The Dallas/Fort Worth International Airport’s board of directors on Thursday approved a settlement ending its four-year royalty dispute with Chesapeake Energy Corp. over the price paid on natural gas extracted from airport property.
The deal requires Chesapeake to pay the airport $5 million for production through June. In return, the airport will drop any claims for additional royalties.
If the city councils of Dallas and Fort Worth approve the settlement, the parties will go into district court in Fort Worth to close the lawsuit. Dallas and Fort Worth are co-owners of the airport.
DFW International agreed in 2006 to lease 18,000 acres of airport land to Chesapeake for natural gas exploration, with the airport to get a $181 million upfront bonus and 25% royalty on the gas sales.
Disagreement about the terms of the original contract led to the lawsuit, attorneys said. Since the original contract, the price of natural gas has fallen to about $2.50 per thousand cubic feet from $13.
The royalties have provided a cushion for the airport over the years, bolstering its revenue-bond ratings of A-plus from Standard & Poor’s and Fitch Ratings and A1 from Moody’s Investors Service. All three agencies give them a negative outlook as the airport embarks on a $2 billion terminal remodeling project expected to raise DFW’s debt profile before the 2014 completion target.
