Chesapeake, Ward settle lawsuit on land leases
Chesapeake Energy Corp. and former SandRidge Energy Inc. CEO Tom L. Ward have agreed to pay $6.95 million to settle an antitrust class-action lawsuit.
The parties on Wednesday asked Judge Joe Heaton to approve the proposed settlement. Under terms of the deal, Chesapeake agreed to pay $2.65 million and Ward agreed to pay $4.3 million, according to a person familiar with the case. The parties did not admit to wrongdoing in the settlement.
The settlement was reached following two all-day mediation sessions, according to court records. Under terms of the settlement, the payout will be used first to pay any attorneys’ fees and expenses. The remaining money will be divided among all members of the settlement class who properly submit claim forms. The class-action lawsuit was filed in March 2016, claiming Chesapeake, Ward and SandRidge violated the Sherman Antitrust Act “by conspiring to fix, raise, maintain or stabilize lease bonuses in the Mississippi Lime Play” in northwest Oklahoma. SandRidge was dropped from the case in March 2017 after the company filed for Chapter 11 bankruptcy reorganization.
The lawsuit was filed shortly after the U.S. Department of Justice announced a grand jury indictment of former Chesapeake CEO Aubrey McClendon. That indictment claimed McClendon and unknown coconspirators conspired to suppress and eliminate competition by rigging bids for certain leasehold interest and producing properties from Dec. 27, 2017 back to at least April 1, 2013.
The federal investigation into McClendon was dropped after he died in a March 2016 car crash. Chesapeake cooperated in the federal investigation and was granted immunity.
The class-action lawsuit
claims thousands of mineral owners in northwestern Oklahoma were underpaid when the two companies agreed to coordinate the bids. As part of the federal investigation, Chesapeake “admitted to what it believes is potential anticompetitive conduct for a handful of transactions,” according to court documents.
“Importantly, Mr. Ward denies that any such communications revealed by Chesapeake violated the antitrust laws in any way and, absent this settlement, intends to vigorously defend those claims,” the documents state.
Both Ward and Chesapeake “hotly contest other factual issues,” including the scope of the alleged conspiracy and the effect on the geographic area, the court records state.
Representatives for Chesapeake and Ward declined to comment on Wednesday. The case is the last antitrust case pending against Chesapeake and nearly wraps up the legal quagmire that has affected the company for more than five years.