A. Lee Graham
Chesapeake Exploration LLC will pay the city of Arlington “a substantial lump sum” to resolve its claims for prior royalty underpayments and improper cost deductions, according to a newly approved settlement agreement.
Agreeing to the arrangement was the Arlington City Council. By 8-0 vote at its Aug. 19 regular meeting, the council settled the ongoing dispute alleging that Chesapeake Exploration, a subsidiary of Oklahoma City-based Chesapeake Energy Corp., underpaid royalties for natural gas collected from beneath outdoor parks and other public property.
Included in the settlement is Total E&P USA Inc., the Houston-based arm of French energy firm Total S.A. that owns about 25 percent of Chesapeake’s Barnett Shale property.
“This settlement compensates the city for past underpayments, but also ensures that no post-production costs will be charged against the city’s royalties in the future,” reads a portion of the settlement. The document also said the agreement ensures certainty regarding how Chesapeake and Total E&P will calculate royalties in the future.
“The result protects the public interest by assuring that the original intent of the leases will be honored,” according to the settlement.
Representing the city in the lawsuit was Shayne Moses, David Palmer and Tim Howell of Moses Palmer & Howell LLP, a Fort Worth law firm.