Chesapeake (CHK) Reaches Settlement Deal Over Underpaid Royalties
Chesapeake (CHK) will pay Pennsylvania landowners more than $9 million for improper oil and gas royalty calculation.
Chesapeake Energy Corporation CHK received approval from a federal court to settle a lawsuit over allegations of underpaid oil and gas royalties.
The federal court approved two class action settlements, which would require the company to pay Pennsylvania landowners more than $9 million for improper oil and gas royalty calculation. The Texas court sanctioned a $6.3-million settlement for landowners and $3 million for attorney fees.
In December 2015, the state filed a complaint against Chesapeake, alleging that the company had been involved in deceptive business activities. The company paid royalties by inaccurately deducting post-production costs from royalty checks to cover marketing expenses, which include compression, dehydration and transmission.
The lawsuit was the outcome of an extensive investigation by the Pennsylvania attorney general’s Antitrust Section and Bureau of Consumer Protection that brings legal action against overcharges and underpayment. Hundreds of landowners, who signed lease agreements with Chesapeake in previous years, played a significant part in the case.
The cases were initially approved in the U.S. District Court for the Middle District of Pennsylvania. However, they were hindered by the company’s bankruptcy last year. Despite being a dominant natural gas producer of Pennsylvania, Chesapeake filed for bankruptcy and, hence, the court delayed the state’s case. It has now emerged from those proceedings.
Chesapeake has been accused in various courts across the country of a similar case of improper deductions. The U.S. District Court finally approved the class settlements as the bankruptcy court denied objections to the settlements, thereby, paying the way for approval.
Headquartered in Oklahoma City, OK, Chesapeake’s operations are focused on discovering and developing its large, geographically diverse resource base of unconventional oil and natural gas assets onshore in the United States.
Zacks Rank & Other Stocks to Consider
The company currently flaunts a Zack Rank #1 (Strong Buy).
Some other top-ranked players in the energy space are PDC Energy, Inc. PDCE and Schlumberger Limited SLB, each currently sporting a Zacks Rank #1, and RPC, Inc. RES, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PDC Energy’s earnings for 2021 are expected to increase 15.5% year over year.
Schlumberger’searnings for 2021 are expected to rise 44.3% year over year.
RPC’s earnings for 2021 are expected to surge 511.1% year over year.
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