Chesapeake Energy Sued For Violating Leaseholder Agreements

Date : 11/24/2010 @ 6:16PM
Source : Dow Jones News
Stock : Chesapeake Energy Corp. (CHK)
Quote : 4.69  -0.15 (-3.10%) @ 8:00PM

Chesapeake Energy Sued For Violating Leaseholder Agreements

Chesapeake (NYSE:CHK)
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A Texas woman sued Chesapeake Energy Corp. (CHK) Wednesday claiming the company, with the help of its bankers, violated the rights of leaseholders for oil wells by selling minerals without compensating members of joint operating agreements.

The lawsuit, filed in federal court in Manhattan by Mary Linda McCall, claims Chesapeake made as much as $5 billion in unjust profits since late December 2007.

According to the suit, seeking class-action status, Chesapeake "wrongfully retained" the proceeds of those sales for its sole benefit, while failing to adhere to the contractual guidelines with its leaseholders.

The suit hopes to recover "hundreds of millions--perhaps billions--of dollars" due to leaseholders.

The suit claims Chesapeake and its bankers violated the rights of the non-operating working interest owners. Chesapeake allegedly sold minerals in the ground without their consent.

"Chesapeake, as operator and a co-tenant, does not have the unbridled right to do as it pleases with the minerals in the ground," the suit said.

The banks in the lawsuit include units of Goldman Sachs Group Inc. (GS), Morgan Stanley (MS), Deutsche Bank AG (DB, DBK.XE) and Barclays Capital.

Deutsche Bank and Goldman declined comment Wednesday. Morgan Stanley and Barclays didn't immediately respond to requests for comment.

A Chesapeake Energy spokesman didn't immediately have a comment Wednesday.

-By Steven Russolillo and Chad Bray, Dow Jones Newswires; 212-416-2180; steven.russolillo@dowjones.com

 
 

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