http://www.star-telegram.com/2013/08/19/5092914/chesapeake-sued-aga...

Chesapeake Exploration deducted costs in violation of their lease terms, used sham transactions to lower the reported price on natural gas production and failed to pay royalties on natural gas liquids produced from several leases. Also named is Total E&P USA, a French energy giant that acquired 25 percent of Chesapeake’s holdings in the Barnett Shale in 2010.

Parties to the suit include William Wright Jr. and William Wright III, Edward and Lynn Sankary, and Sheldon Anisman.

A Chesapeake spokesman at its Oklahoma City headquarters said Monday that the company will not comment on the case. Total E&P representatives were not immediately available for comment.

“Both Chesapeake and Total employ a royalty-accounting system and gas-marketing arrangement that negatively impacts royalties,” the suit alleges. Specifically, the suit claims that Chesapeake sells to affiliates to produce a lower price on which it pays royalties, and then “used device and sham transactions” with its affiliates to impose post-production costs, such as pipeline gathering and compression expenses.

Further, the suit claims that Chesapeake didn’t pay royalties at all on natural gas liquids produced from some leases.

Read more here: http://www.star-telegram.com/2013/08/19/5092914/chesapeake-sued-aga...