Jefferson County shale lawsuit seeks $9.2 million in lease signing bonuses

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Justice scales

TORONTO, Ohio — American Energy Utica and Great River Energy are facing the wrath of a Jefferson County judge after failing to fill the lease signing bonuses for more than 50 landowners.

Breach of contract

The 50 Jefferson County landowners have joined together and filed a lawsuit citing breach of contract and seeking more than $9.2 million against American Energy Utica and Great River Energy for failing to pay for overdue lease signing bonuses and attorney fees.

The lawsuit, filed June 5 in Jefferson County Court of Common Pleas, also includes the Toronto City Schools and five towns, and pits them against American Energy Utica and Great River Energy. The lawsuit seeks the $9.2 million plus $25,000 or more for each plaintiff for the breach of contract.

New company

American Energy Utica was combined earlier in 2015 with its Marcellus counterpart and now is named Ascent Resources. American Energy Utica is the company formed by Aubrey McClendon after he left Chesapeake Exploration as its chief executive officer.

Great River Energy was created in June 2013 and immediately began working for American Energy Utica.

Land agent

The lawsuit contends that American Energy Utica contracted with Great River Energy for help in acting as a land agent on its behalf, and that Great River Energy entered into leases for American Energy Utica. The leases were signed in 2013 and 2014 for a five-year primary term.

120 days

According to the court documents, Great River Energy was supposed to pay the lease signing bonuses and fees within 120 days of the lease signing, unless a problem was found with a title.

Many of the plaintiffs did not receive payment within 120 days and were not notified of problems with the titles to their properties. A second group of landowners contend in the lawsuit that they did not receive payment within 120 days, and Great River tried to identify title defects after the 120-day time limit.

According to the lawsuit, one landowner claims to be owed nearly $1 million in lease signing bonuses, and another claims to be owed more than $3 million for 505 acres he leased with Great River Energy. Some landowners in the case did receive partial payments for the leases they signed, however none of the landowners received full payment.

Some leases released

Some of the leases have been released from the deeds recorded at the Jefferson County Courthouse, while others remain on the record and are stopping some landowners from finding another lease deal. Most of the landowners in the lawsuit negotiated their lease agreements with Great River through a landowners group.

Belmont, Columbiana counties

Although, landowners from other counties were not included in this lawsuit, Great River Energy entered into oil and gas leases with landowners in Belmont and Columbiana counties, as well. However, no lawsuits have been filed in those counties to date.

No comment

Farm and Dairy phone calls to American Energy Partners in Oklahoma, where American Energy Utica’s parent company is based, were not returned. A message was also left for Great River Energy and was also not returned.

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2 COMMENTS

  1. …a lawsuit…fine and dandy. endless lawyers, courts, bailiffs, hearing, briefs, affidavits, depositions, re-hearings, counter-briefs. it never ends. talk about “perpetual motion!”

    (remember the famous case: Jarndyce vs. Jarndyce in “Bleak House” by Chas. Dickens?)

    WATCH OUT FOLKS!

    My prediction: these two huge corporations will have their teams of lawyers do the following:

    1. “slow-walk” the whole deal. and after many, many months, then the corporate treasury will be bone dry from huge executive bonuses, salaries, percs, siphoned-off expenses, and massive lawyers’ fees, then

    2. “bust-out city” by filing for “protection” in the nearest U.S. Bankruptcy Court that favors gas/oil outfits. (that’s called “forum shopping” to get a judge who “likes” you. a Chapter #11 proceeding will start, and then more “specialized” thieves (whoops, “lawyers”) will parachute in like vultures to “capture” the entrails and leavings.

    Do you know that bankruptcy court costs AND lawyers’ fees are a “priority” item that gets paid out first and foremost before any landowner/creditor?

    Advice to landowners: don’t get your hopes up, UNLESS–there is some huge, big, fat insurance policies waiting in the wings for a payout. for a few hundred bucks, companies just file bankruptcy, give the court and media some phony sob-story. move on and set up shop elsewhere.

    ….don’t ask me how I know….

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