Ohio Landowner Lawsuit Against Chesapeake Energy for Shorting Royalty Checks

1. TF1-r E if t E‘ in -49». .A! ._ ‘_§l___J I ‘ COLUMEQANA cot? ‘-* COLII= .‘r“ rat: ry-‘MM(, .}N gfiTé’Aq not 2 s 2015 ANTHONY J. DATTILIO CLERK (CEB) IN THE COURT OF COMMON PLEAS OF COLUMBIANA COUNTY, OHIO Zehentbauer Family Land LP 32491 McKaig Road Hanoverton, Ohio 44423 Hanover Farms LP 32491 McKaig Road Hanoverton, Ohio 44423 Evelyn Frances Young, Successor Trustee of The Robert Milton Young Trust, dated May 14, 1998 64 Overwood Road Akron, Ohio 44313 Plaintiffs, on their own behalf and on Behalf of the Class defined herein, V. Chesapeake Exploration, LLC 6100 North Western Avenue, Oklahoma City, Oklahoma 73154 cio CT Corporation System, 1300 East Ninth Street, Cleveland, Ohio 44114 and Chesapeake Operating, Inc. 6100 North Western Avenue, Oklahoma City, Oklahoma 73154 cio CT Corporation System, 1300 East Ninth Street, Cleveland, Ohio 44114 ‘ and 2015 cv 567 ‘“"d9e C. Ashley Pitta CLASS ACTION COMPLAlNT Case No. Action for Breach of Contract, Accounting, Damages, and Class Certification (Jury Demand Endorsed Hereon) Attorneys for Plaintiffs Dennis E. Murray, Jr. (0038509) dmi@murrayandmurray. com William H. Battle (0008795) bill@murrayandrnurraycorn Direct Dial: (419) 624-3126 MURRAY & MURRAY CO. , LPA 111 E. Shoreline Drive Sandusky, Ohio 44870-2517 Facsimile: (419) 624-0707 William G. Williams Scott M. Zurakowski Terry A. Moore Gregory W. Watts bwi| liams@kwgd. com szurakowski@kwgd. com tmoore@kwgd. com gwatts@kwgd. com Krugliak, Wilkins, Griffiths & Daugherty Co. L. P.A. 4775 Munson St. NW; P. O. Box 36963 Canton, Ohio 44735-6963 Direct Dial: 330~244-2878 Main Phone: 330-497-0700, ext 173 Fax: 330-497-4020 MU1umY&: MU1uzA¥ I PElIENCEb ‘PR AI. .. AW¥ElS www. uuInAvA~| xuuIu. v.: :nn I| l 1'. ..“-snom. nu Drive snunuaxv. Dim: uavu

2. CHK Utica, LLC 6100 North Westem Avenue, Oklahoma City, Oklahoma 73154 olo CT Corporation System, 1300 East Ninth Street, Cleveland, Ohio 44114 and Total E&P USA, Inc. 1201 Louisiana, Suite 1800, Houston, Texas 77002 clo CT Corporation System, 1300 East Ninth Street, Cleveland, Ohio 44114 and Pelican Enery, L. L.C. P. O. Box 18756 Oklahoma City, Oklahoma 73154 do CSC-Lawyers Incorporating Service 50 W. Broad St Suite 1800 Columbus, OH 43215 and Jamestown Resources, L. L.C. P. O. Box 18756 Oklahoma City, Oklahoma 73154 clo CSC-Lawyers Incorporating Service 50 W. Broad St Suite 1800 Columbus, OH 43215 Defendants. Plaintiffs Zehentbauer Family Land LP, Hanover Farms LP and Evelyn Frances Young, Successor Trustee of The Robert Milton Young Trust, dated May 14, 1998 5. (jointly "Plaintiffs"), individually and on behalf of a proposed class of all others #, ... ——w_. ,y-u-. -.. .__ Mummy &MURRAY 2 w»vw. uunIAvAN| :uvuAY. coM I II ‘Ear! Snluxilmui Dxlvu Snuuuntv. Oma nu-In

3. similarly situated, submit this Complaint against Defendant Chesapeake Exploration, L. L.C. , and Defendant Chesapeake Operating, Inc. , to obtain money damages against the Defendants for systematically violating uniform oil and gas leases and underpaying owed royalties. Defendant Total E&P USA, Inc. , Defendant Pelican Energy, L. L.C. , and Defendant Jamestown Resources, L. L.C. , are named as necessary parties because (1) they own working interests in wells at issue and if Plaintiffs are successful their interests may be impacted and (2) Chesapeake Operating operates the wells for them pursuant to an operating agreement. Plaintiffs further states as follows: THE PARTIES 1. Plaintiffslclass Representatives, Zehentbauer Family Land LP and Hanover Farms LP, (“Zehentbauer") are legal entities under Ohio law with their principal places of business in Columbiana County. At all times relevant to the actions of this Complaint, Zehentbauer has been the fee simple title owner of oil and natural gas estates in tracts of land located in Columbiana County, Ohio. Zehentbauer leased the oil and gas for 655.99 acres and 296.361 acres, respectively, pursuant to a written lease agreement with Ohio Buckeye Energy, L. L.C. 2. Plaintiff/ Class Representative Evelyn Frances Young, Successor Trustee of The Robert Milton Young Trust, dated May 14, 1998 ("Young") is a legal resident of the State of Ohio and resides in Summit County. At all times relevant to the actions of this Complaint, Young has been the fee simple title owner of oil and natural gas estates in tracts of land located in Carroll County, Ohio. Young leased / ---vac! -—~. .. MURRAY&MURRAY _‘fifi§‘iiil'c"Ill‘: i‘fiT. l‘7.TWViliE§‘ www. MmuuvmuMuxn; .v. eou n I PAST Sumaeuus nun Smnusxv. Omn «nu

