Thursday, June 12, 2008

Lawsuit filed against Chesapeake Energy for reneging on partnership to market gas from Barnett Shale

By Pegasus News wire

Attorneys from the law firms of Sayles Werbner and Provost Umphrey are announcing a lawsuit filed in Texas state district court on behalf of Dallas-based ICC Energy Corp. against Oklahoma City-based energy giant Chesapeake Energy Corp. claiming that Chesapeake reneged on a commitment to partner with ICC Energy on the marketing of gas from the Barnett Shale at Dallas/Fort Worth International Airport.

The lawsuit, filed Wednesday June 11 in Judge Bruce Priddy's 116th District Court in Dallas, includes claims of discrimination, breach of fiduciary duty, breach of contract, misrepresentation, and fraud against Chesapeake as well as several company subsidiaries and individuals.

According to the lawsuit, Chesapeake approached ICC Energy in May 2006 about partnering on a bid for an oil and gas lease covering 18,000 acres of land owned by D/FW Airport. The land is part of the Barnett Shale, the second-largest on-shore domestic natural gas field in the United States. ICC Energy is the largest African-American-owned marketer of natural gas in Texas.

During the bidding process, Chesapeake sought the participation of minority-owned partners and subcontractors in order to win the lease as a result of D/FW Airport's longstanding policy of awarding contracts only to those companies that commit to utilizing minority- and women-owned businesses.

ICC Energy invested more than $3 million in the bid process based on Chesapeake's promise that if it won the lease bid, then ICC Energy would market 20% of the natural gas recovered at D/FW Airport. Chesapeake filed three separate bids with the D/FW Airport board where the company touted its relationship with ICC Energy and highlighted minority involvement in the marketing of the natural gas.

However, according to the lawsuit, once Chesapeake won its bid and was awarded the right to drill, Chesapeake never permitted ICC Energy to market the gas that was found, and instead moved the work in-house in violation of the earlier agreement and despite the company's representations to the D/FW Airport Board.

Attorney Joe Kendall of Provost Umphrey, a former federal judge and co-counsel to ICC Energy, says he believes Chesapeake pulled a classic "bait & switch," causing his client to lose millions of dollars.

"Chesapeake was eager to involve ICC Energy during the bidding process, but when the company saw the dollar signs they decided that they no longer needed a minority partner," he says. "Chesapeake is not only defaulting on their agreement with ICC Energy, but they're trying to deceive the airport board as well."

Attorney Mark Werbner of Sayles Werbner, co-counsel to ICC Energy, says his clients "have worked too hard to be ordered to the back of the bus" by Chesapeake.

"Karl and Kris Butler have built ICC Energy into one of the top minority-owned companies in the state," Mr. Werbner says. "They have proven themselves again and again as one of the industry's top marketers of natural gas and other fuel products, and they are not going to stand aside while Chesapeake exploits their minority status."

Butler, president of ICC Energy and a Vietnam-era veteran of the Army and Navy, says his company believes there may be as much as one trillion cubic feet of natural gas on the D/FW Airport leased property, which is expected to yield substantial daily production for more than 40 years.

Source: Sayles Werbner

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• Environmental Issues > Barnett Shale