Case 4:12-cv-00461-KGB Document 1 Filed 07/90/12 Page 1 of 114 FILED, IN THE UNITED STATES DisTRICT couRTestHit Ns EASTERN DISTRICT OF ARKANSAS yy. $9 2012 ‘WESTERN DIVISION JAMES W, MeGORMACK, CLERK DORCHESTER MINERALS, LP Pe PLAINTIEE v. CASE NO, US2 cite HEB CHESAPEAKE EXPLORATION, LLC DEFENDANT ‘in can aesigned i iti utes Rea confEnNom™= =e (COMES NOW the Phinitt Dorchester Minerals, LP (‘Dorchester and for its Compa azns the Defendant Chesapeake Exploration, LUC (“Chesapeake”), sates and ateges: JURISDICTIONAL ALLEGATIONS 1 This ie an a for an accounting for sums due and payable by Chesapeake Dovchestr pursuant to the terns of certain ol and gas leases, ad forthe entry ofa judgment in favor of Dorchester and against Chesapeake forthe sums found to be dve and owing. The amount in controversy inthis proceeding exceeds $75,000.00, exclusive of intrest nd costs. 2 Dorchester is Limited partsership organized and existing pursuant to the laws of the State of Delaware, and having is principal place of business in the Sts of Texas ‘Chesapeake is Finite lisbiity company organized and existing pursuant othe laws ofthe State of Oklahoma and having its principal place of business in the Stale of Oklahoma. Complete diversity of citizenship exists between Dorchester and Chesapeake. 3. This cout as jrsiction of the subject mater ofthis proceeding pusuan to 28 Us. 91332.Case 4:12-cv-00461-KGB Document Filed 07/30/12 Page 2 of 114 4. The oil and gas leases between Dorchester and Chesapeake convey lands located in Van Buren County, Cleburne County, White County, Conway County, Faulkner County, and Pope County, Arkansas, Venue is therefore prope in his cout 5. Chesapeake is authorized to conduct business in the State of Arkansas and isin fact conducting business in the State of Akasa, Chesapeake his further designated registered agent for service of process within the State of Arkansas, This court therefore has Jurisdiction ofthe person of the Defendant Chesapeake. FACTUAL ALLEGATIONS, 6. Effective June 27, 2006, Dorchester, as lessor, and Chesapeake, as lesse, entered Jno an oil and gas lease conveying lands located in Van Buren County, Arkansas (the “Van Buren Lease”). A true and correct copy of the Van Buren Lease is attached hereto as Exhibit “A” and incorporated herein by this reference. 7. Bifective June 27, 2006, Dorchester, as lesor, and Chesapeake, as lessee, entered into anol and gas lease conveying lands located in Cleburne County, Arkansas (the “Clebume Lease"). A true and correct copy of the Clebume Lease is attached hereto as Exhibit “BY and incorporated herein by this reference 8. Effective June 27, 2006, Dorchester, as lesor, and Chesapeake as lessee, entered ito an oil and gas lease conveying lands located in White County, Arkansas (the “White Lease"). A true and correct copy of the White Lease is attached hereto as Exhibit “C* and incorporated herein by this reference. 9. Biootive June 27, 2006, Dorchester, as lessor, and Chesapeake, as lessee, entered into an oil and gas lense conveying lands located in Conway County, Arkansas (the “Conway Lease"). A true and correct copy of the Convay Lease is attached hereto as Exhibit “D” and incorporated herein by this referenceCase 4:12-cv-00461-KGB Document 1 Filed 07/30/12 Page 3 of 114 10, Effective June 27, 2006, Dorchester, as lessor, and Chesapeake, as lessee, entered into an oil and gas lease conveying lands locted in Faulkner County, Arkansas (the “Faulkner Lease"). A true end correct copy of the Faulkner Lease is attached hereto as Exhibit “2” and ‘incorporated herein by this reference 11, Effective Jase 27, 2006, Duvcester, as lessor, and Chesapeake, as lessee, entered into an ol and ga lease conveying lands located in Pope County, Arkansas (the “Pope Lease”). A true and comet copy of the Pope Lease is atached hereto as Exhibit “F* and incorporated “herein by this reference 12, The Van Buren Lease, the Clebure Lease, the White Lease, the Conway Lease, ‘the Faulkner Lease, and the Pope Lease are hereinafter sometimes referred to collectively a the ae 13, The language, terms and conditions of each of the above referenced leases are “dentical, as contemplated by that cern unrecorded Letter Agreement between Dorchester and Chesapeake dated March 30, 2006 (he “Leter Agreement”), attached hereto as Exhibit "G" and {incorporated herein by this reference. EIRST CAUSE OF ACTION - UNDERPAYMENT OF ROYALTIES 14, Section 3() of the Lease includes the following language conceming. the ‘calculation and payment of royalties due under the Lease which reads as follows: Provided, however the proceeds from any such wel shall always be equal to or greater than the proceeds received from sales in the field or prevailing szea whichever isthe greater... Despite demand, Chesapeake has filed and refused to pay royalties to Dorchester in accordance with the foregoing provision ofthe Lease. The amount of the underpaid royalties is in excess of $1,000,000.00.