Chesapeake Energy, the gas driller, has allegedly begun reinterpreting thousands of contracts with royalty owners from Texas to Pennsylvania. The company is now deducting costs from the royalties it pays, even in contracts that arguably contain a no-cost clause. Royalty owners have filed at least a dozen lawsuits alleging unpaid royalties, with two of them seeking class action status.<\/p>\n
The dispute comes down to the language of the contracts, which can be very complex. Even with a no-cost provision, Chesapeake has argued successfully in the past that another provision to pay royalties based on \u201cmarket value,\u201d allows it to deduct costs, including production and marketing expenses, from the royalties it pays to landowners.<\/p>\n
Chesapeake instituted the changes in April, with gas prices nearing a 10-year low, a drop of 30 percent from prices in 2010. The company dismissed its CEO, Aubrey McClendon, citing conflicts of interest, and Chesapeake lost (more…)<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Chesapeake Energy, the gas driller, has allegedly begun reinterpreting thousands of contracts with royalty owners from Texas to Pennsylvania. The company is now deducting costs from the royalties it pays, even in contracts that arguably contain a no-cost clause. Royalty…<\/span><\/p>\n