US Justice Department issues subpoena to Chesapeake Energy

OKLAHOMA CITY (AP) - The U.S. Department of Justice has issued a subpoena to Chesapeake Energy Corp. that seeks information on the oil and natural gas producer's accounting methods for the acquisition and classification of oil and gas properties.

Oklahoma City-based Chesapeake disclosed the subpoena, which is part of a Justice Department investigation, on Thursday in a regulatory filing with the U.S. Securities and Exchange Commission. The filing says Chesapeake has been involved in discussions with the Justice Department, the U.S. Postal Service and representatives of state agencies and will continue to respond to such subpoenas and demands.

Gordon Pennoyer, director of communications and investor relations for Chesapeake, declined further comment on the filing Friday.

The Justice Department and other agencies asked Chesapeake for documents, testimony and information related to the company's oil and gas leases and purchases as part of its antitrust investigation, the Journal Record reported (http://bit.ly/2dwWCJ5 ).

Chesapeake alluded to being investigated in its 2015 annual report, filed with the SEC on Feb. 25, 2016.

The company was named in several lawsuits alleging underpayment of royalties and defended cases in Arkansas, Louisiana, Ohio, Oklahoma, Pennsylvania and Texas.

University of Central Oklahoma economics professor Jeremy Oller, an expert witness on antitrust legal matters, said the Justice Department is likely examining other oil and gas companies as part of the investigation.

Oller said there are two possible sections of antitrust law the Justice Department could use.

One antitrust claim is a monopoly allegation, in which a company engages in exclusionary or anti-competitive behavior in an attempt to monopolize the market, he said. The monopoly claim type, known as Section 2, can also be applied if a company has a geographic stranglehold on the market and has a dangerous probability of achieving monopoly power, Oller said.