Before you sign that lease, read this:
CHESAPEAKE OPERATING, INC. v. LOOMIS
The Cliff Notes version:
Chesapeake drilled and operated a gas well on Loomis property.
Defendant, Loomis – surface owner of a 240-acre tract in Woodward County, Oklahoma was negotiating with Chesapeake for surface damages to his property.
Chesapeake nominated an appraiser – Kohl
Loomis nominated an appraiser – Gerloff
Kohl and Gerloff nominated an appraiser – Story
There are now three appraisers to determine what Chesapeake owes Loomis for damages to his property from the following:
1. The separation of the part taken from the remaining property;
2. The loss or impairment of a right of access to the road that previously abutted the owner’s property; and
3. The construction and/or use of the drilling operations on the property being taken.
What did the appraisers find:
Kohl found that Chesapeake owed Loomis $5,490
At this point, late in the game, Chesapeake cries foul because there is more than one appraiser and, well, because they didn’t like the appraisal.
Methodology used by Story for determining surface damages explained:
(1) $6,405 for 1.83 acres taken to construct the wellsite pad and lease road at a fair market value of $3,500 per acre, based upon 15 comparable properties;
(2) $1,750 for damage to property near the well site caused by Chesapeake’s use of the off-site land for parking;
(3) $1,000 for damages caused by a water spill that created erosion problems to property which was off-site; and
(4) Approximately $3,200 for the “stigma” associated with having an oil and gas operation located on the 240-acre tract as a whole. Among other factors, Story testified, the latter figure was affected by the fact that a surface owner has no say in the location of the well site.
Loomis won but, of course, Chesapeake appealed. The court’s decision was AFFIRMED.
Chesapeake, claims they are “Doing the Nation a World of Good.” They can afford to compensate surface owners for damages.
Chesapeake Energy was recently listed in Fortune as ranking number 30 in the Forune’s 2006 list of 100 fastest growing companies. “The Oklahoma City, Oklahoma-based company saw profits rise at a rate of 79% and revenues grow 74% with a stock return of 45% on average annually over the past three years. The company ranked 46 on the 2005 list.”
About Sharon Wilson
Sharon Wilson is considered a leading citizen expert on the impacts of shale oil and gas extraction. She is the go-to person whether it’s top EPA officials from D.C., national and international news networks, or residents facing the shock of eminent domain and the devastating environmental effects of natural gas development in their backyards.
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