A judge in Cheboygan says charges of fraud can proceed against Chesapeake Energy.
Michigan's attorney general accuses the Oklahoma-based energy company of swindling landowners in northern Michigan.
In 2010, Chesapeake Energy signed hundreds of leases across northern Michigan. These included the promise of a cash payment to landowners for the right to explore for oil and gas.
But most of those payments were never made and the company canceled the leases for various reasons. Judge Maria Barton says it’s possible the real reason was never disclosed and that it was because Chesapeake discovered there wasn’t as much natural gas in the ground as the company hoped.
In her order, Barton quotes the former CEO of Chesapeake, Aubrey McClendon, who explains that Chesapeake's interest in Michigan changed after the company drilled a dry hole and "dry holes often dramatically change things."
A spokesman for Chesapeake says the disagreements are basic contract disputes not criminal matters. He says it was not unexpected that the matter would go to a trial but the bar will be much higher to prove fraud.
Chesapeake faces other allegations of colluding with another company to avoid a bidding war for oil and gas leases in Michigan.
The company is the only defendant in the felony cases. No individuals are named and all the potential penalties are fines.
