Chesapeake Energy Corporation (NYSE:CHK) disclosed in its regulatory filing that it received subpoenas from the Department of Justice (DOJ) and certain state agencies seeking information regarding its royalty payment practices.
The second largest producer of natural gas in the United States also revealed that the DOJ and certain state authorities are conducting investigation over potential violations of federal and state antitrust laws.
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Chesapeake Energy Corporation (NYSE:CHK) said the DOJ and state investigations are related to its acquisitions and lease of oil and gas rights in different states. The DOJ and state authorities are demanding for documents, information and testimony in connection with the investigations.
The energy company said it “engaged in discussions with the DOJ and state representatives and continues to respond to such subpoenas and demands.”
Chesapeake allegedly using improper deductions
Chesapeake Energy Corporation (NYSE:CHK) is facing numerous complaints from landowners alleging that it underpaid royalties for oil and natural gas pumped out of their properties by using improper deductions or below-market pricing.
Earlier this year, Republican Governor Tom Corbett of Pennsylvania requested the state’s attorney general to investigate Chesapeake Energy Corporation (NYSE:CHK) on allegations that it was shortchanging royalty payments to landowners in Bradford County.
At the time, Chesapeake CEO Doug Lawler said the company is following the terms of its agreement with landowners and explained that majority of its leases in Pennsylvania allowed cost deductions.
Chesapeake 3Q earnings beat estimates
Yesterday, Chesapeake Energy Corporation (NYSE:CHK) released its financial results for the third quarter. The company posted $0.38 in earnings per share and $5.7 billion in revenue.
The company’s earnings results beat the $0.33 in earnings per share and $4.84 billion in revenue consensus estimates of Wall Street analysts.
“The improvements in our capital efficiency, our focus on cost leadership and the strength and quality of our assets and talented employees are very clear in our third quarter results,” said Lawler.
Lawler added that Chesapeake’s adjusted production increased 11% and the company already achieved its year-end exit rate target of approximately 730,000 barrels of oil equivalent per day last September.