Michigan-based NorthStar Energy has sued Chesapeake Energy Corp. and Encana Corp., claiming the two companies colluded to manipulate oil and natural gas lease prices in Michigan in 2010.
Filed Friday in U.S. District Court in Michigan, the suit alleges that Chesapeake and Encana competed against each other, driving up prices at a different auction in May 2010, but that the two companies then illegally worked together to divide up the acreage NorthStar sold in an auction one month later, ensuring that both companies received leaseholds for substantially lower prices.
Chesapeake and Encana “conspired to restrain trade and depress prices, willfully violating federal and state antitrust laws, with the primary goal of avoiding and/or preventing competition and thereby artificially lowering the price for or eliminating NorthStar's ability to sell its acreage,” NorthStar said in the lawsuit.
Chesapeake and Encana both have conducted internal investigations into the claims, and each company cleared itself of wrongdoing.
Encana on Monday said it planned to “vigorously defend any lawsuit” related to collusion claims. Chesapeake spokesman Michael Kehs declined to comment Monday.
The lawsuit includes email exchanges the company claims show Chesapeake and Encana executives discussing which counties each company would bid on.
After nine days of email exchanges, Chesapeake Vice President Doug Jacobson told Encana vice president John Schopp “we are basically good with the county split you've proposed,” and urged quick action to keep “acreage prices from continuing to push up,” according to the lawsuit.
In another email, Chesapeake CEO Aubrey McClendon told top Chesapeake and Encana executives, it “looks like NorthStar wants us to bid against each other next week, let's decide who should handle that one.”
The U.S. Justice Department and Michigan's attorney general also are investigating Chesapeake and Encana for possible antitrust violations.
CONTRIBUTING: Paul Monies, Business Writer