Muskingum Watershed District Signs with Antero for $40.3M Bonus

Nearly a month ago MDN told you the directors of the Ohio Muskingum Watershed Conservancy District (MWCD) would consider a deal with Antero Resources to allow drilling and fracking on 6,700 acres under and around the Seneca Lake area (see OH Muskingum Watershed District to Sign Drilling Lease in Feb.). At the time, details of the deal were still not disclosed, but we theorized based on past deals the MWCD would probably make around $40 million in new lease payments.

The directors at the Watershed District voted to pass the deal last Friday. The amount they’ll get for a signing bonus? $40.3 million—or $6,200 per acre for leasing 6,500 acres (acreage number was adjusted down a bit). Plus 20% royalties.

Here’s how it was reported by the Zanesville Times Recorder:

The Muskingum Watershed Conservancy District might reduce the tax it levies on landowners after completing a mineral rights deal worth $41.5 million upfront.

The deal with Antero Resources, of Denver, pays the district $6,200 for each of 6,700 acres — plus a 20 percent royalty on all oil and gas produced — at Seneca Lake in Guernsey and Noble counties. The agreement prohibits any surface development on district land, but it does allow Antero to harvest hydrocarbons through a horizontal well located off-site. It was approved Friday at the district’s monthly board meeting in New Philadelphia.

The district has entered into big-money lease agreements in each of the past two years: a $15.6-million deal with Gulfport Energy at Clendening Lake and a $21.5-million deal with Chesapeake Energy at Leesville Lake. It has yet to receive royalties from any Utica Shale deal.(1)

The Columbus Dispatch is reporting a slightly lower number based on 6,500 acres instead of 6,700. We have confirmed with the Akron Beacon Journal that this is the number actually signed on Friday:

The Muskingum Watershed Conservancy District approved a $40.3 million natural-gas lease yesterday for 6,500 acres at Seneca Lake in Guernsey and Noble counties.

The lease with Colorado-based Antero Resources was approved 5-0 by district commissioners, despite continued protests from a grass-roots group, the Southeast Ohio Alliance to Save Our Water.

The district will be paid a leasing bonus of $6,200 per acre plus a royalty of 20 percent on natural gas, oil and natural-gas liquids from Antero wells under district-owned land, district spokesman Mark Swiger said.*

A hat tip and thank you to Akron Beacon Journal reporter Bob Downing for confirming the numbers for us.

(1) Zanesville (OH) Times Recorder (Feb 15, 2013) – Conservancy district OKs lease to allow fracking

(2) The Columbus Dispatch (Feb 16, 2013) – Natural-gas drilling lease to pay conservancy district $40.3M