It has been announced that the city of Fort Worth has filed a case against Chesapeake Energy Corporation (NYSE:CHK) for not paying it the full royalties from leases that the latter holds in natural gas production. In its case filed the city has stated that the company has not kept its end of the lease agreement and has accused the company of hiding money that should have been paid to it by signing false contracts with affiliate companies.
The company’s records were examined by a group of lawyers and accountants hired by the city and it was due to a comparable result achieved by the City of Arlington and the Dallas Fort Worth International airport against the company.
The city mayor Betsy Price, has said that the investigation showed may cases uncovered many cases of misdemeanors by the company and the aim of the case was to recover some of the money that has remained unpaid.
Against the span of the agreements signed by both parties the city alleges that the company is withdrawing money from royalty for expenses like trucking, marketing and production. The case claims that the company sold gas to another company subtracted the cost of the deal from royalties on the argument that it had sold it to another company while the sale was to a related company.
The Mayor said that the decision to sue the company was done as a last resort as dialogues with lawyers representing the company did not give it the kind of results they wanted. The company was at one time a major feature of the city as it sponsored city events and even supported the Mayor in her campaign during the election. Though the mayor is making sure that the cities interests are more important so she is suing the company.
