Winfield Township, PA Turns Down Lease Offer from BLX-Redmill; Lessons for Landowners

The decision is in, and Winfield Township (Butler County), PA supervisors have voted to not accept an offer from BLX-Redmill to lease 60 acres of the 69-acre township park located behind the municipal building.

Winfield Township Supervisors turned down a natural gas lease to explore beneath Winfield Community Park.

Supervisors say they "weren’t happy" with the terms of $270,000, upfront lease offered by drillers BLX-Redmill for natural gas exploration rights beneath 60 acres of the recreation area.

"We’re not signing a gas lease, especially the one presented to us last week," Supervisors Chairwoman Flo Allison said.

"I read it," Allison said Thursday, "and I wouldn’t sign it as an individual."*

The lease would have paid the township $4,500 an acre as a signing bonus, plus residual payments if the well was a “high producer.”

What were the sticking points?

  • The supervisors wanted a 5-year lease term but could not get it.
  • The lease would have granted complete access to all mineral rights.
  • BLX-Redmill was going to assign the lease as part of a larger agreement, meaning another driller would most likely drill on the property, and the lease did not allow supervisors to negotiate the terms of drilling with that new/unnamed driller.

The Township attorney reviewed the lease and reported his concerns to the supervisors.

Good lessons for any landowner contemplating a lease—have an attorney review it first, and don’t settle for the first deal that comes along.

*Valley News Dispatch (Apr 4, 2011) – Winfield rejects terms of natural gas lease