Chesapeake under fire from Pennsylvania governor over Marcellus royalties

|About: Chesapeake Energy Corporation (CHK)|By:, SA News Editor

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."