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.

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Attorney seeks property owners for royalty lawsuits against Chesapeake

From the Fort Worth Star-Telegram by Shlachter, Baker & Fuquay

Royalty Lawsuits Against Chesapeake

Cities, school districts and private property owners have sued Chesapeake Energy for allegedly underpaying natural gas royalties in Tarrant County.

It’s easy for Fort Worth lawyer Dan McDonald to put himself in his clients’ shoes for a lawsuit he expects to file against Chesapeake Energy over alleged underpayment of royalties. He says he has been shorted too.

On Tuesday evening, McDonald held his first Tarrant County meeting aimed at rounding up royalty owners for the cases. About 75 people showed up at Unity Church on Trail Lake Drive in southwest Fort Worth, where McDonald told them he thinks there are hundreds of millions of dollars at stake.

One of those attending was Paul Weide, a TCU-area resident who has pressed the company previously on royalty issues.

“So many people just don’t know what to do,” Weide said of the appeal of a mass effort like McDonald’s. “Eventually, if there’s enough people it’s worth his time” to take on the cost of preparing the cases, Weide said.

“It’s really nothing short of stealing,” McDonald said, recounting his own experience with the Oklahoma City-based natural gas producer. He said the company did not pay royalties for months and months after beginning production on mineral interests his family holds in west Fort Worth, an issue resolved only after Chesapeake needed a pipeline easement across one of the properties.

The company did not respond to a request for comment on McDonald’s efforts.


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.

Read Full Article

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


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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