Chesapeake Underpaid Oil, Gas Royalties, Texas City Says

Law360, New York (August 7, 2013, 1:11 PM EDT) -- The city of Arlington, Texas, sued a Chesapeake Energy Corp. unit in Texas state court Monday alleging the oil and natural gas giant has underpaid royalties on oil and gas leases that cover more than 1,900 acres of city-owned land.

When Arlington issued the leases through a public-bidding process, it negotiated specific contractual provisions to ensure that, at the least, the city receives market value, and it also included provisions that limit or ban Chesapeake from deducting costs from the royalties, the city says. But the...
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