Following up on a story originally posted on this site on June 26, 2012 (To All of Our Contributors to the MNRTF – “Say it Ain’t So”), it was announced on Thursday by Oklahoma City-based Chesapeake Energy Corporation that on June 29th it had been subpoenaed by the U.S. Department of Justice to provide all documents relating to its oil and gas lease bidding activity here in Michigan. The company has also stated that it has received similar requests from agencies within the State of Michigan. Chesapeake Energy has committed to full cooperation in the investigation.
It may be recalled from the original Reuters News Service report that Chesapeake Energy CEO Aubrey McClendon worked with executives at Encana Corporation to avoid bidding against each other in oil and gas lease auctions here in Michigan. Reuters based their report on emails obtained from both companies, and these actions appeared to be in violation of both federal and state antitrust laws.
Since the proceeds from these State of Michigan oil and gas lease auctions are directed to the Michigan Natural Resources Trust Fund (MNRTF) and its successor beneficiary, the Michigan State Parks Endowment, the results of the inquiry should be of interest to all state residents.
Although it is far too early to speculate about possible outcomes of such a federal investigation, from a procedural standpoint it is our understanding that any fines potentially levied in similar circumstances are unlikely to include a recovery mechanism for the MNRTF. It is for this reason that we are pleased to see that the State of Michigan has also sought similar documentation, presumably for the purposes of conducting its own review.
Since this story is being covered by most major news outlets in addition to the business media, we recommend that you keep a safe distance from your PC, laptop or handheld device if you chose to perform your own Goolge search for further details. Today Chesapeake Energy stock closed down $0.63 (3.1%).
The original Reuters News story can be retrieved from the NMCN post of June 26 linked below: