Chesapeake Energy to pay $119 million in Oklahoma royalty case

• Marie Cusick
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  Marie Cusick was the Harrisburg reporter for StateImpact Pennsylvania.

Chesapeake Energy will pay $119 million to royalty owners in Oklahoma under a preliminary settlement that will go before a judge in April, according to The Oklahoman.

The deal would resolve royalty disputes dating back more than a decade. Landowners accused Chesapeake Operating LLC of improperly withholding royalty money and charging them for the costs of processing and transporting gas. The class action suit affects more than 11,800 wells in Oklahoma.

From NewsOK:

“We are pleased to reach this fair and reasonable agreement and look forward to further strengthening our relationships with our Oklahoma royalty owners,” said Chesapeake spokesman Gordon Pennoyer.

The case started in 2010 when Kansas resident John Fitzgerald sued Chesapeake, claiming the company underpaid oil and natural gas royalties owed to him from its Oklahoma wells.

Fitzgerald sought class-action status, which was granted by a Beaver County district judge in February 2013.

Chesapeake opposed the class-action status and appealed to the Oklahoma Court of Civil Appeals. The court reversed the class-action status in February and sent the case back to district court.

Chesapeake has faced similar lawsuits in Pennsylvania and other parts of the country where it operates. It recently agreed to increase the amount it’s willing to pay Pennsylvania royalty owners in a pending class action lawsuit here.

The company is also under investigation for fraud by state Attorney General Kathleen Kane and was recently subpoenaed by the U.S. Department of Justice, seeking information into its royalty practices.

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