Shale Daily / NGI All News Access

Chesapeake, Ohio Company File Counterclaim in Leasing Dispute

Several Chesapeake Energy Corp. subsidiaries, along with a privately owned oil and gas exploration company based in Ohio, have filed a counterclaim in federal district court as they look to fight a lawsuit by 17 landowners in western Pennsylvania over a leasing dispute.

Chesapeake Appalachia LLC, Chesapeake Exploration LLC and CHK Utica LLC, all subsidiaries of Oklahoma City-based Chesapeake, filed the counterclaims Thursday in U.S. District Court for the Western District of Pennsylvania. They were joined by O&G Investment Holdings LLC, a subsidiary of Petro Evaluation Services Inc. of Wooster, OH, and its owners, Jay and Jason Henthorne.

At issue are several leases that O&G signed with the landowners from 2002 to 2006, some of which were subsequently sold to the Chesapeake subsidiaries around Nov. 1, 2011.

The plaintiffs allege that they were promised delay rental payments, production and shut-in royalties if there was no drilling. They also claim their leases are no longer valid because they were for seven years and have since expired. No drilling has taken place. The landowners filed suit in Beaver County Court of Common Pleas on April 19.

But in court documents filed Thursday, Chesapeake and O&G asserted that they were under no obligation to pay any royalties. They also argued that the initial primary lease terms were from seven to 10 years, did not specify a date as to when extraction activities must be started, and did not provide a mechanism for the landowners to cancel the leases.

"Despite knowing that O&G has a valid and enforceable lease on the oil and gas underlying their properties, the plaintiffs filed a lawsuit challenging and denying O&G's interest in the property," the defendants said. "Furthermore, the plaintiffs, by and through their counsel, have published defamatory statements regarding O&G's title to the oil and gas underlying their property to local news media."

Andrew Jenkins, an attorney in the Pittsburgh office of the Houston-based law firm Burleson Cooke LLP, confirmed to NGI's Shale Daily that he is representing O&G. He declined to comment outside of the documents that were submitted in the case, also known as McRoberts et al v. Chesapeake Energy Corp. et al (Case No. 2:12-CV-00514-DSC).

Steven Townsend, an attorney with the Pittsburgh law firm Eddy, Deluca, Gravina & Townsend who is representing the landowners, could not be reached for comment Friday, but told Gannett News Service that the counterclaims have no merit.

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