Pennsylvania

Energy. Environment. Economy.

Chesapeake Energy Plays a Shell Game with Shale

Scott Detrow / StateImpact Pennsylvania

Chesapeake CEO Aubrey McClendon speaks to the Marcellus Shale Coalition's "Shale Gas Insight" conference

An investigative piece by Reuters unearths a chain of shell companies created by Chesapeake Energy to compete in a Michigan land grab. The article explains how companies within companies hired outside contractors to get landowners to sign mineral leases without revealing Chesapeake’s involvement. And it was all perfectly legal. Or was it?

“To understand the role shell companies play in Chesapeake’s business, Reuters reviewed hundreds of pages of lease agreements, rejection letters and contracts, and more than a thousand pages of court records.

Reporters also interviewed more than three dozen land owners, lawyers and “landmen,” those who scout for areas rich with oil and gas and strike deals with land owners.”

The investigation reveals how landowners were signed up, only to have their contracts rejected, and farmers were left waiting for payouts that never came. The farmers are suing. Chesapeake says the purpose of hiding their company identity was to avoid a competitive land rush with other energy companies that could drive up prices. But once the contracts were rejected en masse, the land rush bubble burst. Prices dropped. And then another company with ties to Chesapeake stepped in and bought up leases on the cheap. Read the entire piece here.

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