Chesapeake ordered to pay $100 million to complete Texas lease sale
BY JAY MARKS
HOUSTON — A federal judge has ordered Chesapeake Energy Corp., to pay more than $100 million to complete the aborted 2008 sale of oil and natural gas leases in eastern Texas.
Chesapeake intends to appeal the ruling.
The Oklahoma City-based oil and natural gas company had offered to pay $99 million for about 6,700 acres of leasehold in the Haynesville Shale from Preston Exploration Co. in June 2008, according to court filings, but company officials balked at attending the scheduled closing after raising concerns about the titles for some of the land.
Preston and three other leaseholders sued Chesapeake in federal court in Houston for breach of contract four days after the aborted closing, arguing Chesapeake had no intention of honoring the deals because of reeling natural gas and financial markets.
A judge originally sided with Chesapeake, but his ruling that the contracts were not final was overturned on appeal.
U.S. District Judge Gray H. Miller on Tuesday ordered Chesapeake to make good on three executed purchase and sale agreements worth more than $100 million.
“The evidence in this case indicates that the closing did not occur because Chesapeake — the buyer — declined to attend,” the judge wrote. “Clearly, the Fifth Circuit believed, having considered all of Chesapeake's arguments, that Chesapeake breached the contract.”
The company also must pay interest and attorneys' fees for the plaintiffs, the judge ruled.
Chesapeake will appeal Harris' ruling, spokesman Jim Gipson said Wednesday.
“We believe the court erred, will post the required bond and will appeal the judgment,” he said.