Probe clears Chesapeake and Encana Gas Leases from cheating Michigan in drilling auctions

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According to a Bloomberg report, the US Justice Department has cleared both Chesapeake Energy Corp and Encana Corp from claims that the companies had tried to cheat the state of Michigan in shale drilling auctions. The news was based from a copy of letter sent by the federal agency's antitrust division dated April 29 to Chesapeake. Moreover, Encana had confirmed the closing of the probe in an emailed statement. Bloomberg tried to obtain the department's comments regarding the probe on the nation's largest natural gas producers but the latter failed to respond to the news agency's voice mail messages.

Encana spokesman Jay Averill said in the emailed statement, "We are very pleased with the confirmation by the U.S. Department of Justice antitrust division that it has closed its grand jury investigation into Encana's oil and gas leasing activities in the Western District of Michigan."

Bloomberg said that the closure of the federal grand jury inquiry is another step forward for Chesapeake from the shadow that was cast by its former chairman and chief executive officer, Aubrey McClendon. McClendon was reportedly fired last year amid a conflict-of-interest scandal and a shareholder revolt. Also, the ending of the probe could boost Chesapeake next week in a Michigan court, where it is facing bid-rigging charges alongside Encana filed by the state.

Partner Bruce McDonald at Jones Day and a former antitrust enforcer in the Justice Department said about the closure of the Justice Department probe, "More often than not, federal prosecutors and state attorneys general come to the same conclusion (because they are examining much of the same evidence)."

In the May 5 scheduled hearing, the state of Michigan represented by the office of the Michigan Attorney General Bill Schuette could be challenged by the accused on whether the state had probable cause to bring the charges. Both Chesapeake and Encana had pleaded not guilty to the allegations in March.

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