Chesapeake Energy Corp. on Wednesday said it would appeal a U.S. District Court decision Tuesday that ordered the producer to pay more than $100 million for reneging on agreements to purchase some natural gas mineral rights in Texas four years ago.

In November 2008 three companies filed a lawsuit claiming that Chesapeake had failed to complete contracts to purchase three natural gas leases for which negotiations had begun in June 2008 (Preston Exploration Co. LP et al. vs GSF LLC et al., No. 4:08-cv-03341).

A Houston district court had sided with Chesapeake in the first go-round, ruling that the lease contracts were not final and therefore, the producer was not required to pay for the rights. The plaintiffs then appealed to the U.S. Court of Appeals for the Fifth Circuit in New Orleans, which reversed the lower court’s ruling. The case was returned to Houston and assigned to a new judge.

U.S. District Judge Gray Miller, in a 10-page ruling, affirmed the Fifth Circuit’s decision on Tuesday. “The evidence in this case indicates that the closing did not occur because Chesapeake — the buyer — declined to attend,” Miller wrote. “Clearly, the Fifth Circuit believed, having considered all of Chesapeake’s arguments, that Chesapeake breached the contract.”

A Chesapeake spokesman told NGI’s Shale Daily that the company will appeal. “We believe the court erred, [we] will post the required bond and appeal the judgment,” said spokesman Jim Gipson. “We had already established a reserve for this case. If we must perform under the agreement, we will receive an assignment of the leases originally contemplated to be conveyed.”

Chesapeake also is appealing a $19.7 million judgment in a separate case that also involves mineral rights in Texas. Oral arguments in the lawsuit, filed by Peak Energy Corp., based in Plano, TX, were heard Tuesday by the Fifth Circuit (Richard Coe et al. v. Chesapeake Exploration LLC et al., No. 11-41003).

The contract cases may hold implications for other types of lease agreements by other producers that have failed to be completed, especially for gas leases as the price has fallen. Chesapeake is facing similar claims across the country. In a landmark settlement announced in June with the New York Attorney General’s Office, a drilling unit of Chesapeake agreed to allow more than 4,400 New York landowners locked into gas leases the opportunity to renegotiate their minerals contracts (see Shale Daily, June 15).

The agreement followed a lawsuit that Chesapeake Appalachia lost in 2011 when the U.S. District Court for the Northern District of New York found that even if producers were prevented from drilling wells using hydraulic fracturing in New York because of an ongoing environmental review they were required to pay property owners to hold the leases (see Shale Daily, April 11, 2011).