Arlington school trustees OK royalties settlement with Chesapeake

09/04/2014 9:28 PM

09/04/2014 9:44 PM

The Arlington school board voted unanimously Thursday night to settle the district’s royalties dispute with Chesapeake Exploration but declined to disclose the amount of the settlement.

Trustees voted 6-0 without public discussion. Trustee John Hibbs was absent.

A district spokeswoman declined to reveal the amount, saying the Star-Telegram would have to file an open records request.

According to the suit, the district expected to receive about $1 million for damages, costs, expenses, interest and attorneys fees.

In November, the district joined the city of Arlington’s lawsuit against Chesapeake and Total E&P USA, accusing the energy company of using a complicated scheme devised to reduce royalty checks for gas pumped from under parks, airports and other pieces of public property.

Chesapeake and Total have oil and gas leases for more than 1,000 acres owned by the school district.

On Aug. 19, the Arlington City Council voted unanmiously to accept $700,000 to settle its part of the suit.

The school district, much like the city, raised concerns about Chesapeake basing royalty payments on gas prices below the sales price, deducting unauthorized costs from the district’s royalty payments and overall violating the terms of its lease agreements.

The school district is one of several public entities to sue Oklahoma-based Chesapeake and Total — a French energy company that acquired 25 percent of Chesapeake’s holdings in the Barnett Shale in 2010.

District spokeswoman Leslie Johnston said, “We are pleased this matter has been resolved amicably and look forward to another outstanding school year.”

Attorney Shayne Moses represented the district in its negotiations with Chesapeake. He also represented the city of Arlington.

“The bottom line is obviously we spent months negotiating toward a resolution,” Moses said.

Gordon Pennoyer, director of external communications at Chesapeake Energy, sent this statement: “We are pleased to have reached a mutually acceptable agreement with the Arlington Independent School District and look forward to continuing our partnership.”

The city of Fort Worth sued Chesapeake last October, and the Fort Worth school district sued in May. Neither suit has been resolved.

The city of Arlington’s deal mirrors one that Chesapeake reached with Dallas/Fort Worth Airport in 2012 for $5 million. That deal also established a formula for royalty payments.

Chesapeake also quietly settled with the Tarrant Regional Water District earlier this year when it agreed to pay the district $1.8 million for royalties on 100 leases from January 2008 through October 2011.

This report includes material from Star-Telegram archives.

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