OKLAHOMA CITY, Feb. 17, 2015 /PRNewswire/ -- Aubrey K.
McClendon and American Energy Partners, LP (AELP) today announced
their intention to respond vigorously to a baseless legal action
commenced by Chesapeake Energy Corporation (NYSE: CHK). When Mr.
McClendon agreed to leave Chesapeake in January 2013, the company made a deal with him:
first, the company promised he would be paid his compensation
benefits as provided for in his employment agreement and second,
the company promised he would be provided with an extensive array
of information about the more than 16,000 wells, and the related
leasehold acreage and future wells, he jointly owns with
Chesapeake. That information includes land, well, title,
accounting, geological, engineering, reservoir, operating,
marketing, and performance data. The deal further gave Mr.
McClendon the right to own and use this information for his own
purposes, including sharing it with his employees, contractors,
advisors, consultants and affiliated entities.
The agreement to share this information was well-documented and
very clear - and it was a critical part of a detailed and
extensively negotiated set of documents that were approved by
Chesapeake, its attorneys, and its Board and filed with the SEC in
April 2013. Now it appears that
Chesapeake wishes it had not agreed to the deal it made with Mr.
McClendon and has sued to break those promises. However, a deal is
a deal and Mr. McClendon and AELP will be vindicated in this
dispute, and Mr. McClendon's contractual rights to keep and use the
information he received in the deal will be affirmed.
The allegations in the Chesapeake lawsuit are meritless given
the following:
- Mr. McClendon was entitled to own and use the information in
his possession by contractual right;
- Mr. McClendon's agreement with the company clearly gives him
broad and deep information rights consistent with past
practices;
- Chesapeake has given Mr. McClendon almost 20 terabytes of
information in accordance with the terms of the Separation
Agreement; and
- Mr. McClendon has paid Chesapeake nearly $2.5 billion in connection with the jointly owned
properties and is still a working interest owner in more than
16,000 Chesapeake wells, making him the company's single largest
partner.
The information in Mr. McClendon's possession is rightfully his
under the terms of the agreements Chesapeake made with him in early
2013. Indeed, under those agreements, he is entitled to much more
information from the company, but the information is not yet in his
possession because of Chesapeake's refusal to provide it. Further,
Chesapeake has refused to provide over 1,000 assignments of leases
to Mr. McClendon for interests in wells for which he has been
billed and for which he has paid more than $100 million on a net basis to Chesapeake. It has
also converted to its own use revenue due him that has been paid to
Chesapeake by third parties on at least 63 other wells. Mr.
McClendon will enforce his rights under the agreements.
Mr. McClendon stated, "It is beyond belief that the company that
I co-founded 25 years ago and where I worked tirelessly to build it
into one of America's largest and most successful oil and gas
producers has now decided to add insult to injury almost two years
to the day after my resignation by wrongly accusing me of
misappropriating information. Under my agreements with Chesapeake,
I am entitled to possess and use the 20 terabytes of information I
own. It is a sad day to see Chesapeake stoop so low as to sue its
co-founder for having information that was earned, paid for and
provided through my contracts with Chesapeake."
Mr. McClendon and AELP are represented by Matthew A. Taylor with Philadelphia-based Duane Morris, LLP and Emmet T. Flood with Washington, DC-based Williams & Connolly,
LLP.
Mr. Taylor, said, "Our filings will show that any information in
Mr. McClendon's possession is rightfully his pursuant to the terms
of the agreements entered into between the parties. In fact, the
separation agreement between the parties makes explicit and
repeated reference to the data and services owed to Mr. McClendon,
recognizing that the sharing of information is 'essential' and in
fact 'beneficial to the Company'. We are 100% confident that Mr.
McClendon and AELP will prevail in this dispute."
Mr. McClendon and AELP have established a website
(www.AELPvCHKLitigation.com) on which copies of all relevant
documents concerning this dispute may be located.
KEY PROVISIONS OF MCCLENDON'S SEPARATION
AGREEMENTS
(See website for complete agreements:
www.AELPvCHKLitigation.com)
Term Sheet Dated January 29,
2013:
…the Company will provide the data, licenses, and services,
including administrative, engineering, IT, and software, necessary
to facilitate the efficient exchange of land, well, title and other
information kept in the Company's well files, previously provided
to Mr. McClendon in written format on a routine basis or requested
by Mr. McClendon and development of reserve reports in connection
with oil and gas interests acquired under the FWPP, or jointly
owned by any affiliate of Mr. McClendon's and the Company. Term
Sheet, at "Continued Services"
Founder Separation Services Agreement ("FSSA"), dated
April 1, 2013, effective January 29, 2013:
WHEREAS, the Company and the Executive desire to memorialize
the agreement regarding the Executive's separation from employment
with the Company, to provide for a smooth transition after the
Effective Date and to facilitate an efficient, ongoing
relationship between the Company and the Executive after the
Separation Date as joint working interest owners of certain oil
and gas wells, leases and acreage. FSSA at Preamble.
