From
Bob O'Neal, Economic Development Director
Title
Contract with Moses, Palmer, and Howell L.L.P to represent the city in claims with Chesapeake Exploration, L.L.C
Presenter
Bob O'Neal, Economic Development Director
Recommended Action
Approve
Analysis
We have been receiving royalty payments from our Chesapeake Exploration L.L.C and TOTAL E&P USA (Chesapeake) gas leases since September 2010. Chesapeake acquired the City’s leases with Dale Resources and Harding Oil and Gas. To date, these payments have totaled over $4,000,000. An audit of these payments, conducted by the City’s Management Service office, revealed the potential that our payments were not correctly calculated based on the terms of our lease and a recommendation was made that we should hire an outside firm to handle this matter with Chesapeake.
Shortly after the audit recommendations where made, the City of Arlington and several other public entities hired outside counsel to pursue their similar claims against Chesapeake. We elected to wait and see the results of their efforts, which have now proved successful. The City of Arlington used the firm of Moses, Palmer, and Howell L.L.P (MPH) to come to a successfully negotiated positive conclusion and are very satisfied with the firm's work.
Don Postell and I met with Shayne Moses of MPH to discuss assisting the City review potential claims against Chesapeake. Potential claims would include a review our payments to date and recover revenue, clarify how our payments would be calculated going forward, and verify that all City acreage in production units are being included in our payments.
Mr. Postell has reviewed possible payment options including billing per hour or various percentages of amounts recovered and is recommending that we contract with MPH at their normal hourly rates of $275 to $495 per hour. We hope that with the recent positive experience of our city neighbors, MPH work would be limited to a demand letter and talks lea...
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