Win This Book: The Boom by Russell Gold

THE BOOM by Russell GoldOne hundred wells a day. That is the number of wells that are drilled and hydraulically fractured – or fracked – every day in the United States.

In The Boom, Wall Street Journal reporter Russell Gold chronicles the rise of this once-obscure oilfield technology, a story that answers a critical question of our time: where will the energy come from to power the world – and what price will we have to pay for it. It is a commanding piece of journalism, an astounding study of human ingenuity, and an epic work of storytelling.

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Star-Telegram sues Chesapeake over royalty payments

From the Star-Telegram’s Barnett Shale Blog

Originally posted on May 16, 2014 by Jim Fuquay

A day after the Fort Worth ISD sued Chesapeake Energy over its royalty payment practices, the Star-Telegram filed its own suit against the natural gas producer, alleging two Chesapeake units improperly deducted costs from royalties on one lease and has failed to pay royalties on another. The suit seeks between $200,000 and $1 million in damages. A number of royalty owners in the Barnett Shale, including the cities of Fort Worth and Arlington, and in other states have sued Oklahoma City-based Chesapeake over similar issues. In one of the largest such cases, the company last year paid $7.5 million to settle a class-action lawsuit in Pennsylvania alleging underpayments of royalties.

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Fort Worth school district sues Chesapeake Energy

From the Fort Worth Star-Telegram

Originally posted on May 15, 2014 by Yamil Berard

The Fort Worth school district has filed a lawsuit against Chesapeake Energy Corp. and its former chief executive officer alleging that the company improperly deducted its own expenses from royalties owed to the school district and its taxpayers.

The lawsuit, filed late Thursday afternoon in Tarrant County Judge Tom Lowe’s 236th District Court, names former Chesapeake CEO Aubrey McClendon, company affiliates and its joint venture partner, Total.

Just in the past year, the cities of Fort Worth and Arlington, the Arlington school district, a group including Fort Worth developer Ed Bass and Trinity Valley School and another group including a half-dozen prominent Fort Worth residents have filed lawsuits over royalty payments.

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Royalty Rip-off

Around the country, landowners are suing Chesapeake and other drillers for massive deductions from royalty checks.

Originally posted in Fort Worth Weekly, April 16, 2014 by PETER GORMAN

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Fort Worth Weekly Cover, week f April 16, 2014

Donald Feusner used to be a dairy farmer. His 370 acres of land in northeast Pennsylvania border New York state in a gloriously lush area. In 2011, when his farm was no longer profitable, he sold off his herd and retired to what he thought would be the life of a gentleman farmer, living off the proceeds of the gas wells Chesapeake Energy had drilled on his land. And in December 2012, when the wells came in, it looked as though he’d made a safe bet: Royalty income from the first month’s production alone totaled more than $8,500.

But five months later, with the wells still producing the same amount of gas, his royalty check suddenly shrank by more than 80 percent, to just under $1,700, eaten away by what Chesapeake called “post-production costs.” In the following months, his checks dwindled even further, to almost nothing.

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Chesapeake Energy’s $5 Billion Shuffle

Chesapeake Energy’s $5 Billion Shuffle - ProPublica - Drake - Chesapeake - 630

Joe Drake (Abrahm Lustgarten for Propublica)

The energy giant raised the cash it needed to survive by slashing royalties it paid property owners to drill on their land.

By Abrahm Lustgarten ProPublica, March 13, 2014, 5:45 a.m.
This story was co-published with The Daily Beast.

At the end of 2011, Chesapeake Energy, one of the nation’s biggest oil and gas companies, was teetering on the brink of failure.

Its legendary chief executive officer, Aubrey McClendon, was being pilloried for questionable deals, its stock price was getting hammered and the company needed to raise billions of dollars quickly.

The money could be borrowed, but only on onerous terms. Chesapeake, which had burned money on a lavish steel-and-glass office complex in Oklahoma City even while the selling price for its gas plummeted, already had too much debt.

In the months that followed, Chesapeake executed an adroit escape, raising nearly $5 billion with a previously undisclosed twist: By gouging many rural landowners out of royalty payments they were supposed to receive in exchange for allowing the company to drill for natural gas on their property.

In lawsuits in state after state, private landowners have won cases accusing companies like Chesapeake of stiffing them on royalties they were due. Federal investigators have repeatedly identified underpayments of royalties for drilling on federal lands, including a case in which Chesapeake was fined $765,000 for “knowing or willful submission of inaccurate information” last year.

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Unfair Share: How Oil and Gas Drillers Avoid Paying Royalties

by Abrahm Lustgarten, ProPublica, Aug. 13, 2013, 10:20 a.m.

Don Feusner ran dairy cattle on his 370-acre slice of northern Pennsylvania until he could no longer turn a profit by farming. Then, at age 60, he sold all but a few Angus and aimed for a comfortable retirement on money from drilling his land for natural gas instead.

It seemed promising. Two wells drilled on his lease hit as sweet a spot as the Marcellus shale could offer – tens of millions of cubic feet of natural gas gushed forth. Last December, he received a check for $8,506 for a month’s share of the gas.

Then one day in April, Feusner ripped open his royalty envelope to find that while his wells were still producing the same amount of gas, the gusher of cash had slowed. His eyes cascaded down the page to his monthly balance at the bottom: $1,690.

Chesapeake Energy, the company that drilled his wells, was withholding almost 90 percent of Feusner’s share of the income to cover unspecified “gathering” expenses and it wasn’t explaining why.

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Another royalties suit filed against Chesapeake

From the Star Telegram’s Barnett Shale Blog on August 19, 2013

Several Fort Worth parties, including investor and lawyer Elton Hyder, have become the latest to sue Chesapeake Energy over what they say is the improper payment of natural gas royalties. In a lawsuit filed Friday in Fort Worth district court, the plaintiffs say affiliates Chesapeake Operating and Chesapeake Exploration, along with Total E&P USA, took cost deductions in violation of their lease terms and also failed to pay royalties on natural gas liquids produced from several leases.

Jewett sues for mineral rights on village property

An article from IndeOnline.com by TimesReporter.com staff writer Jon Baker outlines the story of Jewett, a small Ohio village that filed a lawsuit against Chesapeake Exploration LLC, North American Coal Royalty Co, and five other defendants. Jewett seeks to acquire the subsurface oil and natural gas mineral rights to a 29-acre tract of land that it owns in Archer Township, located in Harrison County, Ohio.

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Fort Worth Sues Chesapeake, Citing Millions in Lost Royalties

An article from the New York Times by Jim Malewitz describes the epic battle between the city of Fort Worth and Chesapeake Energy in Tarrant County District Court over unpaid royalties. The complaint states that Chesapeake and their respective companies, “have fallen well short of their obligation to the city and its citizens,” while “willfully and knowingly violating” their duties.

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