Chesapeake Energy (NYSE:CHK) says it agrees to settle a four-year federal class-action battle over natural gas royalties with Pennsylvania leaseholders for $7.75M, but also says it could walk away if the state's attorney general does not drop an unfair-trade action in state court.
CHK agrees to set up a fund to pay ~10K leaseholders to make up for deductions from their royalty checks for post-production processing and pipeline costs, which sometimes left the leaseholders with negative balances, according to the settlement filed in federal court.
The leaseholders, mostly landowners in Pennsylvania's Marcellus Shale, claimed CHK and a then-affiliated midstream company, Access Midstream Partners, inflated the costs for gathering and transporting gas to market by sweetheart deals; CHK has consistently denied the claim.
