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Chesapeake settles farm drilling suit

November 30, 2011
By CASEY JUNKINS - Special to the Herald-Star , The Herald-Star

TRIADELPHIA - Chesapeake Energy will proceed with plans to drill a natural gas well on Ohio County resident Melvin Kahle's 180-acre farm now that the two parties have settled their lawsuit.

Earlier this year, Kahle, a former Ohio County prosecuting attorney who served as the U.S. Attorney for the Northern District of West Virginia from 2000 to 2001, filed a lawsuit against Chesapeake because he believed the company did not have a valid lease to operate on his property.

Chesapeake representatives, who requested the lawsuit be moved from Ohio County Circuit Court to U.S. District Court in Wheeling, maintained the company had a legitimate lease to work on Kahle's ground because of a deal the company made with Range Resources.

Following months of motions and negotiations, U.S. District Judge Frederick P. Stamp Jr. ordered the case dismissed on Nov. 15 because of the settlement, court documents show.

"I am happy this is over and hope it works out for the best," Kahle said Tuesday, noting he could see bulldozers and trucks moving onto his property as he spoke on the phone.

"They are coming in to do their work," Kahle said of Chesapeake, which has permits from the West Virginia Department of Environmental Protection to drill on his land.

Kahle said a confidentiality agreement forbids him from making any specific comments about the settlement he reached with Chesapeake, as he noted, "The case is settled to the mutual satisfaction of all parties."

Chesapeake spokeswoman Stacey Brodak made a similar statement Tuesday.

"Chesapeake and the Kahles settled this matter to their mutual satisfaction. Chesapeake has no further comment regarding the settlement, and intends to proceed with its planned operations," she said.

The heart of the lawsuit involved Kahle's contention that the lease Chesapeake was using to claim his ground was no longer valid. Records in the Ohio County Clerk's Office show that Kahle entered into a lease agreement on May 15, 2006, with a firm then known as "Great Lakes Energy Partners." Great Lakes later became Range Resources Appalachia, which is a division of Fort Worth, Texas-based Range Resources Corp.

The terms of the 2006 lease called for Kahle to receive lease payments of $8.75 per acre, with 14 percent on production royalties for any gas taken from his land.

These numbers fall far short of the $3,000-$5,000 per acre, and 18-20 percent of production royalties, drillers such as Chesapeake have recently agreed to pay for mineral rights throughout the area.

Records show that Kahle's lease was one of 156 Range assigned to Chesapeake throughout Ohio County by an agreement made between the companies on Aug. 16, 2010. The assignments read that they are retroactively "dated effective as of July 1, 2010," even though the agreement was not made until Aug. 16, 2010.

Once surveyors working for Chesapeake showed up at Kahle's property looking to drill a well, via the $8.75 per acre and 14 percent Range lease, Kahle filed legal action against the company to prevent this.

In his complaint, Kahle maintained that Range did not have the authority to assign or sell his lease to another company. He also claimed that Chesapeake did not acquire an existing lease for his property because he believed Range had surrendered that lease with a release letter that company sent to him.

Through it all, Kahle said he got a new perspective of the law that he has studied and practiced for many years.

"Being a litigant is a lot different than being an attorney," he said.

 
 

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