FORT WORTH -- Chesapeake Energy, in an effort to put its troubles in the Barnett Shale behind it, is settling hundreds of lawsuits that accuse the company of cheating thousands of property owners out of millions of dollars in natural gas royalties.
The biggest settlement, for $52.5 million, covers more than 400 lawsuits covering 13,000 clients. The lawsuits were filed by Fort Worth’s McDonald Law Firm and the Circelli, Walter & Young law firm. Dan McDonald made a cottage industry out of suing the Oklahoma City energy giant over how it paid landowners. The lawsuits were filed primarily in Tarrant and Johnson counties.
Beyond that, Chesapeake confirmed it has reached a settlement with the city of Fort Worth over its royalty lawsuit. While the settlement agreement is on the agenda for the Fort Worth City Council’s Tuesday meeting, details of the out-of-court deal are not included and Chesapeake would not disclose them. In March, the city settled a royalty lawsuit with Total E&P USA Inc, Chesapeake’s partner in the Barnett Shale, for $6 million.
“We are pleased to have reached a mutually acceptable resolution of this legacy issue and look forward to further strengthening our relationships with our royalty owners,” Gordon Pennoyer, a spokesman for Chesapeake in Oklahoma City, said in a statement.
Under the terms of the deal reached with the McDonald and Circelli law firms, Chesapeake will pay $29.4 million and Total $13.1 million in cash, with the remaining $10 million being paid through a Chesapeake promissory note payable in three years.
The settlement, however, is contingent on the Fort Worth law firms getting written approval from 90 percent of their clients by July 11. This week, their clients will get statements explaining the deal, and they will be given time to ask questions, according to a joint statement released by Chesapeake and the law firms.
The settlement was reached after three weeks of good-faith mediation led by a former federal judge, according to a statement from attorney George Parker Young.
The amount to be paid to each plaintiff will vary widely, based on the language in each landowner’s lease. While the settlement covers 13,000 individuals, the large majority of them have small-acreage leases that allowed post-production deductions, unlike many of the other royalty underpayment lawsuits that have been filed, according to a joint statement.
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