By Erin Ailworth
Chesapeake Energy Corp. has agreed to pay $25 million to settle
antitrust allegations made by Michigan's attorney general, as well
as complaints that it misled hundreds of landowners to obtain
leases in the state.
Michigan Attorney General Bill Schuette filed criminal charges
against the company last year. He accused Chesapeake of colluding
with Encana Corp., another oil and gas producer, to keep the price
of natural gas leases in the state artificially low. In a separate
case, Mr. Schuette's office also filed racketeering and false
pretenses charges against Chesapeake, saying the company had
defrauded lease owners.
Chesapeake has previously called the cases meritless. On Friday
a spokesman said the Oklahoma City-based company was happy to have
settled the matter.
"We are pleased to have reached a mutually acceptable agreement
with the Michigan Attorney General and to move past these legacy
issues inherited from past management," said Gordon Pennoyer, a
spokesman for Chesapeake. The allegations date back to business
done in 2010 under then-Chief Executive Aubrey McClendon, who was
forced out of leadership in 2013.
Terms of the settlement call for Chesapeake to pay $25 million
into a fund to compensate landowners. Mr. Schuette's office alleged
the value of oil and gas assessments were held down when Chesapeake
and Encana agreed not to bid against each other, which would have
driven prices higher. After claims are paid from that fund, $5
million will be doled out to the state--half to Michigan's
Department of Natural Resources, and the rest to fund antitrust
enforcement activities.
Chesapeake pleaded no contest to one count of criminal attempted
antitrust violations and one count of false pretenses, both
misdemeanors. Michigan has agreed to drop its criminal complaints
against Chesapeake if it fulfills the terms of the settlement.
"This is a victory for Michigan taxpayers and a victory for all
the Michigan landowners who took deep hits to their pocketbooks,"
Mr. Schuette said.
Write to Erin Ailworth at Erin.Ailworth@wsj.com
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