Chesapeake Energy Corporation (NYSE:CHK) has been under fire by the law lately when it was accused of racketeering, anti-trust and fraud. The company has been accused of conspiring with its subsidiaries, to overcharge leaseholders by artificially inflating the cost of gas extraction. Chesapeake tried to get the motion dismissed, but the judge refused the plea, stating that the Suessenbach Family Limited Partnership has provided sufficient evidence against the company, to proceed with the case.
Chesapeake is the second largest producer of natural gas in the US. The lawsuit had been filed in June 2014. It states that Chesapeake had formed its subsidiary Access Midstream, to transport natural gas from its drilling operations. Access Midstream used to charge the company heavily for the service, with the bills being used to mislead lease holders. While in fact, the cash never left the company.
The only account that the two companies were able to get dismissed had been of honest services fraud. The judge dismissed the count stating that the count cannot stand since officials with the companies had no fiduciary duty to shareholders. However, this is not the only racketeering lawsuit filed against the company. Chesapeake also faces a number of other charges from a list of accusers.
Recently, the company has reached a $25 million settlement with just one of the many accusers, the Michigan States Attorney General. The case had been similar to many other charges, which stated that the companies mislead lease owners into selling land cheaply.
However, there was a small addition to the case, where the company had been accused of collaborating with its rival, Encana Corp. The AG stated that the two companies reached an agreement never to bid for the same land, since this tended to keep the prices high. The result was land prices falling by $40 per acre. Encana was, however, dealt with softly, reaching a settlement of $5 million.
Chesapeake Energy Corporation (NYSE:CHK) closed at $14.39 after losing 1.03% on April 27. The company has 665.04 million shares being traded in the market, with a 52-week range of $13.38-$31.49.
