Chesapeake Subsidiary Suffers $404 Million Verdict

A Roane County, W.Va. jury awarded a $404 million verdict regarding royalties against Chesapeake Energy Corp. subsidiary Chesapeake Appalachia LLC, NiSource Inc. and its subsidiary Columbia Energy Group.
The case, filed in 2003, totaled $134 million in compensatory damages and $270 million in punitive damages. The estate of Garrison G. Tawney alleged that the defendants did not pay royalties on gas production in West Virginia.
The case was inherited by Chesapeake when it acquired Columbia Natural Resources in November 2005.
Chesapeake has previously set aside a legal reserve which it believes will be adequate to cover its share of any judgment, should one be entered and survive the appeals process.
Chesapeake said in a release that officials were “surprised and disappointed by the jury’s verdict.”
“If allowed to stand, the verdict would have far-reaching negative implications for all gas producers in West Virginia and would reinforce the hostile legal environment all businesses face in West Virginia,” Chesapeake said.

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