Tarrant County College settles Chesapeake royalty lawsuit

Chesapeake Energy has been quietly settling lawsuits with large landowners over underpayment of royalties.
Chesapeake Energy has been quietly settling lawsuits with large landowners over underpayment of royalties. Star-Telegram archives

Tarrant County College announced Wednesday that it is settling its lawsuit against Chesapeake Energy for underpayment of natural gas lease royalties for $1.1 million.

The community college district filed its lawsuit in November 2014, accusing Chesapeake of undercutting its payments to the institution by improperly deducting post-production costs and failing to properly market the gas on the open market.

“We are very pleased with it,” said Vice Chancellor Angela Robinson, who is TCC’s general counsel and acting chancellor. The settlement is comparable with other settlements Chesapeake has been making in the Barnett Shale, she said.

The TCC lawsuit involved three leases. One covered 159 acres on the district’s south campus and a second one involved 188 acres on the northeast campus. A third lease involved the district’s interest in a lease with the Kennedale School District.

There also were claims tied to a trespass claim on the Northeast Campus. The college states its lease prohibits its property from being in a pool in which it has less than 50 percent interest. The campus has less than one acre involved in a 225-acre pool, court documents state.

TCC’s litigation also named Total E&P USA, the American division of the French energy giant that bought a 25 percent stake in Chesapeake’s Barnett Shale holdings in 2010.

No one at Chesapeake was immediately available for comment. But in previous lawsuits the company has contended that all of its actions were in accordance with the lease and in good faith.

Chesapeake has been working hard in recent months to clean up legal matters in the Barnett Shale, where it was once a key player. It recently agreed to pay $51 million to wipe out hundreds of similar lawsuits, mostly involving landowners with smaller leases.

But it also has been working to settle what are often referred to as “high value” cases, or those filed by large landowners, government entities and businesses in Tarrant and Johnson counties.

Attorneys typically are prohibited from discussing settlements except to say that they worked out terms favorable for their clients. But a court document filed in late June indicated that Chesapeake’s attorneys have resolved, in one way or the other, 24 of 33 of these cases.

For example, Chesapeake settled with the city of Fort Worth for $15 million and the Fort Worth school district for $1 million.

Just last week the Mansfield school district filed a lawsuit seeking more than $1 million from Chesapeake.

This report contains material from the Star-Telegram archives.

Max B. Baker: 817-390-7714, @MaxbakerBB