It’s been a tough couple of weeks in the courts for Chesapeake Energy.
First, U.S. District Court Judge Ed Kinkeade handed the Oklahoma City energy company bad news when he found their arguments “unpersuasive” in a case involving unpaid royalties from natural gas drilling to Fort Worth investor Ed Bass and others.
His decision probably led Chesapeake to reach a confidential out-of-court settlement with the Bass-led group that records indicate could cost the company at least $8.6 million. Some say the payout could be nearly twice as much.
But don’t take this to mean that Chesapeake is treating another court case like a dry hole.
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Last month Chesapeake asked that the Texas Supreme Court to consider revisiting its 5-4 decision in its lawsuit with the Hyder family of Fort Worth, the other big loss it suffered in the courts recently in cases questioning how it subtracts post-production costs from royalty checks.
Chesapeake Energy’s attorneys argue that the court’s pronouncements present a “sea change in the law” and that the court “disregarded its own precedent.” The court “is wrong, and its rushed decision should be corrected.”
In its ruling, written by Chief Justice Nathan Hecht, the majority ruled that the agreement the Hyder family signed with the original production company, a lease that was bought by Chesapeake, specifically barred the company from subtracting the money from the checks.
David Drez, the attorney for the Hyders, argued that the case in question involved a specifically negotiated, heavily tailored lease, and that the court's decision states “that each lease and contract will have to stand on its own.”
Saying that the court’s pronouncements present a “sea change in the law,” Chesapeake also states in its request for rehearing that the court “disregarded its own precedent” and “inexplicably ignored the law.” The court, Chesapeake’s lawyers say, “is wrong, and its rushed decision should be corrected.”
Others apparently agree. BP American, Devon Energy, EOG Resources, Shell Western and XTO Energy, to name a few, have filed a brief in support of Chesapeake’s request, as has the Texas Oil and Gas Association. In their brief, the energy companies state that the court’s decision will cause confusion and force producers to possibly “redetermine royalties owed to thousands, if not several hundred of thousands, of royalty owners in Texas.”
Upping the ante somewhat is the fact that Chesapeake has hired former Supreme Court Justice Deborah Hankinson to state its case, if the court decides to revisit it.
The court has 180 days to decide if it will revisit its Hyder decision.
— Max B. Baker
Railroad Commission race
It’s never too early to start a campaign.
Libertarian Mark Miller announced last week that he is running — again — for the Texas Railroad Commission in 2016. A petroleum engineer, he plans to run against Chairman David Porter. In 2014, he ran against Commissioner Ryan Sitton and lost.
Miller , in touting his candidacy, promises to “transform the agency by bringing increased transparency and accountability” to the agency charged with overseeing the oil and gas industry.
He also plans to make personal liberty (read “eminent domain”) an issue.
Ironically, Miller’s announcements and complaints came at the same time the agency launched social media accounts — that would be Facebook, Twitter, Instagram and LinkedIn — to boost visibility and communicate with the public and stakeholders about the RRC.
“Social media is a great tool to quickly and widely distribute information to the public and stakeholders, and we will use it to its fullest extent,” Porter said.
— Max B. Baker
Goffs selling Eagle Mountain Lake retreat
The chief executive of Fort Worth-based Crescent Real Estate Holdings, John Goff and his wife, Cami, are auctioning Mariposa del Lago, their 6,500-square-foot “retreat” on Eagle Mountain Lake.
The Oct. 8 auction will be done without reserve, meaning the property will be sold to the highest bidder. The Tarrant Appraisal District values the property, at 7941 Summit Cove, at $1.27 million.
The property was designed, built and decorated by Richard Drummond Davis, David Lewis and Joseph Minton. It offers a mix of contemporary design and rustic Texas charm, including Oklahoma river stone and Northwestern white cedar ceilings, according to marketing materials for the auction.
It was not an easy decision to sell, as we’ve poured our hearts into Mariposa del Lago
The property includes a main residence with four bedrooms and three and one-half bathrooms, a 1,500-square-foot guest cabana with a bunk room below, a two-story boat dock with a gated entrance and outdoor living and entertaining space spanning the lake front. It also has a six-hole putting and pitching green, tennis court, basketball court and a playground.
“We created a place where all of our children would want to come; the gathering place for holidays and the axis point of all major events,” Cami Goff said in a statement. “It was not an easy decision to sell, as we’ve poured our hearts into Mariposa del Lago. But, we decided that the timing was right to pass the keys to the next family who will cherish this estate and create their own memories and traditions to last a lifetime, just as we have.”
Goff co-founded Crescent Real Estate Equities Co. with Fort Worth investor Richard Rainwater before taking it public in 1994. It was acquired by Morgan Stanley in 2007 before Goff, in a joint venture with Barclays Capital, bought it back in 2009.
The auction is being handled by New York-based Concierge Auctions, in cooperation with Kyle Crews and Dayton Pereira with Allie Beth Allman & Associates.
Concierge Auctions will host a preview event at the property from 4 p.m. to 7 p.m., Thursday. Daily viewing are from 1 p.m. to 4 p.m. by appointment.