Exclusive: Chesapeake drops energy leases in fracking-shy New York
By Edward McAllister
NEW YORK (Reuters) - Chesapeake Energy has given up a two-year legal fight to retain thousands of acres of natural gas drilling leases in New York state, landowner and legal sources told Reuters.
Landowners in Broome and Tioga counties, who had leased acreage to Chesapeake over the past decade, had battled the pioneering oil driller in court to prevent it from extending the leases under their original terms, many of which were agreed to long before a boom in hydraulic fracturing swept the United States.
But Chesapeake is now ready to walk away from the leases, according to a letter some landowners received two weeks ago from their attorney at Levene Gouldin & Thompson, potentially allowing the landowners to renegotiate new deals with other drillers at a higher rate, if New York state eventually ends a five-year fracking ban.
The decision, expected to be finalized next week, is a sign of energy firms' growing frustration over operating in the Empire State, where most drilling is on hold, and also an indication of how Chesapeake is reining in spending after years of aggressive acreage buying left it with towering debt.
"Chesapeake contacted us and offered to withdraw Chesapeake's appeal and provide complete release of the leases," attorneys from Levene Gouldin & Thompson said in a letter to one of their clients, a landowner. The letter dated July 26 was read over the phone to Reuters.
"Obviously, this is excellent news as it constitutes an end to the litigation," the lawyers wrote to their client.
Chesapeake had sought to extend the leases, many of which were signed in 2000, on existing terms, arguing that the fracking ban had allowed it to do so. Extending the leases meant it would avoid renegotiations, which would likely have raised the cost of the acreage.
Scott Kurkoski, a partner at Levene Gouldin & Thompson, who represents a group of landowners against Chesapeake, confirmed that he was in talks with the company, though he declined to comment further. Chesapeake Energy declined to comment for this story. Continued...