4. the oil and gas for 166 acres, pursuant to a written lease agreement with Defendant Chesapeake Exploration, L. L.C. 3. Defendant Chesapeake Exploration, L. L.C. (“Chesapeake Exploration”), is a limited liability company organized under the laws of the State of Oklahoma, with its principal office at 6100 North Western Avenue. Oklahoma City, Oklahoma 73154. The registered agent for service of process on Chesapeake Exploration in Ohio is CT Corporation System, 1300 East Ninth Street, Cleveland, Ohio 44114. 4. Defendant Chesapeake Operating, Inc. (“Chesapeake Operating") is a corporation organized under the laws of the State of Oklahoma with its principal office at 6100 North Western Avenue, Oklahoma City, Oklahoma 73154. The registered agent for service of process on Chesapeake Operating in Ohio is CT Corporation System, 1300 East Ninth Street, Cleveland, Ohio 44114. 5. Defendant CHK Utica, L. L.C. (“CHK Utica") is a limited liability company organized under the laws of the State of Delaware with its principal office at 6100 North Western Avenue, Oklahoma City, Oklahoma 73154. The registered agent for service of process on CHK Utica in Ohio is CT Corporation System, 1300 East Ninth Street, Cleveland, Ohio 44114. 6. Defendant Total E&P USA, Inc. (“Total”) is a Delaware corporation with its principal office at 1201 Louisiana, Suite 1800, Houston, Texas 77002. The registered agent for service of process on Total in Ohio is CT Corporation System, 1300 East Ninth Street, Cleveland, Ohio 44114. . I. MURRAY &MIURRAY EFIZFTEHFEE null. LAWYISE wvw. uuu: .mm-nu rIImv. coM Ill Bu SIIDIELIIII Dawn S/ mnunul. Omo urn:

5. 7. Defendant Jamestown Resources, L. L.C. (Jamestown) is a limited liability company organized under the laws of the State of Oklahoma with its principal ofﬁce at P. O. Box 18756, Oklahoma City, Oklahoma 73154. The registered agent for service of process on Jamestown in Ohio is CSC-LAWYERS INCORPORATING SERVICE, 50 W. Broad St. , Suite 1800, Columbus, Ohio 43215. 8. Defendant Pelican Energy, L. L.C. (Pelican) is a limited liability company organized under the laws of the State of Oklahoma with its principal ofﬁce at P. O. Box 18756, Oklahoma City, Oklahoma 73154. The registered agent for service of process on Jamestown in Ohio is CSC—LAVVYERS INCORPORATING SERVICE, 50 W. Broad St. , Suite 1800, Columbus, Ohio 43215. JURISDICTION AND VENUE 9. Plaintiffs repeat and re-allege each and every allegation set forth in the foregoing paragraphs. 10. This Complaint is brought by Plaintiffs, citizens of Ohio, against Defendants Chesapeake Exploration, Chesapeake Operating and CHK Utica which develop and produce oil and gas from properties located in the State of Ohio, inciuding in Columbiana County. 11. The amount in controversy exceeds the sum of Twenty-Five Thousand Dollars ($25,000.00), exclusive of interest and costs. 12. Venue is proper in Columbiana County, Ohio, pursuant to Civ. R. 3(B)(5) because the events underlying this matter occurred in part in Columbiana County, Ohio where some of the Plaintiffs’ property is located. . I. / -—-slur--—. MURRAY&MURRAY __E‘£'F___E¢_niam: §n HIM. l. MV1r-LIE? www. |nrnA'AIl nswIu'. can I 1 n EMT Suonm rl : Dnlv n snionsin-. OHIO «no

6. 13. Jurisdiction is proper in the Columbiana County Court of Common Pleas under Ohio law. The oil and gas lease agreements were entered into in the State of Ohio and Ohio law governs. Two of the named Plaintiffs are Ohio companies which do business primarily in the State of Ohio at the addresses set forth above in paragraphs 2 and 3 of this Complaint. The oil and gas property is located in Columbiana County, Ohio. Defendant Chesapeake Operating continues to send royalty and other monetary payments to Plaintiff Zehentbauer who resides in Columbiana County, Ohio. Further, the Defendants and Plaintiffs have agreed to this controversy being decided before this Court under the forum selection clause contained in the subject lease agreements. Speciﬁcally, “[ajny and all disputes must be resolved in a common pleas court located solely in the State of Ohio. " See Exhibit 1, Zehentbauer Family Land Lease, at 11 50; Exhibit 2, Hanover Farms Lease at 1150; Exhibit 3, Young Lease at 1158. As such, the parties expressly waived federal jurisdiction. 14. Pursuant to the leases, Plaintiffs have made objection to Defendants’ calculations and payments of royalties more than 30 days ago. See Exhibit 4, Zehentbauer Notice Letter; Exhibit 5, Hanover Notice Letter; and Exhibit 6, Young Notice Letter. Defendants‘ responses to Zehentbauer and Hanover are attached hereto as Exhibit 7. Defendants have not responded to the Young Notice and more than 30 days have elapsed. COMMON FACTUAL BACKGROUND 15. In 2010 and 2011, Ohio Buckeye Energy LLC ("Buckeye") and later Defendant Chesapeake Exploration began leasing tens of thousands of acres of oil and gas rights throughout Eastern Ohio. rs‘- lWURRAYaMU1uzAY Exllllnriiﬁcnn TIMI. l. Awvai: §_ www. nuxu. nmmunuv. cou In E. I:I'SuoIu. nI: Dxtvz Szmmrszy, Omo uni:

7. 16. Buckeye and Defendants amassed leaseholds for hundreds of thousands of mineral acres in Ohio. 17. Shortly after acquiring its leaseholds, Buckeye merged into Defendant Chesapeake Exploration. 18. Upon information and belief, the named Defendants are or collectively became the lessees under the Buckeye and Defendant Chesapeake Exploration leases and assumed all responsibility under the leases, including, but not limited to, all implied covenants and all express obligations, and Defendant Chesapeake Operating became the operator and manager of any wells regarding the production and sale of all oil, gas, liquid natural gas and the constituents thereof and the payment of royalties to lessors under the leases, as the aent of Chesapeake Exploration and the other Defendants. 19. While amassing Defendants’ leaseholds, which are the subject of this Complaint, land agents for Buckeye and Defendant Chesapeake Exploration negotiated with various landowner groups for leases on numerous land tracts that contain uniform provisions governing gross royalty payments (sometimes referred to as a group lease). 20. Plaintiff Zehentbauer Family Land LP’s oil and gas lease is a representative example of one group lease signed by hundreds of Ohioans. A true and accurate copy of the lease to Zehentbauer Farms is attached as "Exhibit 1” (hereinafter “Zehentbauer Farms Lease”). 21. Plaintiff Zehentbauer Family Land LP leased the mineral rights to 655.99 acres in Columbiana County, Ohio, known as Zehentbauer Farms, which were acquired and drilled by Defendants. .1 . .—--up-~—. . MIJRRAY aMum2Av muiltfifiilfcm 'l‘lllAl yIwi"fin§ wwmarunnxnu nuunnrmmn In ]EAirfiliul: Lr uz Dnvs SANIIIISILV. Oum Mun

