By Curtis Talley
In 2010, Chesapeake Energy refused to pay lease bonuses on signed oil and gas leases. These bonuses were up to $3,500 per acre. This was devastating to many landowner/mineral owners, many of whom had negotiated this payment as part of lease negotiation, or had an attorney assist.
During the summer of 2010, Michigan State University Extension and the State of Michigan Office of Oil, Gas and Minerals held nine public oil and gas leasing and oil and gas industry educational workshops in Northern Michigan. Total attendance was 2,179. Landowners and mineral owners were being contacted by representatives of oil and gas companies and were being offered an oil and gas lease to sign. For many, this was the first time they had an opportunity to lease their oil and gas rights. They wanted information to educate them on oil and gas production and the leasing process.
Workshop Topics included:
- Unconventional Shale Gas Development
- The Department of Oil, Gas and Minerals role in oil and gas production and regulation of the industry
- Understanding the oil and gas lease
- Bringing it all together in a negotiated win-win lease.
Susan Topp of Topp Law frequently volunteered her time to speak at these workshops, discussing the oil and gas lease contract and negotiating the lease.
During the summer of 2010, many landowners signed leases with representatives of Chesapeake Energy Corporation. Not long after signing, the oil and gas leasing market collapsed. Chesapeake in their review of the signed leases disqualified them and refused to make payment for various reasons that many experts, including Susan Topp felt were not legitimate.
On October 21, 2010 Michigan State University Extension, along with attorney Susan Topp, held an informational meeting at the Emmett County Community Building. The title of the meeting was “Duties and Obligations of an Oil and Gas Company under the Lease and Order for Payment.” The goal of the workshop was to help landowner/mineral owners understand the issues and inform them of their legal options going forward.
Twenty people joined together and hired Topp and filed a civil action against Chesapeake. Over the years many settled with Chesapeake for a total of $19 million, which was less than the contracted bonus. Encana Energy honored their leases and paid the lease bonus.
Michigan Attorney General’s Office felt laws were broken and filed criminal complaints against Chesapeake. In May of 2014, Encana Energy settled for $5 million with the state in order to avoid criminal charges. Both companies agreed to pay a combined settlement of $25 million. The $25 million will bring total compensation to $44 million and all qualifying landowner/mineral owners that signed leases with Chesapeake will be compensated 100 percent for their losses, including attorney fees. Those in the civil suit will not have their attorney fees reimbursed due to Michigan law. The news release from the State of Michigan Attorney General’s office has been placed on the MSU oil and gas web page. You are encouraged to read the entire release.
It is estimated there are more than 700 landowner victims. Victims that have not yet come forward in the last four years will have 120 more days to file a claim. It is recommended they contact Susan Topp at 989-731-4014 to learn what information is needed to file a claim.
Source:msu.edu