YOUNGSTOWN, Ohio (Legal Newsline) – Several Ohio and Texas residents are suing an oil and natural gas producer over claims it breached leases.
Dale H. Henceroth, Melinda J. Henceroth, Ruth Burchfield, James M. Burchfield, Toni I. Burchfield, Marilyn S. Wendt, Janet K. Cooper, Wilford L. Copeland, Virgil R. Barnes and Karen G. Barnes, individually and for all others similarly situated, filed a class-action lawsuit Dec. 14 in the Eastern Division of the Northern District of Ohio against Chesapeake Exploration, alleging breach of contract.
The plaintiffs and other class members are lessors under Ohio oil and gas leases with Anschutz Exploration Corp., which assigned the leases to Chesapeake Exploration, whose corporate parent is Chesapeake Energy.
The leases provide for the payment of oil and gas royalties on natural gas, natural gas liquids (NGLs) and oil. The royalties are a portion of the revenue realized from the monthly sale of these products.
The suit states Chesapeake Exploration produces the oil and gas, but Chesapeake Energy and Chesapeake Operating hold the proceeds from their sale, calculate royalties and issue royalty checks.
The plaintiffs allege Chesapeake Exploration breached the leases by allowing Chesapeake Energy and Chesapeake Operating to underpay the royalties on natural gas, NGLs and oil.
Specifically, the suit states the defendant breached the leases by paying royalties on less than the full amount of gas, NGL and oil sold; paying the royalties on less than the revenues realized from the sale of gas; paying royalties using a price that was less than the price paid by the buyer; deducting inflated costs that exceeded the NGL royalties; paying royalties on a price of oil that was below market and less than the price paid by the buyer; deducting costs incurred after Chesapeake Exploration no longer held title to the gas and oil; deducting gathering costs that were inflated through collusion and self-dealing with Access Midstream Partners; deducting transportation costs that were greater than the actual cost of transportation; deducting fuel costs that were greater than the actual cost of fuel; deducting marketing fees that were never incurred; and deducting NGL costs.
The plaintiffs and others in the class seek compensatory damages, interests, and costs of the suit. They are represented by attorney James A. Lowe of Lowe Eklund & Wakefield Co. in Cleveland, Ohio; attorney Robert L. Guehl of Guehl Law Offices in Dayton, Ohio; attorney Mark A. Hutson of Mark A. Hutson Law Office in Columbiana, Ohio; and attorney Robert C. Sanders of the Law Office of Robert C. Sanders in Upper Marlboro, Maryland.
Eastern Division of the Northern District of Ohio Case number 4:15-CV-02591-BYP