8. 22. Plaintiff Hanover Farms LP, throuh the same uniform lease, also leased the mineral rights to 296.361 acres in Columbiana County, Ohio, known as Hanover Farms, which were acquired and drilled by Defendants. A true and accurate copy of the Hanover Farms lease is attached as “Exhibit 2" (hereinafter "Hanover Farms Lease"). 23. After Defendants acquired numerous leases through acquisition or assignment, the Defendants continued amassing other group leaseholds also using large portions of the uniform language from the Zehentbauer Farms and Hanover Farms group leases. 24. Plaintiff Young's oil and gas lease with Chesapeake Exploration is a representative example of the continued use of the uniform group lease forms in Chesapeake Exp| oration’s ongoing acquisitions after acquiring those obtained through the merger with Buckeye. A true and accurate copy of the Young lease is attached as “Exhibit 3" (hereinafter “Young Lease"). 25. Pertaining to Royalties, Paragraph 5 of the Zehentbauer Farms Lease, states in pertinent part as follows: ROYALTIES. Lessee covenants and agrees: a. Oil Royalties. To pay Lessor seventeen and one half percent (17.5%) royalty‘ based upon the gross proceeds paid to lessee from the sale of oil recovered from the leased premises valued at the purchase price for oil prevailing on the date such oil is run into transporter trucks or pipelines. b. Gas Royaly. To pay to the Lessor seventeen and one half percent (17.5%) royalty based upon the gross proceeds paid to the lessee for the gas marketed and used off the leased premises, including casinghead gas or other gaseous substance, and produced from each well drilled thereon, computed at the wellhead from the sale of such gas 1 The royalty percentage varied amongst the subsequent lease groups and ranged from seventeen and ‘none-half percent (17.5%) to twenty percent (20%) gross royalty. MURRAY&. 'MURRA; Liv us can . .R 8 wvm. uuxuwmnuunuv. oon . Ill Em Sironum mm. Surnuunr. OIIIO um:

9. substances so sold by Lessee in an arms—length transaction to an unaffiliated bona fide purchaser, or if the sale is to an affiliate of Lessee, the price upon which royalties are based shall be comparable to that which could be obtained in an arms length transaction (given the quantity and quality of the gas available for sale from the leased premises and for a similar contract term) and without any deductions or expenses except for Lessee to deduct from Lessor’s royalty payments Lessor’s prorated share of any tax, severance or otherwise imposed by any government body. For purposes of this Lease, “gross proceeds" means the total consideration paid for oil, as. associated hydrocarbons, and marketable by-products produced from the leased premises. [emphasis added. ] A- I--<11:--~. .. MU'RRAY&MURRAY WWdLMI| kIJVAflhIiUIKAV. DON I I I EInS1'3llOIlII. llI£ DRIVE Snnnusu. Or-no I-l-D70 Young's royalty provision, provides as follows: ROYALTIES. Lessee covenants and agrees: a. Oil Royalties. To pay to the Lessor TWENTY percent (20.0%) royalty based upon the gross proceeds paid to the lessee from the sale of oil, including without limitation other liquid hydrocarbons or their constituents and products thereof recovered from the leased premises so sold by Lessee in an arms-length transaction to an unaffiliated bona fide purchaser, or if the sale is to an affiliate of Lessee, the price upon which royalties are based shall be comparable to that which could be obtained in an an'ns—| ength transaction (given the quantity and quality of said products available for sale from the leased premises and for a similar contract term) and without any deductions or expenses. For purposes of this Lease, "gross proceeds" means the total consideration paid for oil, gas, associated hydrocarbons, and marketable by-products produced from the leased premises without deductions of any kind except as provided in paragraph 44. b. Gas Royalty. To pay to the Lessor TWENTY percent (20.0%) royalty based upon the rose proceeds paid to the lessee for the gas marketed and used off the leased premises, including casinghead gas or other gaseous substance, and produced from each well drilled thereon, computed at the wellhead from the sale of such gas substances _so sold by Lessee in an anns-length transaction

10. 27. to an unaffiliated bona fide purchaser, or if the sale is to an affiliate of Lessee, the price upon which royalties are based shall be comparable to that which could be obtained in an anns-length transaction (given the quantity and quality of the gas available for sale from the leased premises and for a similar contract term) and without any deductions or expenses. For purposes of this Lease, "gross proceeds” means the total consideration paid for oil, as, associated hydrocarbons, and marketable by-products produced from the leased premises without deductions of any kind except as provided in paragraph 44. [emphasis added. ] Paragraph 44 of the Young Lease only allowed deductions for | essor’s proportionate share of ad valorem taxes, as follows: 28. -| ':"~"l-. 1WUR1tAY§MunRS3r ’n‘x’J‘_ij_L’Wfli‘KTI_. _T_T. v1_‘*‘! .‘iE is-vrmuu klIl| ‘Aarl)MtnlA'. m)| l I ll Eurr Snonmnr. nun-z Slnznuslnr. OHIO «nu AD VALOREM TAXES. Lessor and Lessee each shall pay their respective share of all Ad Valorem taxes, Lessor's share to be equal to the percentage of royalty paid to Lessor. Despite anything to the contrary, Lessee shall be responsible for all severance taxes associated with production of oil and gas under this Lease. Lessee agrees to pay for any CAUV recoupment incurred by Lessor as a result of Lessee’s operations under this Lease, but any such payment shall be based only upon the acreage actually disturbed by Lessee. A third royalty provision in one of the subsequent group leases states: ROYALTIES. Lessee covenants and agrees: an. Oil Royalties. To pay Lessor ? _ percent (_%) royalty based upon the gross proceeds paid to lessee from the sale of oil, including without limitation other liquid hydrocarbons or their constituents and products thereof recovered from the leased premises. b. Gas Royalty. To pay to the Lessor percent (_%) royalty based upon the gross proceeds paid to the lessee for the gas marketed and used off the leased premises, including casinghead gas or other gaseous substance, and produced from each well drilled thereon, computed at the weilhead from the sale of such gas substances so sold by Lessee in an anns-length transaction to an unaffiliated bona fide purchaser, or if the sale is to an affiliate of Lessee, the 10

