Reporter’s Notebook: Update On OKC’s Chesapeake Energy

Oct 21, 2013

The chief executive of Chesapeake Energy Inc. says he expects the company to grow in the future, despite the fact that it gave pink slips to 800 employees Oct. 8.

Journal-Record energy reporter Sarah Terry-Cobo provides an overview of developments and where the company is headed.

Terry-Cobo says the situation with Chesapeake is unique, and similar layoff should not be expected by other Oklahoma City energy companies.

Credit Joe Wertz / StateImpact Oklahoma

Chesapeake CEO Doug Lawler says the company has the elements in place to sustain long-term growth.

Chesapeake also received headlines last week, when it was learned the company has included language in contracts that could deduct a portion of Pennsylvania's impact fee from some lease royalty payments, even though that's expressly forbidden under state law, landowners and attorneys said.

But Chesapeake spokesman Gordon Pennoyer says they haven't deducted impact fees from Pennsylvania royalty owners.

Some landowners have unknowingly agreed to such language in recent contracts, the Pittsburgh Post-Gazette reports.

Lorraine Seiber, a church elder of First United Presbyterian Church of Darlington, says she didn't know the impact fee deduction was part of a recent Chesapeake lease that bears her signature. The church is about 40 miles north of Pittsburgh.

The newspaper acknowledges that it's not clear if Chesapeake has actually deducted the fees from any royalty payments.

Fort Worth and several other individuals and cities have sued Chesapeake claiming the company underpaid natural gas royalties.

The Fort Worth Star-Telegram reports the lawsuit was filed in a Tarrant County district court.

The newspaper says the lawsuit filed Thursday claims Chesapeake improperly deducted production services and sold natural gas to its affiliates under market price. The lawsuit says that as a result Fort Worth, Arlington and others were underpaid royalties.

Chesapeake Energy spokesman Gordon Pennoyer declined to comment.

The lawsuit also lists French energy company Total E&P. That company bought 25 percent of Chesapeake's Barnett shale holdings in 2010.

Arlington first filed a lawsuit against Chesapeake in August. Fort Worth Mayor Betsy Price says that prompted the city to investigate its dealings with Chesapeake.