Remember how Chesapeake Energy folks complained (is whined too strong a word?) about the 2007 Roane County Circuit Court jury award of about $404 million in compensation and penalties?
In the class-action â€œTawney case,â€ people who sold natural gas to Chesapeake and its predecessors — Triana Energy, NiSource Inc. and Columbia Natural Resources — alleged they were cheated out of some of their royalty payments, and the jury agreed.
Chesapeake CEO Aubrey McClendon, in his parting shot at the state last month, said the W.Va. Supreme Courtâ€™s refusal to hear an appeal of the Tawney case had a lot to do with the companyâ€™s decisions to cancel plans to build a $40 million regional headquarters in Charleston and, ultimately, eliminate 215 valuableÂ jobs here.
You might logically conclude Chesapeake was forced to fork over $404 million to its gas lease-holders and their lawyers. You would be wrong.
As the Gazetteâ€™s Ken Ward reported last Oct. 25, the Roane Circuit Court approved a preliminary settlement in the Tawney case in which NiSource Inc. — not Chesapeake — would pay most of the bill.
NiSource, which bought Columbia Natural Resources and then sold it a few years later, announced it would pay $338.8 of the proposed $380 million settlement. The Indiana energy company sold CNR to Triana Energy, which in turn sold it to Chesapeake in 2005.
That meant Chesapeake, at most, was on the hook for $41.2 million — a far cry from the original $404 million jury award. At the time, Chesapeake didnâ€™t even issue a press release, like NiSource did, so it would seem the matter was not all that important to the company.
Chesapeake said as much in its quarterly financial report (10-Q) a few weeks later to the U.S. Securities and Exchange Commission, and again in its annual 10-K report March 2 (page 30). To wit:
As the company said in the Nov. 10, 2008, 10-Q report (page 14):
The Circuit Court for Roane County, West Virginia approved the settlement following a fairness hearing on November 22, 2008, and entered an order to discharge the judgment on January 21, 2009. Chesapeakeâ€™s share of the settlement fund was approximately $41 million, which amount had previously been fully reserved.
Chesapeake believes this litigation will not have a material adverse effect on its results of operations, financial condition or liquidity.
So, in the inimitable words of Clara Peller, whereâ€™s the beef?