Chesapeake Energy says Mich. firm owes it $450,000 for billings

By Kelly Holleran | Sep 21, 2009

CHARLESTON – An Oklahoma corporation says a Michigan company owes it more than $450,000 for joint interest billings on a well.

Chesapeake Appalachia claims it entered into a joint venture and joint operating agreement with defendant Nitro Energy for the exploration, development and production of natural gas.

According to the complaint filed Aug. 14 in U.S. District Court for the Southern District of West Virginia, each party in the JOA was to pay all shares of production, including land owner royalty and all burdens on production from the contract area.

Under the JOA Chesapeake was the operator of a well referred to as the Hammack well, while Nitro was the non-operator, the suit states.

Chesapeake was to pay all expenses related to the well, then to charge each party in the JOA with their shares, the complaint says.

On May 19, 2005, Chesapeake claims it sent Nitro a letter and copies of joint interest billing statements for February and March 2005, informing Nitro that its account with Chesapeake was past due and requesting it pay money owed within 10 days.

Chesapeake continued to send joint billing statements to Nitro, but still received no money, according to the complaint.

"On or about March 17, 2009, Chesapeake sent a letter, via certified mail, to Nitro putting it on notice that its account with Chesapeake was past due in the amount of $457,135, for joint interest billings for the 'Hammack' well for the months of January 2005 to December 2008, and that if Nitro did not pay within 15 days the matter would be referred to Chesapeake's Legal Department," the suit states.

Nitro failed to respond to the letter, so Chesapeake sent it another letter via certified mail, the complaint says. In the letter, Chesapeake claims it informs Nitro that if Chesapeake did not receive the outstanding funds within 20 days, it would pursue legal action.

By April 17, Chesapeake still had not heard a response from Nitro, so it filed a lawsuit.

Chesapeake is seeking a judgment of $472,007.32, plus costs, attorneys' fees, expenses, pre- and post-judgment interest and other relief the court deems just.

It will be represented by William M. Miller and William D. Marcum of Robinson and McElwee in Charleston.

U.S. District Court case number: 2:09-935

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