The 5th U.S. Circuit Court of Appeals upheld an award of $121 million against Chesapeake Energy on Thursday in a case where it dropped a deal to buy more than 500 oil and gas leaseholds in Texas.
Preston Exploration Co., based in The Woodlands, north of Houston, and two other parties sued Chesapeake in 2008 for reneging on an agreement to buy the properties after natural gas prices plunged. The companies started negotiating in June that year and were set to conclude in November, but Chesapeake failed to show for the closing, according to court records.
A federal judge in Houston originally sided with Chesapeake, saying the lease contracts weren’t final. But in February 2012, the 5th Circuit in New Orleans agreed with the landowners and sent the case back to the lower court. That July, a new judge found for the leaseholders.
Chesapeake appealed again, arguing that Preston Exploration lacked title to nearly $9 million worth of leases. On Thursday, the appeals court rejected that argument, saying that Preston “satisfied all conditions” in the deals and that Chesapeake never said it might terminate the agreement.
The Oklahoma City-based company declined to comment Friday on the decision.