Justice Dept. probes Chesapeake over possible collusion

Mon Jul 2, 2012 6:12pm EDT
 
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By Diane Bartz and Brian Grow

WASHINGTON (Reuters) - The U.S. Justice Department is probing Chesapeake Energy Corp and Encana Corp for possible collusion after a Reuters report showed that top executives of the two rivals plotted in 2010 to avoid bidding against each other in Michigan land deals, a source close to the probe said.

The report uncovered emails showing that the two natural gas companies repeatedly discussed how to avoid bidding against each other in a public land auction in Michigan and in nine prospective deals with private land owners in the state.

Communications between the companies occurred in 2010, when Michigan's Collingwood shale formation was considered one of the nation's most promising new oil and gas plays, and Chesapeake and Encana were among the largest bidders for land leases there.

The source, who was not authorized to speak publicly, said the Justice Department probe could last for months, if not longer.

A Justice Department spokesman declined to comment.

Jim Gipson, a spokesman for Chesapeake, said the company declined to comment. A spokeswoman for Encana said the company had no comment.

The federal government's probe adds more scrutiny to the two energy companies.

Last week, the antitrust division of Michigan Attorney General Bill Schuette's office and Michigan's Department of Natural Resources, which oversees state land auctions, also opened investigations into the allegations in the report, according to three sources familiar with the matter.   Continued...

 
Chesapeake Energy Corporation's 50 acre campus is seen in Oklahoma City, Oklahoma, on April 17, 2012. REUTERS/Steve Sisney