*****
From the Effective Date, to the extent not prohibited by the
software or data-use licenses with third parties, and without
waiving or compromising the Company's rights to the "CHK Search"
interface, the Company will provide to the Executive the
data and services (including administrative, engineering, IT and
software) necessary to facilitate the efficient exchange of land,
well, title (including title opinions, assignments and curative
documents), geological, engineering, reservoir, operating,
marketing, performance and other information in the Company's well
files or otherwise kept by the Company; and information
provided to the Executive in printed, plotted or written format on
a routine basis or as reasonably requested by the Executive
related to the wells, increased density locations, leases and
acreage jointly owned by the [Mr. McClendon] and the Company
(collectively, the "FWPP Well File Data"). FSSA at
§ 7.
*****
To the extent not prohibited by the software or data-use
licenses with third parties the Company will provide to the
Executive (or any affiliated entity, agent or employee of the
Executive) the data, licenses and personnel services for
development of reserve reports in connection with oil and gas
interests acquired under the FWPP, or jointly owned by any
affiliate of the Executive and the Company consistent with the
reserve reports prepared in the past for the Executive and his
affiliates. FSSA at § 7.
*****
The FWPP Well File Data, the reserve reports and the
related information are the Executive's property, but
shall remain subject to the confidentiality obligations of Section
7 of the Employment Agreement except that the Executive will
have the right to use all such information for the Executive's own
benefit and purposes and in connection therewith may disclose
such information to the Executive's employees, contractors,
advisors, consultants and affiliated entities who are also under
confidentiality obligations not to make disclosure to third parties
consistent with Section 7 of the Employment Agreement. FSSA at
§ 7
*****
The Executive shall have the right to utilize for his own
benefit and purposes the knowledge, experience and expertise
accumulated by the Executive during his years of service as an
executive officer of the Company and in connection
therewith may disclose such information to the Executive's
employees, contractors, advisors, consultants and affiliated
entities (who are also under confidentiality obligations not to
make disclosure to third parties consistent with Section 7 of the
Employment Agreement), but such information shall otherwise remain
subject to the confidentiality obligations of Section 7 of the
Employment Agreement. FSSA at § 14.
Founder Joint Operating Service Agreement ("FJOSA"), dated
April 1, 2013, effective January 29, 2013:
WHEREAS, the Founder Affiliates in the aggregate are one of
the Company's three largest nonoperating working interest partners
in the jointly developed oil and gas wells, increased density
locations, leases and acreage jointly owned by the Company and the
respective Founder Affiliates (the "Joint Interests") and over the
years have worked cooperatively to develop efficient methods and
practices for access to and sharing of information essential for
the efficient administration of their respective interests in
the Joint Interests (the "Administrative Practices"). FJOSA at
Preamble.
*****
WHEREAS, as of April 1, 2013
(the "Separation Date"), the Founder will no longer be employed by
the Company and it is beneficial to the Company and the Founder
Affiliates to maintain and continue the Administrative
Practices and to provide a framework for the continued
efficient administration of the Joint Interests. FJOSA at
Preamble.
*****
The Company will also make the same information and data
available (a) for all new wells drilled in which the
Company and any Founder Affiliate are working interest owners, and
(b) to keep the Joint Well File Data current and in synch with the
Company's corresponding data in accordance with the methods and
frequencies to be determined by the parties, but in any event in
a manner that makes the information that was available to the
Founder Affiliates prior to the Effective Date available after the
Separation Date on substantially the same basis but utilizing the
Asset Management System (as defined below). FJOSA at Preamble
and § 1.
*****
From the Effective Date through no later than December 31, 2016, to the extent not prohibited
by the software or data use licenses with third parties, the
Company will continue to provide the data, licenses and
personnel services for development of and will prepare the
quarterly and year-end reserve reports in connection with the Joint
Interests consistent with the periodic reserve reports prepared
in the past for the Founder and the Founder Affiliates. FJOSA
at 3.
*****
After the Separation Date and through the date after which an
affiliate of the Founder no longer owns any of the Joint Interests
(the "Termination Date"), the Company will continue to provide the
following routine monthly services (in addition to the services
provided by the Company as the operator of the Joint Interests,
pursuant to any applicable JOA or other agreement among the Company
and any of its affiliates, the Founder or any of the Founder
Affiliates): (a) preparation of schedules and exhibits to
mortgages; and (b) unit interest review with data of the type used
in Dynamics DOI and well interest review with data of the type used
in Artesia DOI, with the Company providing data extracts of the
required lease, division of interest and billing information
available to the Founder Affiliates on the same frequency as in the
past in electronic form for import into the Founder's systems; (c)
preparation of stipulations and JOA ratifications; and (d)
assignment review and GIS services (including, for example, the
maps depicting earned acreage as currently provided). FJOSA at
Preamble and § 8.
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SOURCE American Energy Partners, LP