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Chesapeake under fire from Pennsylvania governor over Marcellus royalties

  • The Pennsylvania governor says he is launching an investigation of Chesapeake Energy's  (CHK) Marcellus shale royalty payment practices, adding to scrutiny of the company for allegedly defrauding landowners out of payments owed to them from gas production in the state.
  • State law in Pennsylvania requires oil and gas producers to pay a minimum of 12.5% in royalties to owners of land where drilling takes place; companies are allowed to charge "post-production costs" for the transportation or processing of gas, but CHK invokes that right more than any other company, which Corbett says has led to the "erosion of trust and goodwill of the natural gas industry."
Comments (23)
  • germiller
    , contributor
    Comments (93) | Send Message
     
    I am PA resident who does not work in oil and gas, but am concerned about the slow growth in my state's economy. I heard a Governor Corbett ad while shoveling snow this afternoon (snow removal has recently become my main pastime). Governor Corbett bragged about how he created 140,000 new jobs in PA during his term. A large number of the higher paying jobs created were the result of the growth in the natural gas exploration and production by CHK and other companies. I hope that he does not go into an "all out attack" on the companies that are growing the PA economy.
    14 Feb, 06:50 PM Reply Like
  • zebra114
    , contributor
    Comments (247) | Send Message
     
    You, my sir, are someone whose family has trusted CHK and if it were you, like it is my family, would have an entirely different opinion, so I ask that until you are the one harmed, or until you know the whole story, you withhold your commentary.
    14 Feb, 09:18 PM Reply Like
  • Daniel Victor
    , contributor
    Comments (21) | Send Message
     
    Before all of these Governors come up with all of these bright ideas for raising extra revenue,they ought to check that the corporations they are picking on can actually afford the extra do-re-mi ! Cheasapeake has a lot of debt, its finances are delicately balanced.
    14 Feb, 07:09 PM Reply Like
  • zebra114
    , contributor
    Comments (247) | Send Message
     
    And Chesapeake has a lot to answer for. Come to PA, where their are 'Mechanics liens', via Chesapeake, on land. What's that you say Carl Ichan? You didn't know how deeply engrained in debt your company is in PA? Better check. Because the perverbial debt is about to hit the fan. When American citizens lose theirs homes due to mechanics liens caused by CHK not paying their bills, maybe then investors will wake up. If you are smart, you will do it before Carl does and leaves you all paying the bill, but you haven't been smart so far, so I have little hope.
    14 Feb, 09:26 PM Reply Like
  • Rope a Dope
    , contributor
    Comments (531) | Send Message
     
    zebra, the liens are technically only on the mineral rights, but they are still having a negative impact on landholders. here's one horror story -

     

    http://bit.ly/1nAXb1c
    15 Feb, 04:23 AM Reply Like
  • WZT
    , contributor
    Comments (28) | Send Message
     
    I think Gov. Corbett is trying score some brownie points with voters. Fewer than one-fourth of Pennsylvania voters think he should be reelected, according to a Franklin & Marshall College poll released Thursday.
    The survey found that only 23 percent of Pennsylvania voters believe Corbett has done a good enough job to deserve reelection, while 63 percent believe it's time for a change. Even among his own party, just 42 percent said he should be reelected.
    He is learning from his democratic political peers like P. Obama and Blasio, the mayor of New York, that when you posture your message that everyone should be getting their fair share from those who have worked hard for what they have it resonates with a large segment of the voters.
    14 Feb, 07:12 PM Reply Like
  • westelk
    , contributor
    Comments (230) | Send Message
     
    Sounds like "new" management found the practices of AWM profitable. Tigers have stripes, and leopards have spots....
    14 Feb, 07:15 PM Reply Like
  • Felixofagassiz
    , contributor
    Comments (35) | Send Message
     
    PA Gov Corbett puts Chesapeake in his cross-hairs?
    Holy cow, I'm going to liquidate my entire position at market asap!
    14 Feb, 08:17 PM Reply Like
  • Rope a Dope
    , contributor
    Comments (531) | Send Message
     
    That might be a wise move, considering it isn't just Corbett who has CHK in his cross-hairs.
    15 Feb, 11:00 AM Reply Like
  • zebra114
    , contributor
    Comments (247) | Send Message
     
    If only one of you investors took the time to look at the loans that CHK has on each and every well. The loans on future loans on production, the agreements with other companies, the loans on top of the loans, based on agreements with other companies, you would all have a "come to Jesus moment". The landowners have done it. I won't do the work for you. Do it yourself and work your way through the layers upon layers of partnerships and loans based on each and every partnerhsip. Sit here and rely on what Wall Street is telling you and invest your heart away. In the meantime, there are farmers in PA that have followed this all along, and they know the layers of loan upon loan and are just sitting and waiting for the card tower to come tumbling down. Gotta love those farmers. Gotta feel bad for them at the same time. They will lose it all and they know it. They got dealt a bad deal because of people like you investors. They are too humble and pure to hope that you lose like they did. All they hope for is that people like you wake up and see this for what it is.
    14 Feb, 09:41 PM Reply Like
  • Jack Cumming
    , contributor
    Comments (68) | Send Message
     
    I don't really care for all of your class warfare rhetoric, zebra. We have too much of that already, and it detracts from objective analysis. Let your socialist governor take the cheap shots, but here let us adhere to objective presentation.

