Drilling Firm Wants Money Back for Donora Claims
Valley Independent
5 November 2010
By Jeff Oliver
DONORA — When Tom Kostolansky signed over gas drilling rights under his
property to Chesapeake Appalachia LLC, he didn't think he would get
rich from the deal.
But the Donora lawyer didn't think he'd have to give back royalty
checks, either.
But that's exactly what's being asked of Kostolansky and other
residents in a 595-acre tract of land that includes part of the borough
and neighboring Carroll Township.
About a week ago, Kostolansky — a Donora councilman — received a letter
from Chesapeake, asking that he send back two royalty checks he and his
wife had received this year as a result of the Marcellus Shale gas
drilling agreement.
Kostolansky is not only balking at sending back the approximate $220,
he's planning to initiate a class-action law suit against the company.
"I don't think it's right and I'm not sure it's legal," said
Kostolansky. "My plans are to file the class-action lawsuit and make
the company prove to people who received those dividends that they are
not entitled to them."
Chesapeake, through spokesperson Stacey Brodak, offered a brief
response on the issue.
"Chesapeake Appalachia," she said in an e-mail, "has communicated with
its royalty owners regarding this matter. We reserve further public
comment at this time."
The letters Kostolansky and other residents in what Chesapeake
Appalachia termed the "Pine Oaks Unit" received claimed that the
company had originally planned to "drill the wellbores under the town
of Donora; however, due to mechanical difficulty, the wells were
drilled shorter than anticipated lateral lengths."
As a result, according to the letters, Chesapeake was not able to
include the lease in the Pine Oaks Unit and the checks already mailed
to people need to be returned.
The letter included a self-addressed, stamped envelope and a message
that the dividends need to be returned by Dec. 31.
Kostolansky, who lives in Donora's Place Plan section, said he has
received calls from some of his neighbors wondering what he's going to
do about Chesapeake's request.
"The contract (signed between residents and Chesapeake) calls for the
payment of royalties based on gas harvested," Kostolansky said. "I
can't believe that Chesapeake would give out dividend checks twice and
not be realizing a profit at the time.
"It makes no sense that you send out a check if you aren't making a
profit."
Repeated attempts to get comment from Chesapeake Appalachia LLC for
this story were fruitless.
Kostolansky estimated that he received his royalty checks in February
and again in September of his year.
He said he doesn't think any company would send out checks based on an
estimate of what profit they expect to make.
He hasn't talked to anyone from the company and said he is encouraging
anyone else who is being asked to send back the checks to join in the
legal action.
"I would assume that many of the people in the Pine Oaks unit have
received checks similar to the amounts that I did. But some people who
own much larger pieces of land probably got much more substantial
amounts of money," he said.
Anyone wishing to learn more about the class-action suit is asked to
contact Kostolansky's law office at (724) 379-6336.
Jeff Oliver can be reached at joliver@tribweb.com or 724-684-2666.