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Ohio Utica Shale

Chesapeake loses suit by Texas lease holder

By Bob Downing Published: September 15, 2012
From Bloomberg News;
Chesapeake Energy, facing claims by mineral-rights holders in multiple states over canceled oil and gas lease offers, lost a bid Wednesday to reverse a $19.7 million judgment to a Texas lease owner.
Chesapeake wrongly canceled an agreement to buy drilling rights held by the family-owned Peak Energy Corp., the 5th U.S. Circuit Court of Appeals in New Orleans ruled.
The panel upheld a 2011 decision by U.S. District Judge John Ward in Marshall, awarding Plano-based Peak $19.7 million.
Peak said Oklahoma City-based Chesapeake breached a contract and abandoned the deal as gas prices plummeted. Ward said a letter of intent signed by both sides is a valid contract. Chesapeake asked the court to reverse that finding.

"The absence of closing documents does not necessarily make an agreement nonbinding," the appeals court said. "This agreement is enforceable."
Michael Kehs, a Chesapeake spokesman, declined to comment on the ruling.
Claims similar to Peak's have been filed in federal and state courts by hundreds of landowners in states including Pennsylvania, Michigan and Texas.

Those suing typically say that Chesapeake offered top prices, including sign-up bonuses, only to walk away from agreements when gas prices dropped or shale formations proved less profitable to develop than projected.
Chesapeake lost a separate lawsuit July 10 in Houston, when a federal judge ordered the company to pay more than $100 million to holders of three leases. The plaintiffs, Texas energy companies unrelated to Peak, sued Chesapeake in November 2008 for failing to complete the purchase of three gas leases that the producer began negotiating that June, before energy prices plunged as much as 50 percent.
"This is a big loss for Chesapeake and will have ramifications across the U.S.," said Anthony Sabino, a law professor at St. John's University in New York who specializes in complex litigation and oil-and-gas law.
The federal appeals court in New Orleans covers Texas, Louisiana and Mississippi, "a huge portion of the oil patch," and is often given deference by other courts on cases involving the industry, Sabino said.
"It is unlikely that the Supreme Court will review this, so the 5th Circuit's decision will be final," he said. In arguing similar lawsuits, "lawyers for Chesapeake will have to distinguish this case and why it doesn't apply," he said.



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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

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Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.