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Chesapeake CEO Aubrey McClendon

Chesapeake Energy: A big driller that's had some problems

Background

It’s hard to find a Marcellus Shale driller that has been more prolific or more controversial than Chesapeake Energy.

The Oklahoma-based company was ahead of many others in capitalizing on the nation’s shale oil and gas boom. Its former CEO and co-founder Aubrey McClendon was a pioneer of fracking, but he was also a risk-taker who Forbes called “America’s most reckless billionaire” in a 2011 profile. McClendon resigned from Chesapeake in 2013 and started another energy company. He died in March 2016 after his car slammed into an overpass in Oklahoma City. The crash happened one day after McClendon was indicted on federal conspiracy charges, which he had denied and vowed to fight.

The fracking boom he and Chesapeake helped ignite led to a gas glut, which has suppressed prices and caused serious financial troubles for the company. In Pennsylvania and other parts of its country where it operates, Chesapeake has faced allegations it cheats landowners out of royalty money. The company has denied this. However, it’s the target of a number of class action lawsuits and a recent lawsuit by state Attorney General Kathleen Kane. The investigative news outlet ProPublica has reported on how Chesapeake raised cash by slashing royalty payments.

In May 2011 the company was on the receiving end of the largest fine the Department of Environmental Protection had given out at that point (Range Resources has since received a larger fine). Chesapeake was fined for a February 2011 Washington County tank fire, and contaminating several drinking wells in Bradford County. Chesapeake voluntarily suspended hydraulic fracturing operations for three weeks in April and May 2011, after a Bradford County well spilled hundreds of thousands of gallons of fracking fluid.

The Department of Justice has said McClendon’s indictment was the first case resulting from an ongoing probe “into price fixing, bid rigging and other anticompetitive conduct in the oil and natural gas industry.”

 

Latest Posts

Feds look deeper into Chesapeake Energy’s accounting practices

Chesapeake Energy, which is facing a royalty owners revolt here in Pennsylvania, will have to share more details of their accounting practices with the U.S. Department of Justice. The company revealed in a recent filing with the U.S. Securities and Exchange Commission that the Justice Department has subpoenaed records on the gas driller’s accounting methods [...]

Township moves to halt gas production, citing anger over royalties

Residents in one of the most drilled-on parts of Pennsylvania want to block companies from producing natural gas, citing anger over royalty payments. The supervisors in Wilmot Township, Bradford County plan to pass a resolution Tuesday demanding, “production be discontinued from wells where landowners are having their royalty checks diminished to nothing or nearly nothing.” Wilmot [...]

What happens after the boom?

well-pad

Four years ago StateImpact Pennsylvania visited Towanda to see how the Marcellus Shale natural gas boom was changing the pace of life. We returned this year to see what happened after the rigs left town. Watch our latest video, After the Boom.

Former Chesapeake Energy CEO dies in crash, one day after indictment

The former CEO and co-founder of Chesapeake Energy, Aubrey McClendon, died in a one-vehicle crash Wednesday, less than 24 hours after he had been charged with conspiracy following a federal investigation. According to Oklahoma City police, McClendon, 56, was traveling at a high rate of speed when his SUV hit an embankment of a highway overpass Wednesday [...]

U.S. Postal Service subpoenas Chesapeake Energy over royalty payments

Chesapeake Energy has been subpoenaed by the U.S. Postal service, seeking information on its royalty practices, according to a regulatory filing. As StateImpact Pennsylvania has previously reported, the Oklahoma City-based driller faces a slew of disputes and complaints over how it pays royalties. A year ago, Chesapeake disclosed that it had been subpoenaed by the [...]

Marcellus Shale drillers fined for methane migration

State environmental regulators say three natural gas drillers contaminated 17 separate drinking water wells in north central Pennsylvania and together the companies have paid close to $375,000 in fines. The Department of Environmental Protection blamed well construction for methane migrating into drinking water supplies. If methane builds up in an enclosed space like a house, [...]

New study links gas drilling to water contamination in NE Pa.

New research published today in the Proceedings of the National Academy of Sciences shows evidence of a connection between gas drilling and water contamination that occurred in Bradford County in 2010. The researchers used a new method of testing for contaminants that can detect much smaller amounts of chemicals than the instruments typically used in commercial [...]

Chesapeake Energy faces another royalties lawsuit

More than 50 landowners have filed a federal lawsuit against Chesapeake Energy, according to the Pittsburgh Tribune-Review. It’s the latest in a slew of lawsuits directed at the Oklahoma City-based driller, alleging it fraudulently withholds gas royalty money. From the Pittsburgh Tribune-Review: Chesapeake, which has more than 700 producing shale wells in the state, declined [...]

Chesapeake Energy to pay $119 million in Oklahoma royalty case

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 [...]

Royalty group urges caution as Chesapeake offers new $11M settlement

One of the state’s biggest gas drillers, Chesapeake Energy has agreed to increase the amount it’s willing to pay to settle a class action lawsuit accusing the company of cheating landowners out of royalty money. Chesapeake has upped its offer to $11 million dollars after a federal judge threw out the company’s original agreement of $7.5 [...]

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