11. ‘.2?’ price upon which royalties are based shall be comparable to that which could be obtained in an anns length transaction (given the quantity and quality of the gas available for sale from the leased premises and for a similar contract tenn) and without any deductions or expenses. For purposes of this Lease, “gross proceeds" means the total consideration paid for oil, gas, associated hydrocarbons, and marketable by-products produced from the leased premises without deductions of any kind except as provided in paragraph 44. [emphasis added. ] An example of the third group lease gross royalty provision is attached as Exhibit 8 (hereinafter referred to as the "Third Lease"). 29. The Zehentbauer Farms Lease, Hanover Farms Lease, Youn Lease, and Third Lease group forms are collectively hereinafter referred to as the “Gross Royalty Leases. ” 30. The Gross Royalty Leases provide with specificity, how all lessors’ royalty on oil, gas, liquid and gaseous hydrocarbons and their constituents and byproducts thereof (collectively referred to as ''oil and Gas” or "Oil or Gas”) are to be determined and paid. The Gross Royalty Leases plainly covenant that there will be no deductions from lessors’ royalty except for a pro-rata share of government imposed taxeslfees. 31. The Gross Royalty Leases provide that all gross proceeds from the leased mineral rights shall derive from a price obtained through good faith arms-length transactions. 32. The Gross Royalty Leases covenant that any sales made to an affiliate, which are by their nature not arms-length transactions, will be carried out at the current market price for the commodity sold. T , .-«--v, |,uv-—-~. . MUnRAYaMmuzAY 1-. “‘ﬂv ER_lEN—-_ElED A_ LAW 11.5 11 wVrV. )l| J>(IIYAilllMIllIIi'. GOM I l I Elli! ’ SIIGIELINE Dlllfli smsrnusxv. Omo «nan

12. 33. The Gross Royalty Leases’ royalty clause is clear that govemment imposed taxeslfees shall be the o_nly deductions that may be deducted from the lessor's royalty interest. 34. Paragraph 1 of the Gross Royalty Leases state that, "Lessee shall always act as a reasonable prudent operator exercising good faith in all of its activities with the Lessor. " 35. Further, the leases contain the implied covenants to market the oil and gas produced from the property and the implied covenant to conduct all operations that affect the lessor's royalty interest with reasonable care and due diligence. There is no disclaimer or waiver of these implied covenants in the lease. Defendants’ Unifonn and Systematic Breach of their Ohio Leases Common Statement of Facts 36. The Gross Royalty Leases expressly provide for royalty payments to the lessor for 17.5 to 20.0% of sales of all Oil and Gas based on the gross proceeds. 37. indeed, the operative language found in the royalty clause is common to the three royalty provisions contained in the Gross Royalty Leases. 38. Upon information and belief, Total was assigned a twenty-ﬁve percent (25%) working interest in many if not all of the Gross Royalty Leases by virtue of which Total is a necessary party to these proceedings under Ohio Law. 39. Upon information and belief, Jamestown and/ or Pelican were assigned a two and one—half percent (2.5%) working interest in many if not all of the Gross Royalty Leases, by virtue of which Jamestown and Pelican are necessary parties under Ohio Law. All -. »--runner--~. -_ MURRAY&MURRAY ax: -2_usncuu -'r‘x'Ln_r. I. AyvILIns 12 vmu-. MuII. uxuuuuuv. c0u in EIuR1'SlIt1II'. i.llr. Dnv: Snunusxv, Omo -Hun

13. 40. Upon information and belief, Chesapeake Operating is the operator of Defendants’ oil and gas wells drilled in Ohio since 2011, handles the accounting of and payments of Plaintiffs’ royalties, and Defendants Chesapeake Exploration, Total, CHK Utica, Pelican and/ or Jamestown have entered into operating agreements with Chesapeake Operating to conduct operations on their behaif, including selling Oil and Gas, and the payment of royalties to lessors. 41. Since 2011, Defendants have improperly deducted from Plaintiffs’ gross royalties owed under the uniform royalty provisions in the Gross Royalty Leases despite direct lease covenants forbidding these deductions. 42. Defendants have levied improper deductions under the guise of assessing costs for various activities, including but not limited to, gathering, processing, dehydrating, transporting, marketing, compression, third party deductions, system fuel, ﬁeld fuel, and Chesapeake Operating's other additional charges. 43. Chesapeake Operating’s royalty statements openly include codes for such deductions, which if shown and charged violate the unifonn lease terms. 44. These improper deductions which were not shown on the royalty statements related to Defendants’ purported costs substantially reduce lessors’ royalty payments. 45. ‘To the direct harm of the Plaintiffs and the proposed Class, the Defendants, operatorliessees under the Gross Royalty Leases, uniformly sell the well production to Chesapeake Energy Marketing, L. L.C. ("CEMLC") (fomierly known as Chesapeake Energy Marketing, inc. ("CEMl")). its own afﬁliate, at a price below market value. an‘: .. . , ,.. «»g‘¢--. _S MURRAY&MURRAY 13 vww. uuILnrm4nuun| Ar. cau I ll F. AS1'5I1D1tl£I. lN1: mm: 3AMDUIlKV.0Il1Cl 4-um

