Chesapeake Won’t Settle with Fort Worth in Royalty Fight

While Oklahoma City-based Chesapeake Energy returned to court Wednesday morning in a fight over natural gas royalty payments to the city of Fort Worth while the city reached a $6 million settlement with Chesapeake’s partner, Total, a branch of the French energy firm.

Chesapeake was fighting the efforts to reach a settlement while the city council met Tuesday night and voted unanimously, 8-0, to strike the deal with Total. The vote had no discussion as city council members had their minds made up and the entire procedure took only 37 seconds. They were also optimistic of eventually reaching a deal with Chesapeake Energy.

The fight with Chesapeake and Total started when Fort Worth and hundreds of other mineral holders sued the firms, accusing them of cheating them out of millions in royalty payments. The fight centered around the energy firms practice of subtracting post-production costs from the royalties. The $6 million settlement with Total represented 100 percent of Fort Worth’s recovery of the post-production costs removed when the royalties were paid.

Mayor Betsy Price called the settlement a very fair offer.

“We’re very pleased with where we got on that and a change in future payments. We don’t have one with Chesapeake yet, but we are optimistic we will.”

The royalty payments that resulted in lawsuits against Chesapeake and Total stemmed from lease agreements reached in 2006 and covered 5,800 acres of city property. Nearly 260 leases were involved in Tarrant and Johnson counties.

As part of the settlement with Total, the company agreed to pay the publicly posted price at the Houston Ship Channel, less two cents on Total’s part of the gas.

Listen to city’s action on the Total settlement.

Click here for audio


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