Court rules against Pa. drillers in royalty dispute

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sshale oil and gas drilling rig

HARRISBURG, Pa. — Attorney General Josh Shapiro announced Dec. 20 a significant step towards economic justice for Pennsylvania landowners in his lawsuit against Chesapeake Energy Inc. and Anadarko Petroleum Co.

Bradford County Common Pleas Court issued an opinion and order denying preliminary objections raised by the defendant companies.

Royalties

The Office of Attorney General’s lawsuit seeks to recover for thousands of Pennsylvania landowners the money wrongfully deducted from fracking royalty checks by Chesapeake Energy and Anadarko Petroleum — in violation of the Unfair Trade Practices and Consumer Protection Law.

The complaint alleges that landowners who entered into leases with the defendants believed they would receive royalties from the sale of natural gas without post-production costs — but were charged deductions for refinement, transportation and other costs associated with processing the natural gas.

Court

The Bradford County court held: No. 1, Chesapeake Energy and Anadarko Petroleum are subject to the Pennsylvania Unfair Trade Practices and Consumer Protection Law; No. 2, The lawsuit filed by the Office of Attorney General Shapiro is in the public interest; and No. 3, The defendants’ oil and gas leasing practices are also subject to the Unfair Trade Practices law.

The court held the Office of Attorney General is “invested with the broad responsibility for policing the marketplace and protecting the people of Pennsylvania from unfair and deceptive business practices.”

The lawsuit alleges that landowners were denied the benefit of competition for leases in the form of higher royalty rates and signing bonuses when Chesapeake Energy and Anadarko Petroleum agreed not to compete against each other in securing oil and gas leases from landowners.

The impact of the unfair and deceptive practices is not limited to the Marcellus Shale but applies also to Utica Shale and any deeper natural gas formations or layers under Marcellus and Utica Shale.

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