Beaver County: Pa. landowners alleging fraud and deception against Chesapeake

BEAVER FALLS, Pa. — A lawsuit involving 17 landowners in Beaver County, Pa., has been filed against Chesapeake Exploration alleging fraud.

O&G Investments

The landowners signed leases between 2002 and 2005 with O&G Investment Holdings LLC, in Wooster, Ohio.

The lawsuit names Jason F. Henthorne, of Key West, Fla., and Jay G. Henthorne, Marathon, Fla., who were officers of O&G.

The suit states that none of the leases signed by the landowners were ever recorded at the county recorder’s office. Instead, a memorandum of oil and gas leases was recorded five months after the initial signing.

The leases were eventually sold by O&G to Ergon Exploration Inc., and Petro Evaluation Services in 2007 and 2010, respectively.

Chesapeake. The leases were then sold to Chesapeake Appalachia, LLC, in May 2010.

The Beaver County landowners stated they have never been paid any delay rentals since signing the lease. They also claim they have not received any production royalties or shut-in royalties.

In addition, none of the companies that acquired the leases have filed to reasonably develop the mineral resources of all of the plaintiffs, according to the suit.

Blank lease?

Randy and Lucinda Ramsey, one set of the landowners listed, state in the lawsuit they signed a blank lease in December 2003, which was to include a seven-year primary term. However, they claim that after signing the lease, Jason F. Henthorne, acting as a landman inserted a 10-year term into the lease.

According to the lawsuit, all of the plaintiffs said they were told by O&G that if the leases were not signed, then O&G and/or its agents would drill on adjacent lands and extract their gas without paying any compensation to any of the unleased plaintiffs.

Prior knowledge?

The lawsuit goes on to state Chesapeake may have known the leases were invalid.

The landowners claim Chesapeake, after assuming ownership of the leases, either directly or through their agents, Mason Dixon Energy LLC, attempted to get the landowners to sign a “top lease,” “ratification” or “amendment” to the leases in order to induce or “otherwise trick all of the plaintiffs” to reaffirm their respective lease.

The landowners also said they were told by Chesapeake it had knowledge of the invalidity of the leases and that the amendments were “needed to change the pooling clause and provide free gas to the plaintiffs.”

Lawsuit

The landowners are asking the court to declare the leases to be invalid and require Chesapeake to record the documents necessary to release the leases and award costs and attorneys’ fees. They are also asking for damages in excess of $25,000.

A request for comment was made to Chesapeake, but Farm and Dairy did not receive a response.

** By the way, while this lawsuit was being filed in county court, Chesapeake was in federal court the same day filing this lawsuit. Besides this lawsuit, landowners have been battling Chesapeake in Ohio. Check out some of the lawsuits filed in Carroll County, Columbiana County and in Harrison County.