Chesapeake Energy Corporation (NYSE:CHK) announced that it will pay $25 million to settle antitrust charges made by Attorney General of Michigan. It will also settle the other charges including misleading of landowners to acquire leases in the state. The attorney general had filed allegations against company in 2014.
The details
Michigan Attorney General Bill Schuette accused Chesapeake Energy of colluding with oil and gas producer firm Encana Corporation (USA)(NYSE:ECA) to keep the natural gas leases prices in the State artificially low. Also, he alleged the company of false pretenses and racketeering, stating the company had deceived lease owners. The oil and gas producer company has initially stated the cases meritless.
The solution
A spokesman of Chesapeake said that the company is delighted to have settled the matter. The company is delighted to reach a common acceptable decision with the Michigan Attorney General. Finally, the company has moved beyond the legacy issues received from past management. The allegations are connected way back to operations in 2010 under former Chief Executive officer Aubrey McClendon. He was said to leave the company in 2013.
The terms and conditions
As per the mutually accepted agreement, Chesapeake will pay $25 million to compensate landowners. The Attorney General’s office stated that the value of oil and gas was held down when Encana and Chesapeake decided not to bid against each other. The competition would have resulted in higher prices.
Payment details
The compensation has to be paid in a form of fund. After the payment is done, $5 million will be given to the state, half of the payment to Department of Natural Resources in Michigan and the rest to support antitrust enforcement operations. Schuette called the agreement as a win for all the Michigan landowners and Michigan taxpayers who have to suffer from the issue. The state has said to drop the charges against the company after it meets the terms of the settlement.
