Chesapeake reaches $25 mln Michigan settlement over leasing charges

Fri Apr 24, 2015 2:28pm EDT
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April 24 (Reuters) - Chesapeake Energy Corp., the second largest U.S. natural gas producer, will create a $25 million compensation fund as part of a settlement on Friday of antitrust and racketeering charges brought by the state of Michigan, according to terms of the settlement reviewed by Reuters.

A criminal antitrust trial under way in Michigan state court in Cheboygan has been suspended as part of the settlement. In addition to the compensation fund, Chesapeake agreed to plead no contest to one count each of attempted antitrust violation and false pretenses, both misdemeanors. Under terms of the agreement, the court will dismiss those charges after 11 months if Chesapeake adheres to the settlement terms.

The antitrust charge brought by Michigan's Attorney General Bill Schuette against Oklahoma City-based Chesapeake alleged the company colluded with a competitor, Encana Corp., to suppress oil and gas land lease prices at an October 2010 state land lease auction. Encana agreed to pay $5 million in a civil settlement with the state in May 2014.

Separately, Chesapeake faced Michigan charges of racketeering and false pretenses that alleged the company defrauded private landowners in the state during 2010. Those charges, for which Chesapeake was slated to face another criminal trial, will be dropped by the state as part of the settlement agreement. (Reporting By Brian Grow and Joshua Schneyer. Editing by Michael Williams and Chizu Nomiyama)