14. 46. CEMLC then sells the production to third party buyers at market prices. 47. The operator, Chesapeake Operating; lessees, Chesapeake Exploration and CHK Utica; and purchaser, CEMLC, are related Chesapeake Energy Corporation entities or affiliates. 48. Through related entity sales, the Defendants then pay its lessors a fraudulent royalty calculated from (1) below market prices for the Oil and Gas produced from the leaseholds, and (2) with post-production costs deducted from the purchase price, which are unwarranted and excessive, while the Defendants still receive fair market value when their affiliate later sells the products to a non-affiliated third party, plus Defendants receive additional monthly income due to the lessors paying arportion of the post-production costs. 49. The Defendants‘ scheme, is designed to conceal the breach of the Gross Royalty Leases by reducing the amount of the royalties paid to lessors through the use of its affiliate entities, which royalties Defendants wrongfully retain to maximize its profit. 50. Through this scheme, Defendants breached a direct contractual duty, including an express covenant to market, to: either sell extracted commodities at the going market rate for those commodities or to engage in arms-length transactions to third parties. 51. Defendants also breached the Gross Royalty Leases, pursuant to paragraph 1, which required Lessees to always act as a reasonably prudent operator exercising good faith in ail of its activities with the Lessors. 1-1 4:: , -»-~1-. v1ur—~~L _gi-awilirncnn n_i_; _x_L_uwrnxs 14 www . mmumm nmlumhouu 1 I I l: '.m- Srloxz mt: DIN: Snruxllllfl, Onic mun

15. 52. Further, Defendants’ breached their implied covenants to market the Oil and Gas produced and the implied covenant to use care and due diligence in conducting all operations that affect the lessors‘ royalty interests. 53. Defendant Chesapeake Operating issues monthly royalty statements purporting to show lessors the amount of Oil and Gas produced from the leasehold and the price realized from sales. 54. Additionally, these royalty statements include a column titled “DEDUC'l'" representing deductions taken by the operatorI| essee(s). 55. Royalty statements issued to the class of lessors uniformly indicate that no deductions have been taken by the operatorIlessee(s). Representative of this ruse, is a true and accurate sample of royalty statements directed to Plaintiff Zehentbauer, attached as Exhibit 9. 56. Additionally, for example, Young’s acreage under the Young Lease with a 20% gross royalty was placed in the Scott North Unit, Scott South Unit, Slates North Unit, and Walters South Units. Acreage under a non-group second lease, with a 12.5% net royalty provision that was entered into between Evelyn Frances Young, Trustee of The Evelyn Frances Young Revocable Trust, dated May 14, 1998, and Anschutz Exploration Corporation, predecessor to Chesapeake, was also placed into the same well units. 57. Attached hereto as Exhibit 10 are royalty statements provided to Young which show that Defendants are treating Plaintiff Young’s gross royalty in the Gross Royalty Lease the same as the net royalty provision of the Anschutz Lease. The net value column showing total revenue (from which each royalty is calculated) is identical nfflim - MURRAY&MURRA1L _ipg= fim_r_«czu ‘rv. |n| _._1_/ i__-iT‘f'n"i1‘s, _ 1 5 wwmuunnranr-My R| lll‘. fl0J( Ill E. s15)Iunz| nul Bull‘! Srmnusxv. Onto we'll:

16. EXl'EIllE. NCl! l) 'rrmu. "DiW! )'lls in both royalty statements, even though the 20% Gross Royalty Lease should have more total revenue due to no post-production deductions. Cf. payments to the ROBERT MILTON YOUNG REV TR (gross royalty lease) with those to the EVELYN FRANCES YOUNG TRST (net lease) as to leases SCOTT 24-12-5 1H, and again ast to Scott 24-12-5 5H. The price, volume and net value amounts are nearly or exactly identical, even though the first lease is supposed to pay royalties on a gross basis and the second on a net basis. 58. Royalty statements issued to the lessors also contain the following statement: “Deduct refers to the deductions identified in the Deduct Code below and are generally limited to taxes or deductions made by the operatorllessee. Deductions made by the purchaser (affiliated or non-affiliated) may or may not be shown. " 59. The unifonn disclaimer that “[d]eductions made by the purchaser (affiliated or non-affiliated) may or may not be shown" is intentionally misleading and reflects inaccurate reporting of the nature and the amount of deductions taken in determining the Plaintiffs’ royalty interests. 60. in reality, substantial deductions were taken, even though they were not permitted under the uniform Gross Royalty Leases and even if they were, are excessive. 61. Moreover, the reduction of Plaintiffs‘ royalties occurs when CEMLC, as purchaser, has deductions, fees or expenses taken prior to paying Chesapeake Operating, which violates and further breaches the uniform leases. , .-—~= §;a'; -—. .. MURRAY&MURRAY_ 16 www . u u zmux nsIInLuv. r.m: r I I F. AS'i‘5ll0htI. lNJ! DIIIVH Smnu IKV , D1410 aura

17. CLASS ACTION ALLEGATIONS 62. Plaintiffs repeat and re-allege each and every allegation set forth in the forgoing paragraphs. 63. Plaintiffs bring this action under Ohio Civ. R. 23(A); (B)(1)(A); (B)(2); and, (B)(3), on behalf of themselves and the other leaseholder members of the Plaintiff Class defined below. 64. The named Plaintiffs bring this action on behalf of themselves and the following Plaintiff Class comprising: All persons entitled to royalty payments from Chesapeake Exploration, LLC, Chesapeake Operating, |nc. . CHK Utica, LLC, Total E&P USA, Inc. , Pelican Energy, L. L.C. , and/ or Jamestown Resources, L. L.C. at any time during the years of 2011 to the present under unifonn oil and gas leases, known generally as Gross Royalty Leases, (some originally entered by Buckeye Exploration Corporation) which state that the lessors royalty shall be the stated percentage of the gross proceeds received by the lessee without any deductions except for a pro-rata share of governmentally imposed taxes and fees, in return for granting rights to produce oil, natural gas, and the constituents thereof from real property located in Ohio. Excepted from the foregoing class are persons who have filed separate actions requesting the relief sought here and those who have resolved claims requesting the relief sought here. Further excepted from the class are any such lessors employed or owned by any of the Defendants. 65. The members of the Class exceed 100 in number, making joinder of all Class members impracticable. 66. The claims set forth in this Complaint are common to each member of the Plaintiff Class because (i) each Class member is entitled to the payment of additional royalties from Defendants so that the total royalties will equal a fixed percentage of the , Agrees market value of the_Oi| and Gas multiplied by the volume of Oil and Gas produced xsxrsnlnucun 1n 1 7 vIwI. uulurAlImuuu. v.aIJIa ill EM‘l‘5lloIzuI£I; Dnv: Sxunulszv, Omo -Mam

