Representatives of Chesapeake and Encana were arraigned in Michigan Wednesday, March 19, for allegedly trying to rig bids for leasing rights to properties in the state's Collingwood/Utica shale play.
The energy companies have been charged by Michigan Attorney General Bill Schuette with one count each of antitrust violations relating to a contract or conspiracy in restraint of commerce, a high court misdemeanor punishable by up to two years in prison and a fine of $10,000 for an individual or $1 million for a corporation.
Each also was charged with a misdemeanor count of attempted antitrust violations, punishable by up to one year and a $1,000 fine. Both companies have denied any wrongdoing.
In Michigan, public auctions of state-held oil and gas leases are held twice a year — in May and October — by the state's Department of Natural Resources. Both Chesapeake and Encana purchased natural gas leases for $1,510 an acre at a May 2010 public auction, but paid just $40 an acre at auction just five months later.
Schuette alleges the two rivals collaborated to avoid bidding wars that would have pushed lease prices up.
Chesapeake and Encana, meanwhile, waived their rights to a preliminary exam within 14 days, and Cheboygan District Court Judge Maria Barton set $20,000 personal recognizance bonds for both. They're due back in court in May.