Chesapeake Energy Energy (NYSE:CHK) is facing tough opposition from a community in Bradford County, Pennsylvania. On Tuesday, supervisors in Wilmot Township voted for a resolution demanding Chesapeake Energy’s production to be discontinued at wells where landowners are having their royalty checks diminished to nothing or nearly nothing.
Chesapeake Energy not following the contract?
The Wilmot Township supervisors voted on Tuesday night to stop allowing the energy giant to remove gas from the wells it drilled there. The community is doing this in an attempt to get gas leaseholders their full royalties, according to WNEP-TV.
Many leaseholders from Bradford County told township officials that the energy giant was charging fees that were not even in the contract, and by doing this, it was cheating them out of their 12.5% royalties. Chesapeake has even started telling leaseholders that they owed it money, says David Parsons of Wilmot Township.
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“Started out at 12 ½ percent and is down to negative where they’re actually owning the company money,” Parsons told.
Now his community near Wyalusing, Penn. is moving against the country’s second largest natural gas producer. Township supervisors approved a resolution that bans Chesapeake from removing any more gas from its wells until the owners of the leases are paid their full royalties, according to WNEP.
Frank Massersmith, chairman of the supervisors, said all they want is to have the leases honored as they are written with royalties paid at 12.5%. Coalition spokeswoman Erica Clayton Wright said that any dispute between an energy producer and a mineral owner over the terms of the contract will always be resolved by the courts most effectively.
Township considering a court injunction
Though it is an ordinance now, community officials say this is more of a symbolic gesture to send a message to state lawmakers to take some action. The township is considering a court injunction to stop the gas from being removed, according to StateImpact.
Next week, Bradford County commissioners are planning to host a rally to display their support of the proposed legislation. The rally is expected to be held at Towanda Area High School at 6 p.m. on September 14.
It must be noted that Chesapeake Energy was slapped with a lawsuit in December from the Pennsylvania attorney general’s office for allegedly using bait-and-switch methods with those who signed gas leases with the energy company.