18. without deduction for any production and/ or post-production costs; and (ii) Defendants underpaid the royalties due each Class member because of deductions that were not permitted under the uniform provisions of the Gross Royalty Leases. 67. There are questions of law and/ or fact common to the Class which predominate over any questions effecting individual members of the Class. These questions are capable of class-wide resolution because the royalty provisions of the Gross Royalty Leases, while containing nominal differences, all provide the same result: Defendants were not entitled to deduct any costs or expenses from the Class members’ royalties except for governmentally imposed taxes and fees and Defendants were not entitled to sell Oil and Gas at prices which fall below the prevailing market values. These questions include, but are not limited to, the following: a. Whether the methodology used by Defendants to calculate the Class members’ royalties breached the provisions of the Gross Royalty Leases; b. Whether the Class members’ royalties were computed based on the gross amount received from unafﬁliated purchaser(s) without any deductions except for governmentally imposed taxeslfees in accordance with the terms of the Gross Royalty Leases; c. Whether Defendants’ business arrangements caused the royalty payments to Class Members to include deductions in violation of the Gross Royalty Leases express provisions, the express and implied covenants of good faith and fair duty and to market; the duty to act as a reasonably prudent operator; andlor are excessive. .1; _ 1VIUR1tAY&MURnA¥ 18 win w_uu KIAYAN uuunnv. r.m. i II I Em‘ SI| n1lRI. lNL‘DIlVll SANIIUIKY, 0HIo «no

19. ——"""%‘m$""“‘~. MURRAY &MURRAY Eirinifnuclsu 1 I l A L Iiiwvsxs www. mn: uuuuauuu mum-. ou in EA!2'l'SllbI: t.IIn Dun-1: 5A bl DUIKY. Omo «no . When afﬁliates are purchasers of Oil or Gas, whether the Oil and Gas prices used by Defendants to calculate the Plaintiffs’ royalties were less than the prevailing market values for those products; . Whether the various types of post-production costs, expenses, or fees that were charged, directly or indirectly, by Defendants to Plaintiffs and the Class members breached the express and/ or implied provisions of the Gross Royalty Leases; Whether the post-production costs, expenses, and fees charged by Defendants to Plaintiffs and the Class members were improper; . Whether Defendants violated their duty to properly account and pay accurate royalties to the Plaintiffs and the Class members on Oil or Gas produced in the State of Ohio. pursuant to the temts of Gross Royalty Leases, as a result of their acts and omissions, andfor the acts or omissions of their agents and/ or co-venturers; . Whether Chesapeake Operating was the agent of other Defendants making them also liable for its wrongful acts; Whether given the legal relationships between the Defendants, all Defendants are liable to the Class Members for any one Defendant's breach of the express or implied terms or covenants of the Gross Royalty Leases; and Whether Defendants attempted to cover up their breaches of the Gross Royalty Leases by falsely stating in royalty reports and statements to 19

20. Class Members that zero dollars were deducted for production and/ or post-production charges. 68. The Plaintiffs are adequate representatives of the Class members because: i) they are each members of the Class; ii) the claims they assert in the Complaint are typical of the claims of the Class members; iii) Plaintiffs’ claims are not subject to any unique defenses, iv) Plaintiff's interests do not conflict with those of any other Class member. 69. The named Plaintiffs will fairly and adequately protect the interests of the Class. None of the Plaintiffs’ interests conflict with any interest of the Class. 70. The claims set forth herein are proper for certification as a class- action under the provisions of Rule 23 of the Ohio Rules of Civil Procedure. 71. The questions of law and fact common to the Class predominate over any issues affecting individual Class members because the class members present uniform issues concerning Defendants’ failure to comply with the terms of the Gross Royalty Leases as set forth in this complaint and more specifically in Paragraphs 66 and 67. Defendants have acted or refused to act on grounds applicable to all members of the proposed class. 72. The Plaintiffs’ claims are typical of the Class because the Plaintiffs entered into one of the Gross Royalty Leases, their rights to receive royalties are under the same terms and conditions as the other Class members, and their claims arise out of Defendants’ wrongful practice of deducting costs, expenses, and fees from Plaintiffs’ royalties (prohibited by the Gross Royalty Leases) and Defendants‘ wrongful practice of . -I. / -“"‘0IU'*—-~. MURRAY&MURRAY lT_: _:'r‘i‘: xrum:1Tii"'r‘i'r'rT'| . LAWYERS 2 O www. Mur. uvAu: ummuv. ccu 1| I Easrsnunuivez Draw: SJ. NIIuIxY. Qfllu nun

21. selling Oil or Gas at prices which fall below the prevailing market prices and using those lower prices to intentionally deflate Plaintiffs’ royalties. 73. Only the determination of individual damages will remain, and that calculation is one of simple mathematics using records of the Defendants and their affiliates that show the actual volumes of Oil and Gas produced under the leases and the actual market price of the Oil and Gas at the time it was produced and/ or sold, absent any deductions for production and/ or post-production costs. The Class member leases call for lessors‘ gross royalty of 17.5% to 20% of the total Oil and Gas production from the well. 74. This class action is superior to other available methods for the fair and efficient adjudication of the claims asserted herein because there are more than 100 members in the proposed Class and repeated individual discovery and litiation of the common issues shared by all Class members would needlessly waste judicial resources and because Class members fear retaliation by Defendants which have the ability to reduce their future income. The names and addresses of Class members will be readily identifiable from records of Defendants and through discovery of this action. 75. The Class members’ interests in individually controlling the prosecution of separate actions do not outweigh the benefits of class~based litigation on those issues. 76. It is desirable to concentrate the litigation of these claims in one forum. Any difficulty in managing this case as a class action is outweighed by the immense benefits the class action has in efficiently disposing of common issues of law and fact among the large number of litigants. nilk . ..—-—qv-—--. .. 1_/ Iptumv oMURRAv 2a&WFc: EE? Fhfi’iT . A1-Hat‘ 21 www. uunuvAmmunAv. cox l I I Eur Sumruuru Izmir. SAll'| 'fl. liK‘. Onto urrrn

