Dallas-based gas marketer ICC Energy Corp. is suing Chesapeake Energy Corp., several subsidiaries and individuals, claiming the company reneged on a commitment to partner with ICC on the marketing of gas produced from the Barnett Shale at Dallas/Fort Worth (DFW) International Airport.
The lawsuit alleges discrimination, breach of contract, misrepresentation and fraud. Chesapeake said it was “surprised by the allegations” and said ICC has delayed presentation of a formal proposal for the project.
Oklahoma City-based Chesapeake signed a $185 million lease with DFW in August 2006 to begin gas exploration in the Barnett Shale below the airport’s 18,000 acres. The DFW board-approved lease featured minority investor and contracting participation that was unprecedented in the oil and gas industry. Minority and women-owned business (MWBE) equity participation was to be greater than 20%; MWBE subcontractor participation was to be greater than 39%. Subcontractors were to provide equipment, construction, engineering and consulting services and natural gas marketing.
According to the lawsuit, filed last Wednesday in 116th Civil District Court in Dallas, Chesapeake approached ICC, an African-American-owned gas marketer, in May 2006 about partnering on a bid for an oil and gas lease for the DFW acreage. ICC invested more than $3 million in the bid process and expected to market 20% of the gas recovered through the deal. But, according to the lawsuit, once the deal was made Chesapeake — despite “touting its relationship” with ICC during negotiations with DFW — instead moved the work in-house.
“Chesapeake was eager to involve ICC Energy during the bidding process, but when the company saw the dollar signs they decided that they no longer needed a minority partner,” said Joe Kendall, an attorney representing ICC. “Chesapeake is not only defaulting on their agreement with ICC Energy, but they’re trying to deceive the airport board as well.”
Chesapeake said it was “surprised by the allegations” made by ICC, with which it said it has an ongoing disagreement about the DFW lease.
“From the inception of this project, Chesapeake has been ready, willing and able to enter into a contract with ICC to provide the services set forth in ICC’s bid documents, but ICC has refused to present a formal proposal with necessary contract terms consistent with its bid,” said Chesapeake General Counsel Henry J. Hood. “The only proposal that Chesapeake has received was provided just a few days ago, and it materially differed from what was represented in ICC’s bid…absent an agreement on essential terms and adequate demonstration of ICC’s ability to perform the services required, the parties will not be able to move forward.”
Chesapeake initiated production of approximately 30 MMcfe/d of gas from the first 11 wells on its DFW lease last October (see NGI, Nov. 5, 2007). Based on results of the company’s 3-D seismic analysis and the drilling, completion and production results, the company plans to drill 300-325 wells on the lease. Assuming an estimated average recovery of 2.5-3 Bcfe gross per well, the company said it believed that up to 1 Tcfe of reserves can be produced from under the airport.
©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |