Chesapeake Energy in U.S. antitrust probe

Thu Aug 9, 2012 6:37pm EDT
 
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By Brian Grow

ATLANTA (Reuters) - Chesapeake Energy said it is the subject of a U.S. government investigation over possible criminal antitrust violations related to the purchase and lease of oil and gas properties in Michigan.

Chesapeake has received a subpoena from the antitrust division of the Justice Department's Midwest field office, requiring the company to produce documents before a grand jury in the Western District of Michigan, according to a filing with U.S. regulators on Thursday.

In June, Reuters reported that Chesapeake plotted with its top competitor, Canada's Encana Corp, to suppress land prices in the Collingwood shale in Northern Michigan.

Emails between Chesapeake and Encana showed the two companies repeatedly discussed how to avoid bidding against each other in a public land auction in Michigan two years ago and in at least nine prospective deals with private land owners.

The Justice Department is "moving criminally," said Darren Bush, a former antitrust attorney for the Department of Justice and a professor of antitrust law at the University of Houston. "They are working their way through the grand jury process to potentially serve up indictments."

Chesapeake's disclosure indicates the Justice Department has moved swiftly on the matter. Reuters published its story on June 25. Just four days later, on June 29, the subpoena was served on Chesapeake, according to the company's quarterly report filed with the Securities and Exchange Commission.

A spokesman for Encana said he could not immediately comment. A spokesman for Chesapeake declined to comment.

Chesapeake said in the filing with the U.S. Securities and Exchange Commission that it has also received demands for documents and information from state governmental agencies in connection with other probes relating to oil and gas rights transactions.   Continued...

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