22. 77. The prosecution of this civil action by ail Class members individually in separate actions would create a risk of inconsistent or varying adjudications of claims by the individual Class members that would establish incompatible standards of conduct for Defendants, could be dispositive of interests of other Class members not parties to the adjudications, or substantially impair or impede Class members ability to protect their interests. 78. Upon information and belief, there are no other similar cases pending in Ohio against the named Defendants which address the narrow issues concerning the Gross Royalty Leases, or other groups’ leases, with the same issues as are raised in this case. 79. Furthermore, Plaintiffs have retained competent counsel experienced in class action litigation to further insure such representation and protection of the Class. To prosecute this case, the prospective Class Representatives have chosen the law firm of Murray and Murray Co. , L. P.A. of Sandusky, Ohio as lead counsel, a firm with ample experience in complex litigation and class actions and the law fimi of Krugliak, Vfilkins, Griffiths & Dougherty Co. , L. P.A. as co-counsel, a firm with significant experience in oil and gas legal matters. Plaintiffs and their counsel intend to vigorously prosecute this action. COUNT ONE Breach of Contract 80. Plaintiffs repeat and re-allege each and every allegation set forth in the forgoin paragraphs. 81. At all times relevant to this Complaint, Plaintiffs and Class members have 3 owned or subsequently acquired fee simple title or a royalty interest in oil and gas / v-vgv--. . MURRAY&MURRAY 2 2 WW1l. |lII. l'| l1lAYllNl5M lJlI#'. C|'Al n I Elff Samusumt mm: Szmnusrw. Onto «ova

23. estates that are real property in the State of Ohio, or royalty interest, having entered into or acquired an interest in oil and gas leases with Buckeye or Defendants or their predecessors. 82. Defendants contracted for the leases at issue and/ or acquired those leases by virtue of assignments from or contracted agreements with Buckeye or Chesapeake Exploration. Defendants CHK Utica, Total E&P USA, lnc. , Pelican, and Jamestown Resources by virtue of agreements with Chesapeake Exploration are vicariously liable for the wrongful actslbreaches of the provisions of the Gross Royalty Leases by Chesapeake Exploration and/ or Chesapeake Operating as joint venturers andlor pursuant to Ohio's agencylvicarious liability law. Plaintiffs, based upon information and belief, state that Chesapeake Operating is the agent of all the other Defendants with respect to the acts of underpaying Plaintiffs’ and the Class members’ royalties under the Gross Royalty Leases. 83. Under the leases, Defendants were required to pay the Plaintiffs and the Class members a fixed percentage of the gross proceeds of the Oil and Gas received by Defendants or the highest market price which Defendants could have reasonably received multiplied by volumes of Oil and Gas produced without any deductions except for governmentally imposed fees and taxes. 84. Defendants had an afﬁrmative duty to pay the named Plaintiffs and the Class members the true and correct royalties due them under the leases. 85. Beginning in 2011, Defendants breached its lease obligations to the Plaintiffs and the Class members by failing to pay the full royalties due under the leases. A an MURRAY&MURRAY 23 vrwvr. I1ulImr. irn1nulILAY. I:aNI lll EAL! -Suonmru nmvr: Srmrzuslw. Olllo Mun

24. 86. Defendants breached its lease obligations to the Plaintiffs and the Class members in a number of ways. 87. Defendants improperly deducted from the royalties various production and/ or post-production charges not identified and not permitted by the lease agreements. This was achieved through a scheme using CEMLC as a shell in order for the Defendants to receive payment of the purchase price for Oil and Gas which payments had already been reduced by post-production deductions. 88. At all relevant times, Defendants attempted to cover-up their breaches by falsely stating in royalty reports and statements to the Plaintiffs and the Class members that zero dollars were deducted for production and/ or post-production charges. 89. Defendants further breached their lease duties to Plaintiffs and the Class by calculating the royalty payments using a price for oil and gas determined by a less than arms-length transaction. 90. Defendants breached their lease duties by systematically selling Oil and Gas to affiliated entities at below-market prices, and also passed improper and/ or excessive production and/ or post-production expenses to the lessors, plainly violating the leases. 91. As a direct and proximate result of Defendants’ underpayment of royalties in breach of its lease obligations, the Plaintiff and the Class members have suffered damages which, in the aggregate, exceed the minimum jurisdictional amount of this Court. The damages are continuing in nature in that Oil and Gas is still being produced and deductions continue to be improperly made, from existing wells, as well as new wells commencing production, that involve Gross Royalty Leases and their lessors. (V : fll -ID MURRAY an-MURRAY 1i: FfiITaNcun rxfii‘ ufirnns‘ 24 www. MuxlAvrmnuunuw_nnu in EAfl‘SrlD| lKI, ltl| l Dawn Snunusxv. Onm uni:

25. 92. It is reasonably estimated that the actual damages to Plaintiffs and the proposed Class amount to no less than $30 million dollars in underpaid royalties. COUNT TWO Breach of Contract — Implied Covenants 93. Plaintiffs repeat and re-allege each and every allegation set forth in the foregoing paragraphs. 94. Under Ohio law, unless specifically disclaimed, every oil and gas lease contains certain implied covenants. 95. Among these implied covenants are the covenants to market the oil and gas and also the implied covenant to conduct all operations that affect the lessor's royalty interest with reasonable care and due diligence. Defendants had a duty to exercise/ act in good faith and fair dealing in the payment of royalties under the Gross Royalty Leases. 96. Thus, in addition to their other plain contractual duties, the Defendants had a further affirmative duty to pay the Plaintiffs and the Class members the true and correct royalties owed by virtue of these implied covenants. 97. The Defendants breached these implied covenants by deducting certain production and/ or post-production costs from the Plaintiffs’ and Class members’ royalties. 98. Defendants further breached their implied duties by misrepresenting that zero deductions had been made. 99. Defendants also breached their implied duties by selling the extracted Oil and Gas directly to affiliated companies at sub-market prices. IA“ 4: It MURRAv§Mu'RRAv lvfintnflcfiu Tklltl. LAWYERS wvrmuv uuvarrmrvrurnvmwu I n I Eu-r sum Intuit: Dunn: SAm: u:x1-. OHIO -nan

