PA Atty General Sues Chesapeake Energy, Williams for Royalty Fraud
Pennsylvania Attorney General Kathleen Kane, who has been indicted on numerous felony charges and likely to be forced from office any day now, filed a lawsuit yesterday against Chesapeake Energy in Bradford County Court over the issue of shorting landowners out of royalties. What every story we’ve seen (thus far) misses is this: The lawsuit also names Williams as participating in the scheme to defraud landowners out of royalty payments. So this is not just a Chesapeake story, it’s a Williams story too. Landowner groups are “hailing” the decision, jumping up and down with glee. Let us throw a little cold water on your face. Note to landowners and the groups that represent them: When you (metaphorically) crawl into bed with Kathleen Kane, you’re crawling into bed with a rattlesnake. Sooner or later she’s going to turn on you too. Mark it down. It’s in her nature. With that disclaimer in place, we’ll break down the news for you, and show you a copy of the lawsuit Kane’s office filed yesterday…
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The failed Governor of Pennsylvania, Tom Wolf, “100 percent guarantees” an oil and gas severance tax will be part of next year’s state budget. That’s the claim made by Wolf’s inept Policy Secretary, John Hanger, last Friday. What hubris. Wolf and Hanger can’t even get THIS YEAR’S budget done! Nearly six months late!! And already they’re trying to grab money for next year. Democrats have a heroin-like addiction to OPM–Other People’s Money. (Coincidentally, when John Hanger ran for governor himself, he ran on a platform of legalizing marijuana, see 
We’ll let you decide whether the recent action by the Pennsylvania Dept. of Environmental Protection (DEP) is in line with being a good regulatory watchdog, or with being a mafia Don, using the power of the government to shake down a drilling company. On Sept. 15, 2011 as Chesapeake Energy was drilling the Stinger 8H well in Aleppo Township (Greene County), PA, in an area known for its landslides–they experienced (yes) a landslide. The landslide created sediment that plugged about one-fourth of a mile of seven “streams” so tiny they don’t have names–essentially drainage ditches. The seven drainage ditches, when they have water in them, flow into a very small creek called Harts Run. In return Harts Run, which crosses the border into West Virginia, eventually empties into a slightly bigger creek called Pennsylvania Fork Fish Creek, which eventually empties into Fish Creek (slightly bigger again), which eventually empties into the Ohio River–on the other side of WV where it borders with Ohio. There is zero chance any of the sediment made it beyond Harts Run, let alone all the way to the Ohio. But still, it’s not a good thing if you’re not “careful” to prevent what the Guvment believes you should be able to prevent. Chesapeake, since that time (over four years ago), has essentially fixed the problem–spending millions to do so. Apparently there’s a little bit of work left to do. The PA DEP comes along and yesterday announced that Chesapeake has agreed to pay the DEP a whopping $1.4 million fine for this four year-old accident, as well as do a bit of tidying up of the drainage ditches. Here’s the kicker–Chessy doesn’t even own that well any more…
Doug “the ax” Lawler, CEO of Chesapeake Energy, was the keynote speaker on Tuesday at the Louisiana Gulf Coast Oil Exposition (LAGCOE). Lawler became CEO after corporate raiders Mason Hawkins and Carl Icahn, the two biggest investors in Chesapeake, forced Aubrey McClendon out–out of the company he co-founded. That’s what happens when you take other people’s money. You lose control. Lawler embarked on massive layoffs and selling everything but the kitchen sink. How’s it worked out? Lawler claims the company now has $1.5 billion in cash, giving them some breathing room. Lawler had some very interesting comments at LAGCOE on the price of natural gas–where he sees it going over the next five years, and at what price his company (and other companies) can’t make money. Lawler also talked about the price of oil, oil production and Saudi Arabia’s rather bizarre behavior with respect to oil production…
Although Chesapeake Energy under Doug “the ax” Lawler has sold off everything but the kitchen sink (see 
The last vestiges of the Aubrey McClendon era at Chesapeake have now been swept away. In June 2012, Aubrey was demoted from his position as chairman of the board of directors. Archie Dunham, the retired chairman of ConocoPhillips, was tapped to replace him and help the company navigate the transition from dumping McClendon (see 
Following on our rumor from yesterday that Chesapeake Energy is looking to sell their dry gas Utica acreage (see 
Did Chesapeake Energy take Williams to the cleaners? Chesapeake Energy has just cut a deal with Williams to shave 25 cents per Mcf off their natural gas gathering fees in the Utica Shale (see this Shale Daily story: