CHESAPEAKE STILL LEASING AFTER VERDICT

(05/24/2007)

By David Hedges, Publisher
www.thetimesrecord.net

After a Roane County jury returned a $400 million verdict against a natural gas company, the company's CEO threatened to curtail new drilling in the area.

But since that time, Chesapeake Energy has recorded several new oil and gas leases in Roane County, in-cluding some signed after the verdict was returned.

The trial in a class action lawsuit filed against Chesapeake and related companies lasted three weeks, before a six-member jury issued its verdict Jan. 27. That verdict awarded the plaintiffs $134.3 million in actual damages and another $270 million in punitive damages. The total award of more than $404 million is believed to the largest in state history.

After the verdict was announced Chesapeake officials threatened to halt plans to build a new regional head-quarters in Charleston.

Chesapeake CEO Aubrey McClendon also appeared on television three weeks later and said plans for an ex-tensive drilling program in the area might be scrapped unless the verdict was set aside.

McClendon said the company had just finished the first large three-dimensional seismic survey ever shot in West Virginia, which was centered in Roane County.

"We are kind of scratching our heads about what to do with it," he said in the television interview.

"I'm not willing to commit to a big, new, large exploration program in the state of West Virginia when I don't know how the leases that I've inherited are going to be interpreted by judges across the state," McClendon said.

The verdict is currently being appealed, but just last week Chesapeake sent over 100 new gas leases to the Roane County Courthouse to be recorded.

Of the 105 lease agreements, 64 were signed after the Jan. 27 verdict. Others were signed earlier in January, or in the last six months of 2006. The lease agreements were for locations in Curtis, Geary, Harper, Smithfield and Walton districts.

Roane County Clerk Charlie White said leasing activity has been brisk in the record room.

"We've been busy," White said. "Some days it's hard to find a place to put a book down on the counter.

"Generally there will be eight to 10 people just working on oil and gas," White said. "Last week there were people at every table."

White said he has not seen a downturn in leasing activity since the verdict.

"If anything it has picked up," he said. "It's not just Chesapeake. There are other companies in here as well."

White said the number of leases recorded by Chesapeake last week was larger than normal.

"Most oil and gas companies will record from 15 to 30 (leases) at a time," he said. "That (105) is a lot to get at one time."

Chesapeake officials did not return a reporter's phone call seeking comment.

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