     

    I would like to believe that recent gains in the price of NG will allow a better world for CHK and your farmers. It seems undeniable that CHK has been under the gun with gas pricing under $4 and below their total cost to produce and deliver the product.
    15 Feb, 10:36 AM Reply Like
  • Rope a Dope
    , contributor
    Comments (531) | Send Message
     
    Ripping off landowners isn’t class warfare, it’s fraud. I am a strong advocate of developing the Marcellus Shale region (and others) but not at the expense of landowners. In addition to shortchanging landowners on their percentage, the liens CHK has on these lands are preventing people from getting loans using their own property as collateral. The banks won’t consider these loans because of the liens.

     

    Continued development of shale gas fields across the US is not something that is guaranteed. Many of these companies have had to fight hard for the right to develop these fields and what CHK is doing will cause more landowners to consider allowing the development.
    15 Feb, 10:59 AM Reply Like
  • Jake2992
    , contributor
    Comments (825) | Send Message
     
    HAHA This is too funny. A classic case of everyone is a conservative until reality sets in.
    15 Feb, 04:41 PM Reply Like
  • User 63931
    , contributor
    Comments (58) | Send Message
     
    I own CHK and I own land in PA and have a lease with CHK. The charges for post production costs are excessive and I am glad that the government is looking into it. Having worked in the government and in the private sector, I have seen direct and indirect costs be manipulated and it is clear that that is what is happening here.
    15 Feb, 12:10 PM Reply Like
  • okcalmoser
    , contributor
    Comments (2) | Send Message
     
    Some serious disingenuous representations made to landowners to secure leases also. Was interested in their stock until I experienced this first hand. If they treat landowners this way I figure they will not have any respect for the investors either.
    15 Feb, 01:02 PM Reply Like
  • Sherpherd
    , contributor
    Comment (1) | Send Message
     
    To those who post before me. Your only concerns seems to be about Tom Corbett..This issue is about the landowners that are being shank by Big bad Chesapeake. Yes the gas company seems to be in cash trouble. So what gives them the right to past their losts onto the landowners who sign good leases in good faith to only have this company make or just take any kind of deductions they please . Why should the landowners have to pay for their bad decisions..
    15 Feb, 01:15 PM Reply Like
  • Mountainman2
    , contributor
    Comment (1) | Send Message
     
    Chesapeake needs to be liquidated. The wells will be there and other companies will buy the assets. Chesapeake was greedy coming into the region and now there mismanagement is showing. The investors should dump their stock and move to other energy companies that manage their books better. They have swindled millions of dollars from the PA landowners and the practice needs to stop.
    16 Feb, 12:04 PM Reply Like
  • Pgman701
    , contributor
    Comments (100) | Send Message
     
    I'm out. Why is this company even still in existence? Unless somebody buy's them, I believe they will be bankrupt within 5 years!!!
    16 Feb, 10:30 PM Reply Like
  • olinickr
    , contributor
    Comments (10) | Send Message
     
    Zebra,
    Can you elaborate on your experience? I am curious to hear from someone who has directly experienced a problem with CHK.
    17 Feb, 09:17 PM Reply Like
  • Ulysses Benjamin Dover
    , contributor
    Comments (157) | Send Message
     
    well folks (pun intended), it's either natural gas for the next couple decades or coal, until solar really takes a bite out of what we need. So, Zebra, how do you propose we fix the issues that come with using fossil fuels? Stop using fossil fuels? Someday, but not today, we'd all freeze and starve. Using nat gas as the bridge to the next thing is the way to go, the process needs tweeking, but nat gas beats the hell out of coal which was killing people in cancer clusters all over America (and still does globally).
    18 Feb, 02:16 PM Reply Like
  • westelk
    , contributor
    Comments (230) | Send Message
     
    Just what kind of thinking believes it is OK for resources to effectively be stolen by CHK?

     

    If you were the landowner and CHK were ripping you off, would you still think it is right?

     

    Reputation counts in business. When a landsman from CHK is competing with a landsman from some other company, do you not think CHK's growing ripoff reputation is going to be a factor? Will CHK's increasingly bad reputation start influencing state regulators to lean on the company more than competitors?
    19 Feb, 08:27 AM Reply Like
  • hehheh
    , contributor
    Comments (2) | Send Message
     
    I own a bunch of CHK stock and am little concerned over these mostly negative blogs. I'd like to think the company takes all this into account and do something quickly about their PR. Aint too good at the moment.
    12 Mar, 12:14 PM Reply Like
  • User 63931
    , contributor
    Comments (58) | Send Message
     
    Again, as I previously stated, I own CHK and I own land in PA and have a lease with CHK. I sent CHK a letter expressing my concerns of overcharging for "Gathering", "Transportation" and "Compression" and I received a "form letter" in return from their lawyers. So, no, CHK is not doing "something quickly about their PR."

     

    I'll give you the exact numbers for CHK (Anadarko and Mitzui own [sub-lease] 50% of my property and pass though the same percentage amounts). So, the total value of my compensation for the gas drilled was $424.64 for December. The charges were -$40.17 for Transportation, -$62.08 for Gathering, and -$5.92 for Compression; making the total charges $108.17 and reducing the payment to me by OVER 25%. That is excessive in my opinion and I believe that CHK burdens costs and expenses onto the "Gathering", "Transportation" and "Compression" so the charges against me and other landowners are high, thus reducing payment to us.
    13 Mar, 10:25 PM Reply Like
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