Chesapeake Energy Corporation (NYSE:CHK) is defending itself in a lawsuit filed against it on grounds of conspiring to depress the market for land, oil and natural gas leases acquired from Chisolm Partners, LLC, and its investors.
Chisholm Partners, LLC and the investors who sold the natural gas, oil and land leases to the company are crying foul against the company for conspiring to rig the bids for drilling rights. Chisolm reported that investor lost more than $10 million in the conspiracy which took place from 2012 to 2012. The lawsuit claims that Chesapeake and SandRirdge CEO Tom Ward who had allegedly conspired to depress the market for the leases in subject.
Chisholm claims that the two firms divided the land in the Anadarko Basin located in Kansas as well as other states and jointly decided not to compete. This move caused the lease prices to plummet. According to Chisolm, Chesapeake and SandRidge were the two main competitors in the bid. Earlier in March, Aubrey McClendon together with a few other executives that were involved in the conspiracy faced federal charges on account of bid-rigging. The pursuant seeking $30 million in damages. It also claims that it struck a deal to sell the leases to Chesapeake in 2011. The latter allegedly acquired 100% of the membership interest in the firm and then unloaded the leasehold interests to SandRidge.
McClendon was the head of Chesapeake during the entire time that the conspiracy was taking place. Unfortunately, he met his demise on March 2, just one day after the indictment when he was involved in a car accident in Oklahoma City. Authorities reported that the accident had nothing to do with the conspiracy. Ward was the CEO OF SandRidge during the entire tie of the conspiracy. A lot of growth was reported in the two firms during the time the two were in leadership. Chisholm also stated in its complaint that there were other co-conspirators that were not mentioned.