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Chesapeake Royalty Lawsuits Stir Controversy

September 15th, 2014

The use of North Texas land for natural gas drilling and allegations of underpayments have spurred a number of Chesapeake royalty lawsuits against the energy giant. The North Texas cities of Fort Worth and Arlington, their respective school districts, and several groups of investors have filed Chesapeake royalty lawsuits to regain what they allege are millions of dollars in unpaid royalties. At least one local attorney is encouraging smaller landowners affected by Chesapeake’s drilling efforts to file their own suits.

Small Landowners Consider Chesapeake Royalty Lawsuits

Dan McDonald, a Johnson County attorney, has organized meetings of small landowners to become part of a major Chesapeake royalty lawsuit to regain unpaid royalties. He has used language such as “dishonest”, “cheated”, “thief” and “embezzler” to describe the actions Chesapeake has taken. Mr. McDonald, who has also had his issues with getting royalty payments from Chesapeake for the use of land he owns, alleges that the company has withheld millions of dollars in royalty payments and charged the landowners “excessive and unreasonable” expenses.

Low Payouts Spur Chesapeake Royalty Lawsuits

A major factor in the Chesapeake royalty lawsuits came when the small landowners found out that the company was paying much lower leasing rates than their competitors. According to Mr. McDonald, Chesapeake was paying less than $1.00 for 1,000 cubic feet of natural gas extracted from the lessor’s property, while competitors such as XTO and Devon were paying as much as $3.00 per 1,000 cubic feet.

Lease Language And Chesapeake Royalty Lawsuits

One allegation stemming from the Chesapeake royalty lawsuits is that the company re-assessed the language of its leases. The company mailed letters to leaseholders stating that the terms of the lease allowed the firm to deduct the costs needed to get the gas from the well to the market. The letters also mentioned that the costs, including compression, dehydration and transportation, would be subtracted from the leaseholder’s royalty payments. The combination of the low lease rates and the new rules subtracting operating costs from their lease payments spurred many leaseholders to pursue Chesapeake royalty lawsuits.

Chesapeake Royalty Lawsuits Cover Thousands of Acres

The larger plaintiffs in the earlier Chesapeake royalty lawsuits sued for payments covering thousands of acres. A Fort Worth family who owned a lease covering more than a thousand acres won $1 million in their Chesapeake royalty lawsuit. Ed Bass, the Fort Worth billionaire, sued the company over leases he owned that covered more than 3,200 acres. Smaller landowners have expressed their opinions that the company is attempting to recover their losses in the Chesapeake royalty lawsuits by reducing or delaying royalty payments.

Source: KHOU-TV

Know Your Rights in a Chesapeake Royalty Lawsuit

To find out how we can help you with a Chesapeake royalty lawsuit, contact us today at 1-855-877-7455. Our friendly staff will ask a few questions about your case and connect you to a Chesapeake royalty lawsuit attorney. You can also fill out the “Free Case Evaluation” form at the top of this page.

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