Breach of Contract Suits Claim Billions Owed by Chesapeake Energy

A recent Texas lawsuit joins others filed against Oklahoma-based Chesapeake Energy for breach of contract in failing to make billions of dollars in royalty payments owed on drilling leases. The suit claims that Chesapeake violated the terms of gas leases by intentionally miscalculating the wellhead price of gas and by impermissibly deducting expenses to which it was not entitled under the gas lease terms.

Similar Claims Made over Drilling Royalties 

Mineral-rights owners in a previous, similar suit, Hyder v. Chesapeake, thought they had won their breach of contract claims against Chesapeake in June of this year, when the Texas Supreme Court ruled that the non-standard royalty language in the gas leases at issue meant that Chesapeake had no right to deduct expenses as it had been doing, affirming a 2014 decision of a San Antonio Court of Appeals.

As a result, Chesapeake was ordered to pay $700,000 in breach of contract damages to the Elton Hyder family of Ft. Worth, as compensation for taking post production/post wellhead costs to which it was not entitled under the drilling lease. 

These costs include such expenses as processing and transportation – expenses that may normally be deducted by the company by law, in many states, unless there is a carefully-worded royalties clause in the mineral lease.

This new suit represents a consolidation of multiple such suits filed against the company – more than 400 of them – from far-flung locations in France to more local ones in Texas, and many between.

Leases Must Be Carefully-Worded 

Breach of contract suits like these illustrate the crucial importance of seeking competent legal representation and advice when entering into drilling contracts and other mineral leases. Wording counts, and in these cases, it counts to the tune of billions of dollars.

The best way to avoid the need for breach of contract litigation is a carefully-worded mineral lease. The best way to deal with a poorly-worded one, or with a party who simply acts outside the terms of a mineral lease, is to seek help from knowledgeable Oklahoma mineral law attorneys, like those at Rick Dane Moore and Associates.

Expert-Level Mineral Law Attorneys

Rick Dane Moore and Associates attorneys have a collective thirty years of expertise in business law, and we are especially knowledgeable about oil and gas contract disputes and insurance contract disputes.

We have successfully represented oil and gas drilling and service companies, surface owners, mineral owners, and royalty owners in a variety of settings against a number of different opponents in the oil and gas industry. Our attorneys have litigated oil and gas issues in federal, state, and tribal courts, including the United States Court of Claims

We invite you to call us today at (405) 703-6552 to discuss your mineral lease interests.