between driller and royalty owners

Photo: WFAA

A Fort Worth law firm is soliciting disgruntled Chesapeake Energy royalty owners in newspaper ads.
(Photo: WFAA)

McDonald Law Firm is planning two big meetings next week to solicit prospective clients who are dissatisfied with payments

By Todd Unger, WFAA on September 10, 2014

A local law firm is planning two big meetings in Fort Worth next week to solicit prospective clients who are Chesapeake Energy royalty owners.

The McDonald Law Firm says recent meetings in Johnson County have drawn up to 200 people, most of whom say they are being underpaid in royalty payments due to them for letting Chesapeake drill for natural gas on their properties.

“Chesapeake has cheated royalty owners out of millions of dollars by charging expenses that are excessive and unreasonable,” said Dan McDonald, the lead attorney on the case. “We currently represent over 4,000 royalty owners in North Texas and across the county.”

See the the full story at WFAA.com

Arlington Approves Gas Royalty Settlement with Chesapeake

Arlington Reaches Gas Royalty Settlement with Chesapeake

Arlington approves gas royalty settlement with Chesapeake – From Star-Telegram Archives, Ron T. Enis

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.

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.

Under the agreement, Chesapeake will no longer subtract post-production costs and the city’s royalty will be calculated based on the highest price received by Chesapeake when the gas is sold or the price established by a formula.

Read more here: http://www.star-telegram.com/2014/08/19/6054582/arlington-approves-gas-royalty.html?rh=1#storylink=cpy

 

Your Claim is NOT Affected by Recently Reported Chesapeake Court Decisions

On Sunday August 3, the Fort Worth Star Telegram reported on two cases that recently were decided in favor of Chesapeake on the issue of whether Chesapeake’s deductions from royalty payments were proper. The recently decided cases involved leases which included language stating that Chesapeake was not authorized to deduct any expenses from the agreed upon royalty payments. The court’s decision stated that this lease provision was contrary to the custom in the business and was therefore “surplusage”, and had no legal effect. We agree that under the vast majority of leases, Chesapeake can deduct for reasonable expenses. However, our claim is that even under the leases that permit Chesapeake to deduct expenses, it has cheated royalty owners by deducting excessive, unreasonable and unconscionable expenses. The recently decided cases do not apply to our claim against Chesapeake and will have no effect on the outcome of our cases.