26. 100. As a direct and proximate result of the Defendants’ breach of the implied covenants, Plaintiffs and Class members have suffered monetary losses in an amount in excess of $25,000 to be determined by the jury. 101. The losses are continuin in that wells will continue to be drilled and produced, oil and gas continues to be produced from existing wells, deductions will continue to be improperly made, misrepresentations are still being made, and improper afﬁliated sales are still being conducted. COUNT THREE Breach of Contract - Breach of Express Covenants 102. Plaintiffs repeat and re-allege each and every allegation set forth in the foregoing paragraphs. 103. Paragraph 1 of the Gross Royalty Leases, and proposed Class members leases, each state that, "Lessee shall always act as a reasonable prudent operator exercising good faith in all of its activities with the Lessor. ” 104. The Young Lease also states: "Lessee shall . . . market any saleable products produced on the leased premises as may be necessary to fully develop the leased premises. " 105. The Defendants breached these express covenants of good faith and fair dealing and/ or to market and/ or to conduct all opertions that affect the lessors’ royalty interest with reasonable care and due diligence, by deducting certain production and/ or post-production costs necessary to market the saleable products produced on the leased premises and to fully develop the leased premises, from the Plaintiffs’ and Class .9. / —--out--—~, MURRAY&MURaAv in P Elilurlca n no A L LAIVV Eng 26 vrvrw. MuII. AvAl nInuRrAv. on| I III I-Last 5l1DII€Ll NK I)ItI‘II Smlnlmrv. Omc sono

27. members’ royalties. These covenants are expressly stated and included in the Gross Royalty Leases and applicable to Class Members. 106. Defendants further breached these express covenants by misrepresenting that zero deductions had been made in printed monthly royalty statements. 107. Defendants also breached these express covenants by selling the extracted Oil and Gas directly to affiliated companies at sub-market prices. 108. As a direct and proximate result of the Defendants’ breach of these express covenants, Plaintiffs and Class members have suffered monetary losses in an amount in excess of $25,000 to be determined at trial. COUNT FOUR Accounting 109. Plaintiffs repeat and re-allege each and every allegation set forth in the foregoing paragraphs. 110. Defendants failed to pay Plaintiffs and the Class members the full amount of their royalties provided under the Gross Royalty Leases. 111. Plaintiffs and the Class members are entitled to a full accounting from Defendants, at Defendants’ sole cost, of all the deductions assessed against Plaintiffs’ and the Class members’ royalties, the actual volumes of Oil and Gas produced under the Gross Royalty Leases, the actual prices at which Defendants sold the Oil and Gas produced under the Leases, and the actual market price when Defendants sold the Oil and Gas produced under the Gross Royalty Leases. WHEREFORE, the Plaintiffs respectfully demand on behalf of themselves and the members of the Class: . .I. , ---urns; --—. . MURRAY&MURRAY irxs-Ifii irrrcnn Til/ u. ﬁwnrns 27 wuwmuxuuunu uxmncou III IIIl: 'I' SII¢‘II'l. l'. l.INE DIIV1! SANIIUHKL‘. Cluro aura

28. a. That this action be certified as a class action as soon as practicabie, with the named Plaintiffs serving as Class Representatives and undersigned counsel as Class Counsel; b. That this Court ﬁnd that the Defendants have breached the contracts in question by (1) making impermissible deductions to the Plaintiffs’ and Class members’ royalties contrary to the express provisions of the Gross Royalty Leases, (2) selling Oil and Gas to an affiliate at a price below the prevailing market price and that included deductions, and (3) by not bein a prudent operator in violating express and implied covenants to the Plaintiffs and Class members; c. That the conduct of Defendants alleged in this Complaint be ordered, adjudicated and decreed to be unlawful; d. That the Plaintiffs and the Class members recover full royalties and compensatory damages against Defendants, jointly and severally, as determined by the jury in this case, in a sum far in excess of Twenty-Five Thousand Dollars ($25,000); e. That the Plaintiffs and the Class members be awarded pre-judgment and post-judgment interest on the amount of the judgment; f. That the Plaintiffs and the Class members be awarded reasonable attorneys’ fees, litigation expenses, and the costs of this action; g. That the Plaintiffs and the Class members he provided any additional relief . .C. . , —v—-‘raw-—~. s MURRAY&MURRAY I1X? lllIE)lCI! I1'I'RIAI_ I. Awv ‘ S '”"”"“""__‘ 28 www, MunmvAuhuI: n:. v.uuu I I I JSAH snort aura: DIIVI rixrrnusiur. Olua «rm:

29. that is just and proper and to which the Plaintiffs and the Class members are entitled, either in law or equity. Res ctfully Submitted, nis E. Murray, Jr. (0038509) dmi@murrayandmurray. com William H. Bartle (0008795) Direct Dial: (419) 624-3126 MURRAY AND MURRAY CO. , LPA 111 E. Shoreline Drive Sandusky, Ohio 44870-2517 Facsimile: (419) 624-0707 And William G. Williams bwilliams@kwgd. com Terry A. Moore tmocre@ kwgd . com Scott M. Zurakowski szu rakowski@kwgd. com Gregory W. Watts gwatts@kwgd. com Krugliak, Wilkins, Grifﬁths & Dougherty Co. L. P.A. 4775 Munson St. NW; P. O. Box 36963 Canton, Ohio 4-4735-6963 Direct Dial: 330-244-2878 Main Phone: 330-497-0700 Fax: 330-497-4020 Atfomeys for Plaintiffs . .l. . /""“T""~—. MURRAY SLIVIURRAY EXPEI m. m': cIﬁ"iT1'Ai. LAW run»: 29

30. Iatwltlilinnltu 'I‘l1AI. I.Aw'ﬁlE JURY DEMAND Plaintiffs hereby demand a trial by jury on all ‘able i ues. git s E. Murray, Jr. (0038509) ~ ‘ RAY & MURRAY CO. , L. P.A. Attomey for Plaintiffs PRAECIPE TO THE CLERK: Please serve a copy of this complaint upon each defendant by U. S. Certiﬁed Mail, return receipt requested. . urray, Jr. (0038509) M RRAY & MURRAY CO. , L. P.A. Attomey for Plaintiffs .1; ___ MuRRAYsMURRA3r 30 wHw. MunIJlVAIln)IunnAr. m:ru Ill EA" 5|IunuI. n¢I om: SAN uunur. Oruo uaw

Ohio Landowner Lawsuit Against Chesapeake Energy for Shorting Royalty Checks

Marcellus Drilling News

Ohio Landowner Lawsuit Against Chesapeake Energy for Shorting Royalty Checks