Chesapeake Energy pleads no contest in oil/gas auction probe, agrees to $25 million settlement

MICHIGAN – Officials say an Oklahoma energy company has pleaded no contest to attempted antitrust violations in Michigan and agreed to pay $25 million to settle claims that it conspired to keep prices down during an auction for oil and gas leases.

Michigan Attorney General Bill Schuette says it’s a victory for property owners who “took deep hits” in the 2010 auction. He says more than 700 victims will be repaid.

In addition, Chesapeake will pay $5 million to the state. Encana Oil and Gas USA agreed last year to pay $5 million.

Separately, Chesapeake pleaded no contest Friday to two misdemeanors in Cheboygan County. The case will be dismissed next year if Chesapeake follows the settlement.

Chesapeake, based in Oklahoma City, says it’s pleased to close issues inherited from past management.

The civil settlement includes the following key terms:

• A $25 million victims’ compensation fund will be established and every victim listed in the state’s Racketeering complaint will be paid back 100% of their losses and attorney fees.
• The victims who have pursued private settlements with Chesapeake, which resulted in Chesapeake paying over $19 million to victims, will have the opportunity to have their cases reopened to recoup additional losses not already compensated for.  This combined with the state’s $25 million settlement results in $44 million total paid to victims by Chesapeake.
• The company will pay $5 million to the State of Michigan.  $2.5 million will go to funds managed by the Department of Natural Resources and affected by Chesapeake’s actions, and the remaining $2.5 million will fund the state’s antitrust enforcement activities.
• Victims who have not yet come forward in the last four years will have 120 more days to file a claim and will be paid back 100% of their valid losses.  It is estimated there are more than 700 affected victims.