Oklahoma-based Chesapeake Energy agreed Friday to pay $25 million to settle legal issues tied to some of its Michigan leases.
The payment will settle antitrust, racketeering and fraud charges filed by Michigan’s attorney general last year for alleged collusion during a lease auction and improperly cancelled leases.
As part of the deal Chesapeake will plead no contest to one count of attempted antitrust violations and one count of false pretenses.
If the company fulfills the terms of the settlement the state’s criminal case will be dropped in 11 months.
Under the settlement Chesapeake will not admit any wrongdoing.
State officials began investigating Chesapeake after a 2012 Reuters report claimed the firm colluded with Canada-based Encana to keep land prices low during a 2010 public lease auction.
Chesapeake and Encana were allegedly able to push lease prices down to $40 per acre at an October 2010 auction, a steep drop from the record breaking $1,510 per acre price set at a state auction in May of that year, Reuters said.
Both companies have denied any wrongdoing.
In May Enanca paid a $5 million civil settlement for its involvement in the case.
“This is a victory for Michigan taxpayers and a victory for all the Michigan land-owners who took deep hits to their pocketbooks following the October 2010 private land auction,” Michigan attorney general Bill Schuette said.
Chesapeake was also facing fraud and racketeering charges in Michigan after allegedly cancelling hundreds of leases under false pretenses.
The settlemetn funds will be used to fully reimburse every person listed in the state’s racketeering complaint for those cancellations.
Plaintiffs who pursued private settlements with Chesapeake will also be able to reopen their cases and recoup “additional losses not already compensated for.”
The settlement will also lift a state imposed ban that had prohibited Chesapeake from bidding on new leases.
“This settlement will achieve recovery for every one of the more than 700 affected victims who come forward and make a valid claim,” Schuette added.