The proposed new secretary of the Commissioners of the Land Office ran an energy company which filed for bankruptcy last year and had been underpaying the commission royalties for oil and gas production.
In a special meeting on Tuesday, the commissioners will consider the appointment of Elliot Chambers to be the new secretary at the Land Office, which runs a $2.3 billion trust fund of oil and gas leases and property to benefit public education.
Chambers was CEO of White Star Petroleum LLC, which filed for bankruptcy in May 2019 and owed the Land Office more than $207,000 in underpayments and interest for oil and gas deductions and valuations on its leases, according to bankruptcy documents. White Star’s assets were later sold to Houston-based Contango Oil and Gas Co. for $132 million.
Chambers is Gov. Kevin Stitt’s second pick for secretary of the land office. The former interim secretary, A. Brandt Vawter, resigned abruptly in March. Oklahoma Watch reported last year that Vawter did not meet the statutory requirements for the position.
Before he was interim secretary, Vawter and his company, Monticello Investments, faced several lawsuits over oil and gas leases. Stitt wanted the Legislature to change the requirements for secretary of the land office, but lawmakers were unwilling to take it up during a COVID-19-shortened session.
In September, attorneys for the Land Office protested White Star’s plan to emerge from bankruptcy. In filings with the bankruptcy court, they provided an analysis of the royalty underpayments from leases to White Star. They also objected to assigning the leases to Contango, saying they couldn’t be automatically transferred during the bankruptcy reorganization to a new owner.
Vawter directed attorneys at the Land Office to accept a settlement offer from White Star for $176,000, according to an email obtained under the Open Records Act. That represented 85% of the outstanding claim.
In an executive session at their February meeting, commissioners approved a settlement with White Star and its new owners. The commission comprises the governor, Lt. Gov. Matt Pinnell, Superintendent of Public Instruction Joy Hofmeister, Auditor and Inspector Cindy Byrd and Secretary of Agriculture Blayne Arthur.
Baylee Lakey, Stitt’s communication director, said on Friday the governor “looks forward to presenting Elliot Chambers, who has a proven track record in corporate finance and management” at Tuesday’s meeting.
“White Star went through the same review process with the CLO Board that many companies do each year,” Lakey said in response to a question about the settlement and royalty underpayments. “White Star’s decision to file bankruptcy was extensively investigated and no concerns were found. The White Star settlement was discussed, voted on and approved during the February CLO board meeting.”
Chambers graduated from Oklahoma State University in 1995 with a bachelor of business administration in accounting, according to a biography on an archived version of the White Star website. He has a master of business administration degree from New York University and is a certified public accountant. Chambers was named CEO of White Star in 2016 and was a former vice president and treasurer at Chesapeake Energy Corp.
A home phone number listed for Chambers on the Oklahoma Accountancy Board’s license verification website did not work.
House Minority Leader Emily Virgin, D-Norman, said any pick to lead the land office should be above reproach.
“This is an entity that produces millions of dollars for our schools,” Virgin said. “The system needs someone who has impeccable credentials and doesn’t raise any red flags. Our schools and our children deserve the best person we can get into that position.”
The Land Office generated more than $132 million for education in fiscal year 2019, according to its annual report.
Longtime oil and gas attorney Terry Stowers said the Land Office has been aggressive about pursuing energy companies for underpayments of royalties. Stowers, who represents royalty owners, said he was concerned that the Land Office could be led by an energy company executive whose former company had settled for royalty underpayments.
While the state warned of the “chaos waiting in the wings,” if Oklahoma lost the case, tribes and others opposing the state downplayed those concerns.