BHP hit with another fracking fracas in US courts

BHP hit with another fracking fracas in US courts by Leonie Wood, July 20, 2012, The Sydney Morning Herald
BHP and other energy companies in eastern Arkansas have been peppered with class actions in the past year as residents claim the injection of liquids into underground shale formations, a process known as fracking, has caused tremors and damaged the environment. But some landowners are now contesting how much they are being paid for leasing the land for fracking and gas production. In the latest class action, filed last month, a couple from eastern Arkansas have accused five energy companies, including BHP, of wrongfully deducting from their royalties the costs of extracting and transporting gas produced on their land. … The stoush over royalty payments comes amid speculation that BHP will write down the value of the $US4.75 billion of shale gas assets it acquired early last year from Chesapeake by at least $US2 billion. … In documents filed in the US District Court in eastern Arkansas, Denny and Diane Brown say the lease agreement they struck with Basin Management in 2005 calculated royalties to be paid to landowners on a gross basis. But they say the energy companies are wrongfully deducting costs that the companies claim are part of the process of ”enhancing” the value of the gas. The Browns claim XTO Energy, which operates the facilities on their land, Basin Management, Chesapeake and BHP ”wilfully withheld payments without just cause or through bad faith”.

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