Oklahoma Pipeline operator Glass Mountain LLC is suing troubled oil and gas producer Chesapeake Energy Corp for allegedly defaulting on an oil transportation contract that had been renegotiated weeks earlier.
Glass Mountain LLC, based in Oklahoma City not only builds crude oil pipelines but owns lines that serve the STACK/Merge, Granite Wash and Mississiplpi Lime plays in the state. It also delivers crude oil to a million barrels of storage at Cushing.
The suit, filed in Oklahoma state court on April 3, seeks $48.8 million and expenses for breach of contract.
Chesapeake, a shale gas pioneer, borrowed aggressively to buy and drill properties and began losing money as gas prices plummeted. U.S. natural gas futures traded at $1.73 per million British thermal units (mmBtu) on Monday, down from more than $13 in 2008.
A spokesman for Chesapeake did not respond to requests for comment.
Chesapeake Energy last month tapped debt restructuring advisers Kirkland & Ellis LLP and Rothschild & Co to help it deal with creditors amid an unprecedented drop in oil demand and plummeting prices for its output.
Source: Reuters
